Blog

In its recommendation, the ‘Fair Wage Commission’ mandated a rapid minimum wage increase of 33% over three years beginning June 1, 2018 to June 1, 2021. That is an average of 11% per year. The previous Liberal government orchestrated significant increases starting in 2011 at $8/hr to a final increase taking effect under the NDP in the fall of 2017 to $11.35/hr. The earlier Liberal increases were designed to play catch up for a period previous to 2011 when the minimum wage was static for many years. But the rapid increase of almost 44% caught up and surpassed cpi index which grew by 30% over the same period from (2002 to 2017).

The current increase, proposed by the NDP, is substantially over and above the cpi index which is averaging anywhere between 2-3 % annually. Most businesses will try to pass on the cost to the consumer. But the BC farming sector will be one major loser in this, as it is one industry that does not have the ability to pass on the cost to the customer.

No Mandate

In politics, the truth is usually the first casualty. The NDP Government will have you believe they won a mandate in BC’s last election. The reality is that no political party can make that claim. Of the three leading parties, the BC Liberals actually had slightly more of the popular votes at 40.37% followed by the NDP at 40.29%. This translated into 43 Liberal seats and 41 NDP seats. Hardly a mandate for the NDP, but that did not stop them for instituting the ‘Fair Wage Commission’ to raise the minimum wage to $15/hr under the pretense of a mandate from the public.

Politically Astute

In the aftermath of the election, the NDP did prove itself to be a quite politically shrewd, as it astutely outmaneuvered the BC Liberal, first by forming a coalition with the Greens and then by audaciously snatching the disaffected Abbotsford South MLA Darryl Plecas from the Liberals. Awarded with the Speakers position, the ‘Super Speaker’, as Plecas is sometimes referred to, has allowed the NDP to cling to power.

Almost two years later, the NDP-Green coalition is very much comfortable in finishing out its 4-year term, despite a setback with Proportional Representation referendum. But the victory in the Nanaimo by-election has given the Coalition Government a renewed confidence and stability. While the Liberals have been characterized by missteps throughout the election campaign and after the election, the NDP has been making the right political choices to stay in power. It seems to be spreading the goodies to those who might support them in the next election and taking away from groups that are perceived to support the Liberals.

Picking on a docile group like the farmers has been politically convenient, but not necessarily in the best interest of the public. Government Policy that does not recognize that Farmers are stewards of BC’s farmland and a policy that detracts for agriculture sector’s competitiveness will not be in the long term interest of the Province.

Not Meant to be Fair

The purpose of the Fair Wage Commission was to deliver the result the NDP wanted. It was never about determining a fair wage. The Commission was constituted to deliver the results the Government sought from the process. The $15/hr minimum wage target was a number picked out of the air. It was not based on any Science or Economic study. The politically savvy government that the NDP is, they knew how to stack the cards. The question was not about whether we should have a $15/hr minimum wage, it was more about how do we get there. The Commission was constituted to deliver those results

Concept of Household Income Abandoned

In making an argument for a Fair Wage, the government abandoned the concept of household income in determining disposable income. The household income is often comprised of more than wage. In a single household, it is possible to have a primary wage earner, a secondary wage earner, and other supplementary wage earners. The generally accepted concept of household income was abandoned in favor of each wage earner as a stand-alone economic unit. While this is is certainly possible, the reality is the majority of the households have dual wage earners .

Businesses held responsible for Income Support not the Government

In any society, there will be disadvantaged groups who require financial support. It is ironic that a Socialist government like the NDP has abdicated from that responsibility and is moving to a paradigm where the burden is imposed on Businesses. Whether that is a concept of fair wage or the new payroll health tax, the basic premise is the same. Download on the businesses and keep it off the government’s balance sheet.

While this radical outlook may go under the radar because the BC economy has been red hot for the last couple of year, but in a slowing economy, these measures will not be sustainable.

Fair Wage and Minimum Wage not the Same

As a part of the political strategy, this government has been trying to confuse the public when it comes to Minimum Wage and Fair Wage. While the minimum wage is a widely accepted tool used by governments all over the world to establish a minimum floor for wage earners, the concept of a fair wage is not as widely applied. Typically, fair wages are minimum wage rates for specific occupations more often used in unionized construction work. For some reason, the name “Fair Wage Commission” was given to the body sanctioned to find a pathway to $15/hr minimum wage.

There has also been some talk of a livable wage, which hinges on the concept that every wage should be able to cover your basic cost of living such as housing, food, transportation etc. It seems to ignore the fact that majority of the households have more than wage earners. While the rationale of a livable wage is intuitively attractive to most people, but from a practical point of view, there is no sound economic basis for it.

Reasonable Minimum Wage Increases are Good

From a free market economy standpoint, individuals are compensated based on the value they add in the performance of their duties and the competitive nature of the labor force. It is also generally accepted that wage increases occur through productivity gains.

In contrast, British Columbians have also accepted the need for minimum wage increases despite the fact that debate still rages on its merits among academics. What is at contention is the rate of increase that has been set out by the present government.

Cumulative Impact will Undermine BC Agriculture

BC Farmers that are not protected by supply management are very vulnerable to the current government’s policy of implicit taxation. Farm operators neither have the ability to absorb nor pass on these costs to the consumers. Agriculture operates in what they call a ‘Perfectly Competitive ‘ market. Farmers are essentially price taker. The price for farm commodities is set at the global market. The present government is oblivious to this fact as it continues on a path of an urban panacea at the expense of rural reality.

Under this government, BC agriculture has been on the receiving end of Government policy without any real ability to pass on the cost to the consumer. From the rapidly increasing minimum wage, water license fees, payroll health tax, to the loss of land use privileges, the flurry of anti-farm policies will be debilitating to an industry that is already dealing with declining returns.