Student perspectives on minimum wage

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					June 7, 2010

To: Standing Committee on the Economy

From: Alberta Students’ Executive Council

Labour market regulation: a changing context
Since mid-2008, volatile investment markets and dramatic evaporation of wealth
prompted the global community to re-evaluate foundational economic principles like
never before. In particular, changes in the labour market have encouraged far-
reaching policy reconsideration and review including taxation of income models,
support for unemployed and the under-employed, and minimum wage thresholds.

As such, it is with a sense of gratitude that the Alberta Students’ Executive Council
(ASEC) contributes its input to the Alberta’s Standing Committee on the Economy
review of the province’s Minimum Wage Legislation. Although significant changes
were made in 2007 to the province’s principles surrounding the framework on
minimum wages, ASEC believes that exploring the ways in which minimum wage
thresholds are determined in order to better reflect market and economic
necessities is a worthwhile and important endeavor.

Moreover, given the overrepresentation of young Albertans among minimum age
earners, special consideration should be given for the ways in which minimum wage
policy affects Alberta students.

Minimum wages and Alberta students
While there are few statistics on the precise number of Alberta post-secondary
students earning minimum wage, there are numerous ways in wage standards
impact on the financial health of Alberta students.

Minimum wage earners in Alberta constitute only 1.3% of Alberta’s workforce;
compared to the nationwide average of 5.8% 1. While this is indeed an encouraging
statistic, it merits noting that nearly 60% of all workers earning minimum wage are
25 years of age or younger2. Many of these young workers plan to become, or
currently are, post-secondary students.

    Statistics Canada: Fact Sheet on Minimum Wage
    Statistics Canada: Fact Sheet on Minimum Wage

In the absence of reliable data on student wages, many researchers and policy
makers take minimum wage as the proxy wage for young workers. Take, for
example, calculations on the number of hours worked at minimum wage required to
pay for one year’s tuition. On average, Alberta students would need to work 35
weeks, for 18 hours per week - the average number of hours most Canadian post-
secondary students work - to pay their annual tuition bill3.

This represents only a fraction of the total yearly cost of education, which
necessarily include items which are highly sensitive to inflationary pressures, such
as housing, food and transportation, as well as costs such as directly educational
expenses such as textbooks and ancillary fees. Unchecked, an alarming pattern
begins to emerge: as more students work more hours to cover educational costs,
educational success rates decline 4.

The practice of using minimum wage proxy also helps illuminate situations in which
there is downward pressure on wages, such as that of international students
studying in Alberta. For these students, part-time employment options are limited
to on-campus positions, often in the service industry where the greatest
concentration of minimum wage work exists 5.

Perhaps the most important group of students affected by minimum wage policies
are those who are exempt. Thousands of Alberta post-secondary students enrolled
in programs which require co-operative placements, practicums and directed field
studies are required to offer their labour without the guarantee of receiving a wage.
This places undue financial and personal stress on students, and in turn, reduces
their ability to complete their programs in a timely and satisfactory manner.

Changing principles
Given the clear demographic bias of minimum wage work, it is necessary to review
the principles on which minimum wage policy frameworks are based: frameworks
are not only philosophically necessary to meet economic necessity -- they also
perform a moral duty to help those less economically fortunate. As such, tying
minimum      wage   considerations  based    upon     Average    Weekly  Earnings
(AWE)indicators poses considerable issues with both respective foundational
elements. Economic necessity is not served, as AWE metrics do little to ensure
those at the lower echelons of economic stratification have the economic means to

  The Price of Knowledge: Access and Student Finance in Canada, Fourth Edition. Berger, J., Motte, A.,
and Parkin, A. 2009. Canadian Millenium Scholarships Foundation.
  The Price of Knowledge: Access and Student Finance in Canada, Fourth Edition. Berger, J., Motte, A.,
and Parkin, A. 2009. Canadian Millenium Scholarships Foundation.
  Statistics Canada: Fact Sheet on Minimum Wage. 2009.

maintain their basic human needs related to health and wellness; income levels and
physical health are intimately correlated.

Moreover, AWE metrics do little to address the moral principles inherent within
minimum wage legislation. Average weekly earnings do not reflect such important
items of consideration as market prices, market conditions, wealth disparity, social
health and wellness, debt levels or savings. While AWE provides a sense of whether
minimum wages should be increased or not, it fails to capture a variety of pertinent
information that ought to be included in such calculations.

While AWE allows minimum wage levels to be adjusted based upon an indicator of
relative wealth, the formula does not take into account such economic variables as
total provincial economic productivity (GDP) or the market costs of goods and
services (CPI). In this light, AWE proves to be a narrow indicator in which to
evaluate the mandatory minimum compensation for labour services rendered. For
example, CPI could increase faster than AWE, which would serve to decrease the
purchasing power of consumers (especially those making minimum wage), even if
the minimum wage threshold was to be increased as directed by surges within the
AWE indicator. By adjusting for inflationary pressures and moving towards median
earnings as the benchmark, minimum wage closer to the ideal goal of a
sustainable, livable wage.

ASEC offers the following suggestions to transform minimum wage legislation into a
more constructive public policy:
• Expanding the metrics that determine what the minimum wage is determined,
  specifically, i.) replacing Average Weekly Earnings with median earnings, and ii.)
  broadening metrics to include such variables as CPI, GDP, Wealth Disparity,
  Debt and Savings Levels;
• Reducing exemptions so students engaged in work required by their post-
  secondary program, including but not limited to internships, practicums, co-
  operative placements and other unpaid labor, be subject to minimum wage

We offer these recommendations to accomplish three specific goals: first, to ensure
metrics used in determining minimum wage increases reflect actual economic
conditions; second, to close the gap between minimum wage and a living wage;
and third, to ensure equity for hours worked for all Albertans, including and
especially Alberta students.

We encourage the standing committee to further explore the possibilities of other
unique, Made in Alberta improvements to economic efficiency and responsiveness.


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