Category Archives: minimum wage

Editorial: The Government as a Low-Wage Employer

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New York Times  By THE EDITORIAL BOARD     August 12, 2013

In 1965, in a nation torn by racial strife, President Johnson signed an executive order mandating nondiscrimination in employment by government contractors. Now, as President Obama has observed, the nation is divided by a different threat: widening income inequality. He could respond much as Mr. Johnson did — with an executive order aimed, this time, at raising the pay of millions of poorly paid employees of government contractors.

Recent studies have shown how hundreds of billions of dollars in federal contracts, grants, loans, concessions and property leases currently flow to companies that pay low wages and provide few if any benefits, even as executive pay among federal contractors has risen. In effect, tax dollars are being used to fuel the low-wage economy and, in the process, worsen inequality.

This research has been underscored by a recent complaint filed with the Labor Department by Good Jobs Nation, a group representing low-wage workers employed under federal concession agreements. The complaint alleges that food franchises operating at federal buildings in the District of Columbia have ignored minimum-wage and overtime laws. The group has also organized walkouts by low-wage workers of vendors licensed to operate at Smithsonian museums, actions that have dovetailed with recent walkouts by fast-food workers around the nation.

Many laws and executive actions, mostly from the 1930s and 1960s, require fair pay for employees of federal contractors. But over time, those protections have been eroded by special-interest exemptions, complex contracting processes and lax enforcement. A new executive order could ensure that the awarding of contracts is based on the quality of jobs created, challenging the notion that the best contractor is the one with the lowest labor costs.

Mr. Obama also could tell federal agencies to conduct reviews of contracts to see if the work should be done in-house. There is compelling evidence that using private-sector contractors is often costlier than using government employees, even when contractors pay workers little.

Nearly 50 years after one executive order helped to end discrimination in government contracting, another one is needed to help ensure fair pay in that same sector.

Large, Profitable Companies Employ Most Minimum-Wage Earners

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George Zornick    http://www.thenation.com

If you’ve ever had a conversation about the minimum wage with friends and family, you invariably hear an argument about how raising it would hurt small businesses.

There is compelling academic research that increasing the minimum wage doesn’t dramatically impact employment levels, but a new study released today underscores another important point—most people earning minimum wage work for large, profitable corporations.

The National Employment Law Project looked at Census data from 2009–11 and found that 66 percent of low-wage workers are employed by large businesses with over 100 employees. Moreover, it found that the fifty largest employers of low-wage workers have all recovered from the recession and are in strong financial positions:

  • 92 percent were profitable last year.

  • 78 percent have been profitable for the last three years.

  • 75 percent have higher revenues now than before the recession, and 73 percent have higher cash holdings.

  • 63 percent have higher operating margins than before the recession.

Also, the study found that at these fifty firms, executive compensation averaged $9.4 million, and they have returned $174.8 billion to shareholders in dividends or share buybacks in the past five years.

Low-wage workers are concentrated in the service industry, and dominate the following sectors:

You can guess from looking at that list who the biggest abusers of low-wage labor are. Walmart, for example, employs 1.4 million Americans, and a vast majority of them at wages under $10 per hour. The highest-paid executive, however, earned over $18.4 million last year. Other key offenders are Yum! Brands (Taco Bell, Pizza Hut, KFC), McDonald’s, Target, Sears, Doctor’s Associates Inc (Subway), TJMaxx and Burger King.

Amazingly, one in four American jobs pays less than $10 per hour (26 percent), according to the study. And it’s not just those workers who suffer—big businesses that pay collectively pay millions of workers low wages set a basement for the rest of the wage scale and depress earnings above $10, too.

As we noted last month, some Congressional Democrats have joined forces with Ralph Nader to pass a bill that would raise the minimum wage to $10 per hour immediately, and then index it to the Consumer Price Index after one year.

But they are unlikely to find many allies on the other side of the aisle. This week, Representative Sean Duffy, a Tea Party star, was taped getting in a Jetta and driving away from a constituent asking him for help in raising the minimum wage:

Another, Representative Bill Young of Florida, somewhat oddly told a constituent asking about the minimum wage to “get a job” before walking away:

The minimum-wage debate, summarized in 10 reader comments

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Published on Wed Aug 07 2013  http://www.thestar.com

 

Ten readers weigh in on columnist David Olive’s piece on Ontario’s minimum wage.

Ten readers weigh in on columnist David Olive's piece on Ontario's minimum wage.

Judging by the passionate response to David Olive’s column, Ontario’s minimum wage resonates deeply with a great many people, regardless of how much they make.

