Minimum wage hike too much, too fast
While some celebrate the Jan. 1 increase, Nunavut should hope there’s no financial hangover
Nunavut’s minimum wage climbed to $19 an hour on Jan. 1, a result of a move MLAs approved in November during the fall sitting of the legislative assembly. (File photo by David Venn)
A lot of Nunavummiut had an extra reason to celebrate on New Year’s Eve because minimum wage went up to $19 an hour on Jan. 1.
Hopefully, there won’t be an economic hangover to suffer through because of the higher wages. Such a big and sudden hike should make people wonder if the Government of Nunavut went too far, too fast.
Nunavut Justice Minister David Akeeagok announced the three-dollar-an-hour jump in the legislative assembly back in November.
That announcement came about a month after six Canadian provinces increased their minimum wages on Oct. 1.
It makes Nunavut the leader among all provinces and territories in terms of having the highest minimum wage.
When governments raise the minimum wage, it’s a popular move with the people, but not always a hit with businesses.
With the higher rate, the cost of one of the most important factors for any business — labour — increased by 18 per cent.
When operating expenses go up, there are only two things a business can do — absorb the cost and pass it along to their customers, or cut back the number of hours employees get in order to offset the increase in wages.
One is bad news for customers. The other is bad for workers.
The increase is intended to help minimum wage earners keep pace with inflation. The cost of darn near everything has gone up dramatically over the past three years.
But there’s a chance the GN’s approach could backfire.
Some economists say that whenever wages go up, there’s a risk that it could contribute to even more inflation.
The more money there is in people’s pockets, the greater demand will be for everything from bread to snowmobiles. But if supply doesn’t increase at the same pace, more money in more pockets could put upward pressure on prices.
Sure, you’re making $19 an hour instead of $16. But if bread goes up to six dollars a loaf and a coffee goes up to four dollars, are you really going to be further ahead?
On the other hand, it might be that the wage hike won’t affect all that many people because higher-paying public sector jobs — not just the Government of Nunavut but organizations like Nunavut Tunngavik Inc., and the regional Inuit associations — make up such a big part of the territory’s workforce.
How many people are actually earning minimum wage in the first place?
Setting a minimum wage is a delicate balancing act anywhere, but even more so in a unique economy like Nunavut’s that doesn’t behave the same way southern provinces’ do.
There’s also the strong likelihood of a trickle-up effect among workers who were already earning a little bit more than minimum wage.
Someone who was making, for example, $20 an hour last year will want to stay ahead of the game now that minimum wage has gone up by three dollars.
A lot of employers will need to respond to the higher minimum wage by raising wages for all their employees or risk watching them walk across the street to another employer who will.
With just a week of the $19 minimum wage under its belt, it’s too early to see whether it will lead to higher retail prices in Nunavut.
But it might well be that a more moderate, more gradual approach would have been advisable.
Did gas seriously go up $3 a gallon to meet our $3 minimum wage increase? I think we know who is paying minimum wage in the territory after this.
The Gas prices are fixed to what it was purchased at for the year, not to this minimum wage increase. The price of gas is now representative of what the high prices were when it was bought at for the year.
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For the longest while we were paying less than people were down south because of how prices are fixed for a period of time, but now we are paying more than most people down south, reflecting the point it was purchased at.
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If gas prices hold at what they are at now, expect us to pay less than we do now once the fuel is purchased for next year, it’ll be more in line with what people are currently paying down south.
why would the government care? its not coming out of their pockets. its all smoke and mirrors. the retailer just raises their cost of goods and passes it onto the consumer.
Stores and the government run on greed. The government is just giving themselves a raise. The stores are just raking in money. Everything in the world turns to greed. If you wanna survive this world, become greedy. The government and stores are getting rich. Government governs Everything.
Superficial analysis, coming in hot, boring and predictable as always…
At $19/hr, a full time 40 hour week minimum wage job, with no vacation time, is $39,520 a year. Are you aware of ANY full-time job working for Nunavut government where the pay is $39,520 a year or less?
Save you time: the answer is no. So I guess the government isn’t giving themselves a raise after all.
Your absolutely right there are no GN jobs at the minimum wage level. because even jobs that require no education (janitorial jobs) need to be over 30/hr to get any interest. and part of this problem is that there are so many programs that are paying people (you heard right paying people) over $30/hr to take sewing programs, or cooking classes, or join an meeting on of the many committees that dont do anything.
Way to many people wont volunteer to make our communities better without expecting to get paid a lot to do not much.
Minimum wage got an 18.75% increase legislated by the GN to keep pace with inflation.
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The GN gave its own workers a 9% raise over 6 years during some of the highest inflation in recent memory (thanks NEU).
Curious to know if the GN has staff who majors in economics that should provide advice on such topics? Wouldn’t this issue be better looked at and explain it’s a bit more complex then just increasing the minimum wage.
Then there’s the addition of Stats Holiday and possible more stats, the price of fuel, The ridiculous price of Freight and airline tickets, the multiple layers of charges on any thing related to air travel, the price of food and on and on. These are all very real and are going to cause escalation. This article points out some very real issues. Its nice to have raises but they are just part of the real changes that have come quickly. no wonder people are trying to work from the south and that set of ramifications.
It’s simple math… Northern wants their payroll to be 8% of their sales so if you increase thier wages by 18.5%, because most of their staff get minimum wage, then they will need to increase thier prices on everything across the board by 1.5% to keep the same labour’s rate and profits.
Check out the date on their shelf lables… they’re all brand new because they recently had mass re-pricing of the entire store to cover this wage increase.
Every minimum wage increase that I have lived through has come with this apocalyptic hand-wringing and doomsaying. Oddly enough the economy has yet to collapse, the ownership class hasn’t run off to Ireland or the Bahamas and prices only ever increased as much as the retailer’s respective oligopoly would allow.
Let’s not clutch our pearls too hard. Those are expensive.
I got mine. Everyone else can eat snow.
How ’bout giving minimum wage to people that actually deserve it? Not some yin-yang with a Grade 9 educational drop out, who is related “to the right people?
Majority of GN employees barely pass G.E.D. but hey their relative runs the place.
Bring back GNWT and Yellowknife.
Hike in hourly wages are not going to help a working person; why? NWC/ACL never let an opportunity go to waste, expect a huge price hike on groceries, the blooding sucking companies in Nunavut will make sure that huge hike is theirs…period. My head is now just little above the water; order all your non-edibles, all by summer cargo. I am el-cheapo, I buy enough for two meals per day now (daily), bare Frig. Too cheap? seems to work for me. Buy with ash, 3 bucks per transaction…..another killer; fees.
How about one gets paid for education accordingly? If you drop out at Grade nine and can barely read/understand English. You deserve 9.09/hour.🤪
What a load of lacrocque.