Forget Andrew Coyne, Alberta still needs to raise the minimum wage
Last night, Andrew Coyne published a column in which he champions introducing a minimum income over raising the minimum wage as a radical policy suggestion for Alberta’s new NDP government. Coyne couches the column in his typical pseudo-contrarianism. Here he is supposedly advocating socialism… gasp! In reality, however, Coyne gets it backwards: a minimum income in Alberta today would almost certainly be a dangerous neoliberal measure. It’s raising the minimum wage that can help open more space for progressive politics.
First, the basics. The $15 minimum wage was a key promise of the NDP campaign and is increasingly being adopted as policy across North America. A minimum income is a theoretical idea that’s never really been implemented and would essentially guarantee every citizen some basic level of cash income. As Coyne notes, it remains mildly popular across the political spectrum; it was recently floated as a proposal by Calgary mayor Naheed Nenshi.
Coyne argues for the superiority of a minimum income as being solely focused on poverty reduction and redistribution, at the same time criticizing the minimum wage as too interventionist. As usual on the right, Coyne couches his opposition to hiking the minimum wage with an appeal to Economics 101: if the price of labour (the wage) goes up, the quantity demanded (employment) will go down. Simple: don’t mess with the market!
Not so fast: the labour market is a peculiar market. Not only do some people have to sell their time and energy to others for a price, but employers, especially those employing workers at the lowest wages, are often said to have what is called “monopsony” power. In short, employers have the power to set the terms of labour contracts, including wages, rather than have the fabled market do it for them.
As more and more research has pointed out, higher minimum wages don’t mechanically work themselves out through the simplistic Econ 101 model of supply and demand. A higher minimum wage can lead to less turnover, more efficient technology and techniques being adopted, as well as less space between low and high wages within the same firm. We might even pay 5 cents more for our Big Macs.
Even if there is slightly less employment, it’s increasingly clear from even the mainstream economic literature that, overall, workers would be better off. This isn’t a gift to rich teenagers either: the vast majority of those between the current minimum and $15 are not young workers and often support others. Remember that the minimum wage today is a poverty wage; this is no jump from a gold to a platinum card for workers. But this is all (relatively) old hat with lots of ink already spilled (I debunk some myths here or see David Green’s recent CCPA report here).
Coyne says tongue-in-cheek that his minimum income idea is not only better, in fact it “sounds like utopian socialism.” However, the conservative version of the minimum income, as advocated for example by Milton Friedman, would do away with much of the welfare state apparatus if adopted. Rather than publicly-provided social services – no universal health care, welfare, unemployment benefits, pensions, child care or other services – a minimum income would create space for more and more markets. When Coyne thinks of a minimum income, I fear he has in mind a neoliberal utopia.
The problem with a minimum income that would bolster rather than replace the welfare state is that there is no political force strong enough to carry it through. A minimum income alongside existing services would require a massive expansion of the tax and transfer system. Today, Alberta has no sales tax, a flat income tax, and low corporate taxes and royalties. If the province were to seriously consider a minimum income, the version it would most likely get would be a crippling neoliberal variant.
Consider how much of a political shift it took to raise corporate taxes from 10 to 12 per cent as the NDP have promised to do. Now imagine a shift many multiples this big. A real minimum income, like other worker-friendly policies, needs a force powerful enough to counter entrenched interests. Leaving redistribution to a minimum income and the everything else to the market leaves the extremely unequal power relations fostered by the market in place.
Look at Alberta. Despite the resource boom, wage growth has been kept under relative control (though, of course, it has been much faster than the stagnation in the rest of Canada), there is a large and extremely precarious migrant worker population, and now the oil price crash has resulted in calls for belt-tightening all around.
What is the biggest barrier to a minimum income that wouldn’t also help to dismantle the welfare state? The power of big business and elites who would have to pay for it. Who and what can break the power of big business? Workers with more power in the workplace.
Someone like Coyne can profess to rally behind the minimum income precisely because, in his version, it doesn’t challenge power. In the current climate, it would actually work to undermine existing universal social programs; areas of life now decommodified, like health care, would risk being returned to the market. A minimum income within something close to the current configuration of Alberta’s tax and transfer system could well even undermine Coyne’s professed goal of poverty reduction.
Raising the minimum wage, on the other hand, challenges entrenched powers and interests. It is a welcome intervention into the unequal marketplace. It challenges the power of employers to pay poverty wages. And it has the chance to give workers more power in their workplaces. Alberta’s unionization rate is about 10 per cent lower than the Canadian average – this too needs to be challenged. And, not least, a raise in the minimum wage is something that is ready today and can be implemented quickly.
Beyond the Econ 101 over-simplifications, the key thing that Coyne misses about the minimum wage is that it is not simply a poverty reduction tool but a power building tool. Workers with longer tenure and who don’t face poverty in minimum wage jobs will be more willing to organize and to build the political spaces for bigger reforms. A higher minimum wage is actually one of the pathways to a minimum income that could expand social welfare.
2 Comments
1) Replacing a patchwork of social safety networks with a minimum income is far better than this article makes it out to be. When you introduce a number of conditions that must be demonstrably met in order to receive social assistance such as pension and EI, there will inevitably be some people who fall through the cracks, and barriers that hassle people who we’ve identified as needing our help. If we estimate the standard of living that ought to be guaranteed to every citizen and certainly provide it, that is in fact better than possibly providing it to them if they meet the regulations. If the budget for our current regine of social programs is X dollars, then every dollar can be put towards a minimum income, except all the money currently spent on bureaucrats running these programs to the people who are actually supposed to be benefiting from this funding. If an individual gets less assistance than they otherwise would, it must be because someone with less is given more, but with proper funding this is far from a forgone conclusion.