The story has generated 780 comments (and counting), representing every point along the political, economic and moral spectrums.

Here is the debate, as laid out by 10 reader comments on the issue:

1. Go ahead and raise the minimum wage. Then another 40,000 workers will be laid off as most of the companies that do pay minimum wage cannot afford them any more. Unemployment spiked after the last minimum wage hike. — westender

2. In 2004, when our minimum wage went up by 25 per cent, the median income rose. Inflation did not rise, unemployment did not rise, business insolvency rose slightly (0.4 per cent), then went back to normal in the following year.

Raising the minimum wage does not cause price increases, unemployment or business failures. It isn’t common sense, but it is reality.

— Punned It

3. It’s not false . . . It has been proven time and time again to be true.

When costs increase, companies find ways to increase productivity either by having fewer workers doing more, increasing use of technology, or possibly shutting down because they cannot compete with the higher costs. Therefore, the total number of absolute jobs will decrease, but the jobs that remain will pay higher — it’s a trade-off.

The problem with minimum wage is that it sets a floor to the supply and demand curve — because of the higher costs, companies will hire fewer employees than they would naturally. So instead of having 10 employees making $5/hour, you would keep your top five employees and give them $10/hour (and lay off the remaining five).

Instead of focusing on how we split up the pie, we need to find a way to make it bigger (become more productive/valuable to our companies) which will lead to higher wages (we need to justify the higher costs to the companies). — TOgirl

4. Is it really about minimum wages? Why not also look at company performance bonus ideas; top management cannot pay themselves large bonuses exclusively without paying everyone else at least 50 per cent above minimum wage. Wasn’t it Henry Ford who saw that paying people higher wages would allow more people to buy a car? What happens when wealth in a country gets too concentrated in too few people? Why not have a 19-1 rule? The top person cannot pay themselves any more than 19 times of the bottom person, like it is at Whole Foods Market. At the end of the day, if society does not feel secure, it can lead to a lot more problems. Good paying jobs help to make people feel safe. — chas999

5. While raising the minimum wage will put more money in the pockets of those affected, there is no ripple effect on those whose wage is slightly higher than minimum. Typically, those wages do not move up, resulting in additional people now earning the new (higher) minimum wage. Somehow, we need to create a ripple effect so all people near the bottom of the wage ladder get a benefit, albeit not as much of a raise.

Secondly, the minimum wage is not the only employment standard that affects workers. There are a wide variety of workers, often seasonally employed (i.e. earning less than $20,000 per year) who are not entitled to statutory holiday pay or aren’t entitled to time and a half for working on a stat holiday or who aren’t entitled to overtime until way more than 44 hours are worked. These are allowed for under the Ontario Employment Standards Act. Closing these loopholes will also help those on the bottom end of the wage ladder. — SuburbanJoe

6. It doesn’t matter what the minimum wage is; no corporation is going to let increased wages cut into their profit margins, so prices will go up to match increased wage costs. One place I worked, the same day the wage went up to $8.75 an hour, the prices were increased, and staff was told to tell complaining customers that it was necessary due to the increase in minimum wage. At another company, when wages went up to $10.25, wages for the rest of the staff were frozen for six months, costing everyone else their semi-annual increase. The company’s excuse: it said it might not be able to survive these increased wages. These are huge companies; both of them are more than just surviving years later. The only way that increased minimum wage would make a real difference is if all prices were frozen for a length of time, and that is not happening. — pepc6372

7. Raising minimum wage higher than the current $10.25 does not take into account that many small shops cannot afford to pay this. So they either do not hire or, if they do take on more staff, it is for fewer hours. Besides, it is not only the raise in hourly amount, there is then also the increase in payroll taxes that goes along with it. Many small shop owners work for far less than the minimum wage. When (then-Ontario premier Dalton) McGuinty raised the level to $10.25, he did not do any favours to the small business owner. Generally these are low skill jobs requiring little experience. So how does raising the wage level ad infinitum help? Politicians who live in the stratosphere of incomes tend to forget that not everyone can pay these inflated wages. — Gracie

8. If only it were as simple as raising the minimum wage by $2 for the lowest wage earners from say $10 to $12. Every employee now making $12 has an expectation of getting a $2 increase also and so on up the wage scale. As a previous small business owner, I know that this is true. For a business with 10 employees, this can quickly translate into $20 per hour; plus the additional CPP and EI portion paid by the employer. For an eight-hour day, the employer has to come up with about $200 per day in additional profit to cover the $2 increase per employee. I have seen this happen many times with a minimum-wage increase where the employer is forced to decrease the number of employees and asked those still working to take up the slack, thus fewer jobs. — I See you too

9. You keep confusing what people “deserve” in a moral sense, with what they earn in an economic sense. If we think people “deserve” more, we can supplement incomes out of government revenues (up to a point). But we can’t just pass laws decreeing that people earn as much as they deserve, if they don’t produce as much as they deserve to earn.

