Category: Current Topics

Do you know many people earning minimum wage in Canada or Saskatchewan for their livelihood?

There is quite a bit of talk in Canada about minimum wage levels given Ontario has raised their minimum wage to over $14 per hour for 2018 and plan for it to go to $15 per hour in 2019.

Some argue the increases will improve life for those at the lowest end of the work scale and others argue that jobs will be lost and the very people the raises are supposed to help will actual be hurt.  Both sides refer to studies to support their case.

I want to point to some statistics as well as lay out some common sense considerations on the subject.

• Actual Employees Earning Minimum Wage

First off, how many employed people in Canada and Saskatchewan actually earn minimum wage?  I have asked this question to a number of people – in business and in employment positions – and I received answers mostly in the range of 25% to 35%.  I was in this range of personal belief as well.  These answers give the perception that quite a few people earn minimum wage.  In fact, these responses lead us to believe that many people in our society are really affected by minimum wage and it should be a hot topic that needs to be addressed and indeed rectified.

Let’s look at the real facts and not the perceptions.  The following information is from a Canadian Labour Congress article using information from the “Labour Force Survey microdata 2015, Government of Canada Minimum wage database”

There are about 8% of Canadian employees earning minimum wage and less than 5% of Saskatchewan employees earning minimum wage.  In addition, of the people earning minimum wage, 60% are between 18 and 24 and live at home. Therefore, the people actually earning minimum wage is  significantly less than the people I talk to perceive and I expect the numbers are less than most people believe.

It appears to me the actual numbers suggest that over 95% of Saskatchewan employees and 92%of Canadian employees earn more than minimum wage and employers are already reacting to the supply and demand in the market place and not the level of minimum wage set by legislation.  For the vast majority of employees, minimum wage is irrelevant.

The above study also determined that about 25% of Canadian employees earn less than $15 per hour and for Saskatchewan the amount is 23%.  In effect, 75% of Canadian employees earn over $15 per hour.  Not bad at all in my way of thinking.  Considering that many jobs should have an entry-level wage, I think the marketplace is working just fine in establishing wage levels without the need for a legislated minimum wage.

• Employees Already Earning Above a New Minimum Wage Threshold

Let’s consider an employee who currently earns $16 per hour and all of a sudden their colleague or someone else now gets a minimum wage increase from $11 to $15.  How can the $16 person not feel that they deserve an increase as well given there were logical differences for the original pay differential between themselves and the minimum wage person?  I expect the $16 person has more education or experience or skills than the other person earning minimum wage.  The result of a minimum wage increase is simply not fair and it skews the labour supply and demand pay scale.

If the employer is expected or must then give the $16 person a wage increase, a cycle is started that will effectively raise prices for goods and services and will cause inflation.

There are reasons people seek greater education or stay with a job to gain experience. They want to earn more money or create more skills to move onto better paying work.  Employers do pay more for real education and for job experience and the fact there is such a low percentage of minimum wage earners proves this point.

Take an entry-level job at a fast food restaurant.  It does not take long to get proficient at the job; however, an employee can learn skills to move onto higher end restaurants and earn more or apply the skills learned to their educational endeavours and future employment.  These entry skills include being on time, taking and following instruction, working with other employees and work appearance and safety.  Is this entry-level job their career?  Probably not.  If it is, perhaps this is the highest level of job they can aspire to and that’s alright as well.  The fact is some jobs only pay so much and the labour supply and demand marketplace should decide this, not a legislated minimum wage.

• Employer Options to Minimum Wage Increases

It seems to me that of the low percentage of minimum wage jobs in Canada, that fast food restaurants and retail stores probably have the most employees earning minimum wage at the entry levels.  So how do the employers react to a significant legislated increase to minimum wage from say $11 to $15?

They can raise prices to cover increased wage costs, reduce benefits not covered by minimum wage, reduce their bottom line net income or automate to remove the minimum wage position.

If prices are raised, will the marketplace accept the increase or will business sales suffer and then employees will be reduced and the business net income will fall?  Price increases can also directly affect the minimum wage earners as they are consumers of the products sold at fast food restaurants and low-cost retailers.

Reducing employee benefits is a real possibility; however, many employers will not want to do this if a better option exists. Perhaps a short-term solution.

A reduction in bottom line net income.  I don’t believe the business owner will jump for this option if other options exist.

I think business will default to automation if it is possible in their industry.  Think about it – there is a labour cost threshold whereby automation makes sense to replace an actual worker.  We are seeing automation with self scanners in grocery stores and large retail stores. There are even some fast food restaurants that have started to introduce ordering on a computer board as opposed to a person taking the order.  Given these innovations are already taking place, it is not a leap to see the technology grown and expanded.  The result – less minimum wage jobs and more automated self scanners and self ordering.

Who really suffers?  Jobs will be lost for the very people who need the jobs the most for life and for entry to get to the next level.