2) If it takes a lot of political capital to raise the corporate tax rate, imagine how much it would take to cut off our healthcare. This is a service widely regarded as a right in the first world, if for some reason the neoliberals decided to stop providing public funding, they would have to substitute it with more income to everyone such that they can obtain the same standard of living we thought was acceptable in the previous system. Of course this would never happen because any political voting for scrapping public funding for health care would be run out of town by a mob. Similarly, if you have dependents, obviously those people need an adequate standard of life too, since their wellbeing is entrusted to another person, obviously that person should be given more financial support. This is totally consistent with the principles behind a minimum income. The contention that businesses and the 1 percent could trick us into fucking over low income families like this is utterly facile.
3) A higher minimum wage increases worker’s bargaining power…. how? As a business owner, a higher minimum cost for labour means that substituting ordinary workers with temporary foreign workers or more capital investment is less expensive relative to the status quo. Of course, unlike other inputs, workers face a tradeoff between time spent working and time spent pursuing leisure activities. As workers have higher incomes, they are more likely to spend their time enjoying the money they earn from working, rather than actually working. If an individual desperately needs work in order to support themselves and their family, they have relatively little bargaining power. Of course, if they pull in a greater income it will be easier to pressure their employer because they will be more capable of supporting themselves through a brief period of unemployment. But wait, wouldn’t the same effect be accomplished by giving workers a greater income directly, especially that income exceeded what they receive from EI under the current system?
I see no reason why it wouldn’t , and doing so would sidestep the labour-capital substitution problem and render minimum wages unnecessary, which would correct the market distortions caused by it. If you know you will always have enough to make ends meet, you will be much less willing to work a shit job for a boss you hate at $4.00/ hour. This means that employers have to make the conditions and the compensation more attractive for entry level jobs if they want people to do them. If businesses are forced to pay an inflated price for workers it is that much easier to find a cheaper way to complete their tasks. Unless, contrary to this analysis, high minimum wages give workers power not dependent on higher incomes, it is simply a less efficient way to provide (fewer) workers with that income.
From Trevor in Edmonton on Jun 11th, 2015 at 6:29pm
Michal Rozworski is right to be suspicious of Andrew’s Coyne’s apparent sudden “conversion” to socialism over the issue of a minimum income. The chances of that are infinitely smaller than, say, the chances of an NDP majority government in Alberta.
As Rozworski points out, Andrew Coyne isn’t the first conservative to advocate a minimum annual income. He joins notables such as Milton Friedman and Richard Nixon. In 1985, the Macdonald Commission recommended a guaranteed annual income for Canadians that was outrageously low.
However, arguments for a minimum income or basic income can be made from a variety of political and philosophical positions. As the co-founder of the Kingston Action Group on Basic Income and a supporter of the Basic Income Canada Network, I can say with confidence that no one I’ve met is advocating a minimum income plan that would destroy what is left of our social safety net. Our vision of a basic income would ensure that all Canadians have the income to meet basic necessities. It would form the foundation for a renewed and reinvigorated social safety net that would include pharmacare, national childcare, affordable housing, public transit and other progressive programs. Means-tested, mean-spirited, stigmatizing, bureaucratic social assistance programs would be replaced, but we would still need supports for people with disabilities, addictions, mental health problems, those who have suffered domestic violence, and so on. Much like an increased minimum wage, a basic income is a “power building tool” that would help re-balance the relationship between labour and business, allowing employees the security to refuse work that is unsafe, exploitive or demeaning.
Recognizing that some, like Coyne, imagine a very different minimum income than we do, our Kingston group has developed a vision that is based on five principles. In our view, a basic income would increase social justice, increase income security, increase equality of opportunity, increase dignity, and increase the standard of living of the lowest-income Canadians. Moreover, it would restore social solidarity, uniting Canadians once again in a social program that would demonstrate our care for each other.
One of most pernicious effects of living under neoliberalism for 35 years is our intense sense of isolation from each other— the competitive individualism that leaves us with the feeling that we are “on our own,” lucky if we have family who can help us out. Facing the possibilities of crippling student debt, precarious employment, and a looming environmental meltdown, it is no wonder that young people are stressed. At Queen’s University, where I teach, about 40% of students are on anti-depressants or anti-anxiety medications.
Like Naomi Klein, who advocates basic income as the most important policy initiative to address the climate crisis, I believe that a basic income can help break the stranglehold that neoliberalism has had on our collective imaginations. An adequate basic income would provide the freedom for us to re-imagine how we might live together with more care and compassion, and how to live more sustainably on the planet.
We already have lots of evidence of the benefits of a basic income, for example, from the Canadian MINCOME experiment in the 1970s. The trick, as Rozworski points out, is to find a way to implement such a scheme, which would face significant resistance from economic elites. There is growing interest in and momentum around basic income. But we will need a vocal and ferocious movement of Canadians who have had enough of “market mechanisms” and demand a Canada for the people, where everyone has adequate income to meet basic necessities.
Elaine Power, Ph.D.
Associate Professor
School of Kinesiology & Health Studies
Queen’s University
From Elaine Power in Kingston, ON on Jun 14th, 2015 at 8:34pm