Thursday, April 7, 2016

A Little Hard To Swallow

Despite the fact that I think and write a great deal about the disparities and inequities that plague our society, I am almost embarrassed to admit that until now, I had never heard of something called The Big Mac Index, launched, according to a recent article in The Star, in 1986 as a “lighthearted guide” to global purchasing power.

While its original purpose was as a tool to make exchange-rate theory more digestible, it has also become a barometer of purchasing power. In Britain, for example, which currently has a minimum hourly wage of ₤6.70, it would take 26 minutes of minimum wage labour to buy a Big Mac. That country has a target minimum wage of ₤9 by 2020, at which level it would take only 18 minutes to make the purchase. How does this compare with other countries?
Denmark is well ahead of the pack at a current 16 minutes. Australia: 18 minutes. France: 25 minutes.

Canada? A chart in the Financial Times shows our country at 33 minutes, which closely equates to a minimum-wage worker in Toronto, at $11.25 an hour, paying $6.10 for two all-beef patties, special sauce, etc. That same worker can look forward to a Dickensian 15-cent-an-hour increase come October.
This is not good, and our country could ultimately become an unenviable outlier when it comes to fair compensation, since the movement for increasing the minimum wage is gaining momentum in many jurisdictions:
Last Thursday, California passed a six-year phase-in to a $15-an-hour minimum wage — a landmark achievement as it’s the first state-wide success in the country. Seattle started its phase-in a year ago, with a $15-an-hour target set for Jan. 1, 2017. New York Governor Andrew Cuomo, who spent part of the winter travelling around in a “Fight for $15” branded bus, saw his push for a statewide $15 minimum watered down Thursday, but scored significant gains nonetheless, including a three-year phase in to $15 in New York City from the current $9.
Such increases are to be embraced, not opposed. As I noted recently, California's goal of increasing its wage will raise the incomes of 30 to 40% of workers in that state.

But what about all those fraught cries that such moves will result in massive job loss? According to Britain's Low Pay Commission, and as reported by The Star,
the commission wrestled with the predictable “job killer” charge — that businesses facing increased costs will flee or retrench, hurting vulnerable workers the most.

The “range of evidence,” the commission found from more than 140 research projects, was that the national minimum wage “has succeeded in raising pay for workers without damaging employment or the economy.”
While most past increases have admittedly been more gradual and modest in scope, the Commission
points out that businesses have previously worked around increased payroll costs by a variety of measures, including reducing non-wage costs or increasing productivity.
And there is one more thing that neither the Commission nor critics consider: the likelihood that the vast majority of people will not object to paying a little more for their products since it will allow their fellow-citizens the opportunity to conduct their lives with a little more dignity and a little more security.

Who could argue with that?


  1. And that extra cash that goes into the pockets of low-wage earners is both taxed and spent. It goes back into the economy. Best of all, it comes off the top, the 'dead money' that corporations amass for shareholders and becomes wealth that somehow finds its way offshore.

    1. The fact that the money circulates and helps the economy seems to mean little to the corporatist agenda, Mound.

  2. The people that make minimum wage are not saving it in off-shore accounts. They spend it and boost the economy.