Government intervention for the perceived betterment of society does not always return the intended results.  Perhaps it is better to let the marketplace work and quit the onerous interference and unnecessary rules and regulations.

My second cup is now empty………………………………

Is your family in Saskatchewan better off today then it was 10 years ago?

This question is easy to answer for me – YES.  Not everyone would agree and I wish them well in the next 10 years.  Of course, we should first consider in what context “better off” means before we make any knee-jerk reactions.

I’m speaking in the context of better off as it relates to the role of our provincial government.  My belief is that provincial governments do not exist to make me:                                                                                                                                            happy, more confident, less dependent on drugs or booze, manage the economy, run businesses in competition with the private sector, find me a job, go to school, take care of my children or use common sense.

In my opinion the role of provincial government should be to provide basic services in a financially responsible manner.  These services include road infrastructure, public safety, public education, public health, facilitation of provincial free trade and stewardship of our natural resources.  This list is not exhaustive and has expanded over the years as people demand more services with the intent of using other people’s money to fund the services  or to fund the services with debt.  The following quote from Voltaire may be appropriate.

In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other.

—Voltaire, 1764

This seems rather true in the context of our federal government and Prime Minister Justin Trudeau.  There is an insatiable demand for public services and our federal leader appears to be satisfied to meet the demands by taking from others or using public debt.  Sadly, another topic for another day.

In Saskatchewan, in the last 10 years, we have received leadership from Premier Brad Wall and I want to congratulate him on his current retirement from politics.  I have valued good leadership of various political stripes over the years – Roy Romanow, provincial NDP and Paul Martin, federal Liberal to name just two, although, I must say the list is not long.

Brad Wall brought an attitude change in this province that helped move a good number of people out of our “1930’s” mentality.  The old mentality told us to be careful and not venture out into new possibilities.  Of course, there were some people who overcame this on their own, but sadly, many had to leave Saskatchewan to achieve their goals and attain greatness elsewhere.  The new attitude that Brad Wall instilled was that we could be better and we could create jobs and we could increase our population and be economically better off.

Brad Wall was not perfect and I disagreed with some of the people around him who did not conduct themselves in a manner befitting public office.  Guess what, this has happened before and will happen again because government is basically inefficient and as some people come to the trough of power they seem to eat in excess.

Brad Wall’s detractors will say that we still had deficits under his command.  Considering the economic slump in 2008 – 2009 and the precipitous decline in commodity prices, he did alright.  If you check the following website, provided by The Canadian Taxpayers Federation, you will find that Saskatchewan has the lowest public debt in Canada.

http://debtclock.ca

The cumulative debt is still far too large for my liking and yet there is a loud group of people wanting more services with no rational way of paying for the services.  You can’t have it both ways.  More services require a way to pay for them.  This will be the continued challenges for future provincial governments.

I believe Brad Wall’s tenure as Premier has been good for our province.  Did your children have to leave Saskatchewan in the last 10 years to work in Alberta or British Columbia?  Do you know of people who came home in the last 10 years because there are now meaningful jobs here for them?  I know in our business we had three CPA’s came home from Alberta after having had to go to Alberta to find work.  Can you imagine what this has meant to them and their families.

Both our sons live and work in Saskatchewan and I could not have envisioned this before 2007.  We do not take for granted the ability to see them, go out for lunch or supper together or just talk face to face at any time we choose.   In Saskatchewan, prior to 2007, our best exports were our people.  Just ask the people around you.

I think the 10% plus growth in the Saskatchewan population speaks to a changed attitude and an economic improvement under Brad Wall’s leadership.  We can now celebrate success in Saskatchewan and do not have to apologize for it.

Brad Wall is a cheerleader for the province and has a good sense of what it means to live, work and run a small business here with the support of government.  I think you will be missed.

Brad Wall, I do not know you; however, thank you and all the best in your next ventures!

My second cup is now empty………………………….

“The bank would lend me more money then I could ever repay.  I didn’t take it.”  Quoted from my Dad when he was a man and I was a boy.

My parents were simple people.  They were short on education and long on common sense.  My father and I discussed politics regularly and he was an avid CCF and NDP supporter.  He had several simple principles.

“If the Co-op doesn’t have it I don’t’ need it.”

“Assist those who cannot truly take care of themselves.”

“Be responsible for your actions.”

“Live within your means.”

“Only borrow money that you can repay.”

“Put back into the community.”

“Only rich people can afford to by junk, because they can buy it again and again.”

I don’t ever recall my dad talking about the ratio of debt to GDP or the world inventories of commodities and their affect on market prices.  He never delved into Keynesian economic theory or speculated on how a raise in the Bank of Canada interest rate would affect inflation.  He did not understand these things, and with all do respect, I’m not sure the people we put in charge do either.

The dust has now settled on the 2017 Federal and Provincial Budgets.

