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Growth in minimum wage interesting

There were so few surprises in the provincial budget, unveiled Thursday, that nearly all the headlines were about how boring or unexciting it was.

Setting aside the fact that any high school student should be able to tell you that budgets should seldom be exciting, one of the few announcements buried in it was that the province would be raising the minimum wage again.

They didn't say how much or when, but they've shown a preference recently for 25¢ hikes every October. We'll see.

A co-worker, hearing the news, was surprised. "Hasn't it gone up like two bucks in the past two years?" he wondered.

Well, no. It's taken five years to go up about two dollars.

But it got me thinking. How much has the minimum wage gone up? And, how much has it gone up in relation to inflation?

Luckily, the province provides a chart online that gives historial minimum wage rates — all the way back to 1921 (you had to pay women a quarter an hour back in those days, the equivalent of $2.80 today).

I decided to track the minimum wage growth from 1991 to today. I picked 1991 semi-randomly, but it's close to when I entered the workforce (at about minimum wage, actually), and it was a convenient point because before that there were separate minimum wages for youth and adults.

The 1991 minimum wage was also a nice starting point because, at $5, it was a satisfyingly round number.

I plugged the minimum wage numbers into the Bank of Canada's Inflation calculator, to see what the minimum wage would be in today's dollars.

It turns out that $5 in 1991 is the equivalent of $7.51 in 2014. Given that the minimum wage is actually $10.45 right now, and set to increase again, that's a 39 per cent increase in purchasing power. Not too shabby for folks making minimum wage.

And also an argument against the people who say that most people make above minimum anyway. If the minimum wage had only just been tied to inflation, it would be, say $7.50 today. Could you really argue that most people would be making nearly $3 an hour more?

Anyway, I traced the minimum wage growth from 1991 to now, which is closing in on a quarter-century. And I adjusted the nominal value to the inflation adjusted value. Here's the result:

It's not a perfect chart — the wage hikes take effect in different months and the wage bumped up twice in 2009, so the X-axis is slightly not-to-scale, but the Y-axis of values is. You can see, for example, that inflation takes a slight bite out of the minimum wage between 1991 and 1995, despite the hike in 1995 (adjusted for inflation, the wage went from $7.51 in 1991 to $7.46 in 1995, even through the nominal hike was from $5 to $5.25). But a better chart might show the green line dropping further before jumping up. The $5 minimum wage was worth $7.11 in today's money before jumping to $5.25 (worth $7.46).

You can also see that the NDP government has made good on their promise to increase the minimum wage — although not so dramatically as the nominal numbers make it appear. In fact, it looks like their first hike, in 2001, didn't even keep pace with the final hike that the Filmon government made, in 1999 (to $6 then, worth $8.07 today).

I support a relatively high minimum wage, and I'm comfortable paying $1.29 for a hamburger instead of 99¢ if that's what it takes.

But I know a lot of small-business owners preach doom and gloom every time it goes up.

Interestingly, I read earlier today that Washington state, which has the highest minimum wage in the United States, also leads that nation in job growth and has shown a huge increase in restaurant and bar payrolls since they tied minimum wage to inflation.

And I read that on Bloomberg, a news site with impeccable business credentials.

It will be interesting to see what kind of hike comes out of the province this year. Will they be keeping pace with inflation, the way it looks like they've basically done the past couple of years? Or will they be hiking it more substantially, the way they did from 2009–11.

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