All around North America over the last several years, there has been a big push for higher minimum wages to a “living wage,” headlined by the #Fightfor15 labor “strikes” at many retail and fast-food establishments in various cities.
Some of the various demonstrations in support of this have paid off in many places, as several states and Canadian provinces have passed ballot initiatives or municipal ordinances that have raised minimum wages up to $15 per hour, raising in stages over several years. Not all wages are at their new levels just yet, but the impacts have been as much adverse as beneficial to the workforce.
More Wages, Fewer Opportunities?
With an increase in wage, there is generally an understanding that workers have developed more marketable skills to add more value to their employers. But with forced wage increases by government, one of the downsides to these “living wage” pushes is that there are fewer jobs for the low-skilled workers and unemployment seems to increase as these low-skilled workers don’t improve themselves and yet expect to continue working with a $15 wage when they were making $10.
What we are discussing today, though, isn’t about the low-skilled workers being impacted by the minimum wage – it’s another subset of workers who are essentially tied to workplace safety. In Ontario, for example, a recent story came out describing the problems that injured workers are having in taking advantage of the recent provincial minimum-wage increase to $14 per hour (a 21-percent jump from the previous level).
The Silent Unemployed
The story is about a practice called “deeming” by the Workplace Safety and Insurance Board (WSIB), which has hampered employment opportunities for many disabled or injured workers, and has caused significant financial hardship for some. “Deeming” has sent injured workers into the workforce – a workforce that has fewer jobs because of the increased minimum wage forcing many businesses to cut hours or close altogether because of the increased costs.
Here is what the WSIB does and what its “deeming” practice looks like.
We Deem Thee …
When an employee gets injured on the job, the employee gets benefits from WSIB that are equal to the wage the employee received before he or she got hurt. At some point, however, the WSIB may “deem” a person capable of working and earning a wage, so those benefits are cut down to the difference between minimum wage and the person’s former earnings. The “deeming” reduces benefits, even if the person who is “deemed” healthy to work is not able to find any new work – it’s only about the capability of working.
And if you know anything about basic math, you can understand that if minimum wage increases, the difference between that and former earnings dwindles – which means benefits dwindle. When a person’s benefits drop by about 20 percent because of a minimum-wage increase, it’s like a person taking a 20-percent pay cut moving from one job to another. A household budgt gets that much tighter.
Poverty by Government
It will be felt in the pocketbook, never mind an even more significant cut when you had a permanent injury before but then are “deemed” by the WSIB. And as job prospects drop because of the wage increase, there are more people applying for the fewer jobs, making the odds of those “deemed” getting gainful employment longer. This becomes a problem that some activists are calling “forcing people into poverty.”
It is always unfortunate when victims of workplace injuires lose the ability to work, but it’s clear that with the struggles these “deemed” workers are having, that it might be time to have a serious discussion about reforms in how the WSIB operates so that those who are truly capable of working but are not working, are not being punished by an increase in working wages. I am not sure what is the best way forward, but when government policies are “forcing” poverty, that is something that really must be addressed, for no other reason than individual dignity.