Minimum wage laws are established in Canada and each province has their own minimum wage law. With Nunavut having the highest minimum hourly rate (cbcnews.ca) and British Columbia having the lowest minimum wage in Canada (BCFED). In addition, by offsetting the inflation, most of the provinces try to renew their minimum wage laws every few year. However, British Columbia's minimum wage law has stayed the same since 2001 with $8 per hour for workers who have 500 hours work experience and $6 per hour for first or entry level jobs (BCjobs.ca). For economic reasons, critics oppose increases to the minimum wage due to increasing costs for firms, increasing unemployment and claiming that minimum wage laws do not help the poor and unskilled labour. Although, there are negative points for increasing minimum wage, there are much evidence that clearly provide evidence that the minimum wage laws help the society and the economy as a whole. The actual picture of the results following minimum wage laws is much more significant than general economic analysis on the consequences of the minimum wage law.
The last renewal of the British Columbia's minimum wage law was in November 2001. Although New Brunswick is having the same minimum wage rate as British Columbia, they are changing their minimum hourly wage to $8.25 on September 1, 2009 (cbcnews.ca). As most of the provinces are renewing their own minimum wage laws, British Columbia has no incentive to increase their minimum wage rate. With the lowest minimum wage and the second highest living expense in Canada (Living in Canada), British Columbia's minimum wage cannot be a reasonable living wage. The living wage in Victoria, B.C. is $16.39 and $16.74 in Vancouver, B.C. (the Manitoban). With a minimum wage of $8 per hour, people who are living on minimum wage could not support their living expenses, since the living expense is more than double their hourly wage. To allow people to move out of the poverty line and to reduce the amount of people living on government welfare, minimum wage should increase in order to let people to survive on the minimum wage they are earning for their living.
Although many people are realizing the importance of raising minimum wage, there are many critics who oppose raising the minimum wage. Often people argue that raising the minimum wage will cause increases in unemployment rate, increases in firm's costs and does not help redistribute money to the poor (Helium). However, minimum wage laws will not raise taxes. Contrasting the minimum wage laws with negative income taxes or subsidies for low wage workers, in which the subsidies come out from the government's budget (Dolado, Felgueroso, & Jimeno, 2000). In addition, these government welfare programs will likely raise the taxes of the citizens in order to help the poor. In addition, the increasing costs to the firms from the minimum wage laws will typically increase prices of their goods and services. Nevertheless, this increase in goods and services is not opposed by consumers. According to the ABC/Washington Post poll, during the 1989 U.S. debate over raising minimum wage, the poll asked questions to which the public responded to the increase in minimum wage (Freeman, 1996). The results have indicated that although 79% of the salary of no one in the family of the participants will go up because of the minimum wage law, there are 82% of the people have responded saying yes if they are the one who bears most of the cost from the increased prices of goods and services. This clearly shows that people are intended to help those who deserve to get benefits from the public rather than those who only depend on government subsidies.
Furthermore, increases in minimum wage in the actual context do not actually affect unemployment rate as much. With the study that is on the minimum wage effects in New Jersey has concluded that the April 1992 increase in the New Jersey minimum wage led to no loss of employment in the fast-food industry (Card & Krueger, 2000). The result from this fast-food study have indicated that the point the critics argue about the employment rate will decrease because of the increase minimum wage rate is not always true. In addition, a study has found that almost half of the minimum wage workers are between the ages 25 to 54 (Boushey, 2005). This has illustrated that the critics point that minimum wage jobs only employ students and women are wrong. Many people are depending on the minimum wage salary for a living; therefore, increasing in the minimum wage does indeed help the poor who are depending on the minimum wages.
There are other benefits from increases in minimum wage. Minimum wage increases the incentive to work (Dolado, Felgueroso, & Jimeno, 2000) because typically more people will find the increased minimum wage attractive and join the labour force. Moreover, increased minimum wage will increase supply of labour. According to a study conducted in the United Kingdom, at 3, workers are willing to work at the job few hours a week, but at 4, they may want to work more hours (Freeman, 1996). In addition, minimum wage increases growth of the economy by acquiring more skilled labour. This is so because increasing minimum wage will impose high relative price for unskilled labour; therefore, firms will have a high demand for skilled labour. This greater demand for skilled labour, together with a high level of unemployment for unskilled workers, induces workers to improve their level of skill, in order to avoid unemployment (Cahuc & Michel, 1992). As workers improve their skills, the rate of growth will increase (Cahuc & Michel, 1992). Higher growth of the economy will induce more workers to gain more useful skills to keep away from the chance of unemployment. In general, there are good reasons to increase in minimum wage. It will help the economy and the society from the increase in human capital.
Increasing minimum wage not only increases the supply of labour, increase human capital and the growth of the economy. The main point is that there is actually half of the minimum wage workers are between the ages 24 to 54, which they depend on their minimum wage to survive on. It is important to note that minimum wage increase does help the older people, not just the students and women. Increasing the minimum wage of these people will definitely help people to get out of the poverty line which benefit everyone since the government will not have that much of a burden to assist the poor low wage workers and they will not induce more tax on taxpayers for helping the poor. Therefore, increasing minimum wage is definitely a good way to decrease poverty in Canada.