Investors reacted positively to the projected $28 billion Federal deficit as bank stocks rose nicely the day after the budget.  How sad is that when we applaud irresponsibility. Of course, the applause comes as no surprise because we were given exactly what was promised in the last Federal election.  You cannot blame the Liberals for making good on a direction they clearly laid out for the Canadian people.

In Saskatchewan, there is the typical hand wringing and outrage that comes when a budget is presented.  The sense of entitlement is front and center as we try and determine what is, or what is not in the budget, for me.  How sad is this for a Province that has produced some of Canada’s greatest leaders.  We want more services and yet we still have a 2017 projected deficit of over $685 million.  Irresponsibility is not just reserved for our friends in other Provinces.

Simple question – I can’t operate my life with deficit financing, so why can governments?  Answer – because the people demand it and vote for it.

I hear with considerable regularity that, “the government is wasteful, they squander resources, they don’t spend enough on this, they spend too much on that, they need to tax the rich more, it’s the government’s fault, the government needs to create jobs…..”  The fundamental flaw in these tirades is that this assigns the blame to the government, thereby, removing the responsibility from the people. In a democracy, the people elect the government and they govern at the behest of the people.

We live in an increasing global society that has embraced deficit financing to provide and enhance government services for the people.  We are paying for these services with debt that presumably must be paid off in subsequent years.  Our priorities are skewed and the current excessive entitlement priorities will have lasting affects in the coming years. As Canadians, we care about many causes and we demand the government finance them with debt and let someone else pay for them down the road.  This is a short term, selfish view that makes me wonder how we can blindly burden our children with this debt to satisfy our current wants.

Current deficit financing will ultimately affect the poor more then the wealthy.  People with money will always be able to access health care and other services world wide.  Not so for the poor.

We pride ourselves on the universal access to many services in Canada, not the least being health care.  These same universal services will be eroded if we are not responsible with our government spending today.  In the future, money that would otherwise be available for services will go to reduce debt.  Compound this with the fact we have an aging population that will require even more services and we are facing a colossal financial problem. For those who believe this is or should be someone else’s problem, then I must respectfully disagree. We have spending problems in this entire country and not revenue generation problems.

I always find it is helpful to review a few numbers to enlighten myself. The Canadian population is roughly 36,000,000 and the Saskatchewan population is roughly 1,100,000.  We make up about 3% of the Canadian population and I can only assume that is why we are sometimes viewed as irrelevant in Ottawa and Toronto.  The Saskatchewan population also includes our children and our friend’s children who didn’t have to go to Alberta to live and work in the last 10 years. Think about it – this is a big deal to our family and should be for yours.

It appears the accumulated national debt is about $636,000,000,000.  The accumulated provincial debt is about $7,600,000,000.  That’s a lot of zeros.  I had to bring out my fancy calculator to do the ciphering.

The following are the average debt amounts for EACH person in Saskatchewan.

2017 annual Federal projected debt – $778 per person.

Accumulated Federal debt – $17,667 per person.

2017 annual Provincial projected debt – $623 per person.

Accumulated Provincial debt – $6,909 per person.

Therefore, the combined Federal and Provincial debt accumulated to date is almost $25,000, and growing, for each person in Saskatchewan.  When you consider that there is a large segment of any population who has no ability to assist in paying this debt, it seems a bit daunting.

Now some of you may think it would be a good idea to pack your bags and move to another province to be part of a lower overall debt.  Best rethink that move because Saskatchewan has the lowest debt per person in Canada if you believe the following website that tracks both Federal and Provincial accumulated debt numbers.

http://www.debtclock.ca/

Life is about choices.  We can choose to pay our way now or we can leave it for our children to pay.  You decide.

My father was a simple man.  I miss him.

My second cup is now empty…………………

My personal opinion is I find it difficult to justify how this country can pay money to a terrorist.

All of the above impact SaskTel’s future profitability and the related value of SaskTel’s assets.

I also have to wonder how many people who want to keep SaskTel as a crown corporation actually use the services of other providers like Telus, Rogers, Shaw and ADT?  If they are not supporting SaskTel services, then how can they argue for keeping SaskTel?  I take no issue with people making their own decisions in a competitive market; however, they can not have it both ways. They have effectively already made the decision to sell SaskTel by abandoning the SaskTel services.  Perhaps check with your friends and family to see what services they actually use.  You may find that the SaskTel market is shrinking or will shrink as a percentage of the overall Saskatchewan market

There has been talk that a referendum is necessary to decide whether or not SaskTel’s assets should be sold.  If this is done I expect we will be into a costly, emotional, political debate that can possibly lead to an uninformed decision.

Strong leadership, with the assistance of qualified professionals, is required to evaluate the business merits of selling or not selling the SaskTel assets. Given this process, I will be content with the decision either way!

My second cup is now empty……………….