A 40-year-old single mom with four kids clearly needs, and probably deserves, more income than a 20-year-old student. But if they’re doing the exact same job with the exact same level of competence, then they’re going to earn about the same, all else being equal. Wages are not determined by calculating how much people need to live comfortably, and dividing by the number of hours they work. Wages are determined at the point where what an employer is willing to pay meets what an employee is willing to accept. And what the employer is willing to pay has everything to do with what the employee can produce, not with how needy the employee’s lifestyle is. — thinktwice

10. I always viewed minimum wage as an incentive to get a higher education, get valuable experience, and pursue a career in a higher paying field that I could find passion in.

It worked as an incentive. — RAinToronto

Join the conversation now.

Bateman Advocates A Race To The Floor For Minimum Wage….You First, I’ll Give Ya A Push….Just Saying….

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August 3, 2013   Updated on August 15, 2013

By Andrew Phillip ChernoffJust-saying

I came across an article titled, “The pay of government workers is way out of line” by Jordan Bateman.

At the start of his opinion piece, Bateman, makes a conclusion that is somewhat  true in municipal politics, but also provincial, federal politics. Even private business, multi-national companies and private corporations practice overpaying their upper management people.

Bateman states:

    • Taxpayers and watchdogs often focus their attention on the top of the government salary spectrum. Government executives are increasingly overpaid, especially at the municipal and regional district level. And the problem is growing.
    • For example, the District of North Vancouver, had 62 employees making $100,000 or more in 2011. A year later, that number had jumped to 93.

Then Bateman goes off into his way out stupor and churns out that “taxpayers are overpaying for labour throughout the system.”

Provincial government deals with their own government employees.

Municipalities and regional districts are separate and distinct from the provincial government and negotiate on their own with their respective employees.

Front-line municipal and regional district workers are not overpaid in my opinion.

Front line workers have wages and benefits that have been negotiated in fair and good faith bargaining in line with their respective municipal and regional district finances of which their councils and boards are charged with being proper stewards of.

Management contracts are not negotiated in the same manner as above.

The public never hears anything in the press, radio or television as to what the management staff in municipalities and regional districts are getting in their contracts….unless somebody applies under the Freedom of Information Act. Through the Statement of Financial Information, which is made available every year, for the last audited year, taxpayers are able to find out some salaries of municipal staff and council members.

Yet the employees have a very public collective agreement that spells it all out. Yet, management contracts are hidden under private and confidential legislation for the most part…..just saying

Front line workers at the municipal and regional district level  do the grunt work out in the field. It is the non-management employees that have the qualifications and certification to do the work on the front line. And work they do.

Front line workers correct the mistakes of contractors; don’t play politics when working; and are the first to hear of the public dissatisfaction.

Municipalities and regional districts MUST balance their budgets.

Provincial governments while they should balance their budgets, are more often than not, tabling unbalanced budgets.

Bateman then defies all sense of logic by taking on the City of Burnaby with its desire to hire a bartender for a wage negotiated through collective bargaining, providing a wage higher than minimum wage:

  • The City of Burnaby is looking for a bartender. B.C.’s minimum wage is $10.25 per hour but liquor servers can legally be paid as little as $9 per hour, plus tips (where they make their real living). Ignoring the bizarre idea that property taxpayers have a bartender on the payroll, Burnaby should be able to get a suitable swill slosher for $10.25 per hour, tops.
  • But this is government – where your hard-earned money gets spent freely. Instead, Burnaby is offering its future bartender $13.65 per hour and 12 per cent cash-in-lieu of benefits, plus tips. That’s $15.29 per hour plus tips, for a job that could be filled for 70 per cent less.

For twelve years the corporate tax rate in BC with a BC Liberal government in power was kept at 10 per-cent.

During that same period, BC has consistently had the worst child poverty rate in Canada and the worst reputation for providing support to highly vulnerable families and children in Canada as well.

According to the article, “ Why does B.C. have the highest poverty rate in Canada?” by Iglika Ivanova:

“The reason why B.C. has the worst poverty rates in Canada is not poor economic performance but lack of social spending, a large low-wage sector, and big gender pay gaps, especially at the low end.

The government needs to step up with a comprehensive poverty reduction plan to boost social supports to a level that covers basic costs of living. Other immediate priorities include providing affordable, universal child care for families (for example, the $10/day plan) and investing in affordable housing for families.

Training and education also jumps out as an area of government responsibility that hasn’t received enough attention over the last decade. That’s why many of the newly created resource sector jobs aren’t going to unemployed British Columbians but to temporary foreign workers and/or migrants from other provinces because we don’t have the skills needed. And since resource expansion is essentially the basis of our government’s Jobs Plan, such job growth is unlikely to make much of a dent in poverty rates.

But while the government must play a leadership role here, poverty is not just the government’s problem. All citizens have a responsibility to tackle poverty, including those who own and run businesses. Business managers are understandably focused on their bottom line, but as members of the community they need to consider the kind of jobs they create, and the kind of life their employees can afford on the wages they pay. Is there job security? Are the wages so low or the shifts/hours so few that they keep the employees in poverty?

35 Vancouver employers have committed to pay a living wage to all their workers and more large companies should follow their example.

But not all jobs created in B.C. are well-paying, family-supporting jobs that offer benefits and a reasonable level of economic security. Despite recent minimum wage increases, a person working full-year full-time on minimum wage earns less than the poverty line for a single person in Vancouver. There has been an explosion of unpaid internships, with the most recent scandal exposed by CBC here.

The bottom line is that we need a combination of good quality jobs and social supports for families who have fallen on hard times. This is particularly important now when we’re seeing a worrisome and rather steep increase in poverty in what’s arguably the best measure of poverty, Statistics Canada’s Market Basket Measure (see here).

Poverty is not an intractable problem, other provinces and countries have taken action and are seeing results. B.C. should too.”

Would Bateman regulate everybody, including himself, to a below poverty line lifestyle?

I call on Bateman to give up his upper tax level “living wage” for the bartender’s job and wage for one year, and then tell his readers the same thing he is saying now.

It is clear that the City of Burnaby, and other municipalities, regional districts are doing their part to provide above minimum wage jobs where they can; to insure stable economies in their communities and regions, where the monies they give in wages are not only possible but are put back in local and regional economies providing spin off jobs and new business opportunities; diversifying local and regional economies at the same time.

Bateman further proposes legislation similar to CETA, that would take local autonomy and control away for decision making by municipalities and regional districts.

Once again, Bateman lacks knowledge and shows his ignorance and audacity to impose his political will and beliefs for all municipalities and regional districts, considering he lives in one community and belongs to one regional district.

Municipalities and regional districts levy taxes in their respective areas. The provincial government does not provide municipalities and regional districts with their operational budgets.

I would tread lightly Bateman, when you suggest, a provincial Compensation Equity Act.

Municipal and regional district employees are not provincial government employees. The Community Charter and Local Government Act, set out the powers of the municipalities and regional districts.

Further, many BC municipalities and regional districts have told the provincial government of their concerns and lack of support for CETA.

I guarantee Bateman if you come to my community and try to impose your ridiculous ideas, you would be met by concerned taxpayers who may not take to kindly to you interfering with local autonomy and local democratic decision making for affairs affecting the community and region.

Further, I would find it difficult to believe that what happens in Penticton, Richmond, Kelowna and the regional districts those communities reside in, presents hardship and dire tax consequences to his community and regional district.

If anything, people from those communities visiting where he lives, would actually aide his community as they spend their hard earned dollars, helping his local business; help to provide living wages for workers including  students going to high school and earning money for post secondary education.

Would Bateman really deny what he benefited from?

I would argue that multinationals and corporations benefiting from low cost labour in BC, ravaging our natural resources; leaving taxpayers to live with the cost to our wildlife, environment and water, are the leaders behind the inequality issues in this province.

They take……10 per-cent corporate tax rate for twelve years, until this year when it was changed to…..wait for it…to 11 per-cent.

They don’t give back…..why?

They use tax payers dollars; take our raw materials; abuse BC labour workers; make gross profits; do nothing to improve well-paying, family-supporting jobs that offer benefits and a reasonable level of economic security.

Bateman’s ideas, and the system he proposes doesn’t work for the best interests of British Columbians, municipalities or regional districts.

If Bateman is advocating a race to the floor for  “minimum wage”, then by all means…..you first….. lead the way Bateman…..get out in front…..I’ll give you a push……just saying…..

COPYRIGHT ANDREW PHILLIP CHERNOFF 2013