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Accessible policy focused perspectives

Minimum wage Up in BC

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The B.C. government has announced a plan to raise the minimum wage in B.C. to $15.20 by 2021, they will raise it in small increments annually over the next 4 years starting June 1st. The raises are as scheduled:
June 1st 2018 $11.35 to 12.65 (+1.30)
June 1st 2019 $12.65 to13.85 (+1.20)
June 1st 2020 $13.85 to 14.60 (+0.75)
June 1st 2021 $14.60 to15.20 (+0.60)
The raises being spread out over several years mean that there will be less of a shock to the employment market. Currently every minimum wage in Canada ranges from $10.85 (N.S.) to $14.00 (Ont.). 8 of the 10 provinces have a rate within a $0.50 margin from $10.85 to $11.35 while Alberta and Ontario both have plans to raise their minimum wages to 15$ at some point in 2018. At face value raising the minimum wage is good for the poorest amongst us. It allows for an increases in quality of life for the bottom end of a labor market, it provides more youth with the opportunity to seek higher education and helps others meet the soaring housing costs. There are, however, real concerns about the viability of small businesses and a raise in the unemployment rate from raising the minimum wage.
There is also often a sentiment that minimum wage jobs should not feel entitled to a higher wage and that if they want more money they should improve their skill sets and demand higher wages. While some may feel that teenagers working in corner stores do not deserve 15$ an hour it is important to understand the demographics of the minimum wage labor force before making assumptions regarding the utility of those funds. Only 18% of minimum wage earners are teenagers, with 39% being above the age of 35. Additionally 58% are working full time. Jobs earning under $15/hour represented 25.5% of all employment in 2015 according to Statistics Canada. These numbers paint a different picture about the nature of minimum wage workers in B.C.
Increasing the minimum wage does raise the potential for job losses in a few ways. First employers facing very small profit margins such as the food service industry will face an even tougher situation. Generally labor costs range from 25-35% of total expenses in the food industry with nearly all earners falling beneath the 15$ mark before gratuities. This means that food industries will see an increase from 0 to 8.5% in expenditures depending on how well their employees are currently paid. Increasing minimum wage also makes automation more viable, the cost of employment going up means companies will be willing to spend more to replace that employment.
The amount that unemployment will rise is difficult to predict as there are far too many other variables involved in the equation. In 2011 when the minimum wage was raised from 8$ to $10.25 minimum wage employment saw a decline of 1.6% over 3 years. While the 2011 raise occurred over the duration of a year, the planned annual increase rates of this raise will certainly have a smoothing effect. With no major shock to the market we are less likely to see a dramatic reduction in employment.
The amount of $15.20 will mean that a single employee working full time will not be under the poverty rate anywhere in B.C.. While the exact objective of the minimum wage has never been tied to an economic metric directly, poverty reduction and a basic standard of living have been the implicit primary objective. While B.C. has seen some of the highest increases in GDP and employment rates over the past few years it still holds the second highest poverty rate in the nation. 
While raising the minimum wage will reduce poverty of those who maintain jobs there will invariably be some who do not. The market for minimum wage employment is rather abundant in the urban centers of BC with many workplaces operating in a permanent state of being understaffed. In these locations a loss of jobs will simply mean a lateral move for employees and they will maintain some form of employment. For workers in small towns $15.20 may be a more daunting prospect. In a weak labor market where unemployment is already high raising the minimum wage has the potential to exclude workers from the market who would be willing to work for a lesser wage. The discrepancy in the cost of living accross the province is the most challenging component of a minimum wage increase, while 15$/hour may be the requisite for a basic standard of living in Vancouver this may not be the case in Williams Lake and could exclude willing workers from the labor market.
Labor markets are a tricky ordeal and the rate of a minimum wage is one of many factors that heavily influence the market. With continued increases in GDP and consistent other market factors a $15 minimum wage is likely to have little impact on the employment rate and a significant impact on poverty reduction. Should these factors falter, or if industry dependent towns see a localized depressions then the policy may become a barrier to employment.
 

Understanding Electoral Reform

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The government of BC has released a questionnaire on electoral reform as the beginning of a 2-3 year process in which it hopes to change how our votes are counted and how we as citizens are represented. Our current system (First Past the Post) has been widely criticized by mathematicians and citizens alike for poorly representing our votes and also forcing individuals to vote strategically rather than for the government they most support. It is important that everyone give input on how they would like to see votes counted and in order to properly do so we must first understand our system and what any alternatives would look like.
First Past The Post (FPTP): Simply put the province is divided into ridings and votes are cast within those ridings. The individual who earns the most votes wins the riding and the party that wins the most ridings wins the election. It is simple, locally representative and it seems reasonable enough, but there are serious drawbacks to this system. The first problem is a misrepresentation of power on both a micro and macro scale. For a micro example let’s look at the results in the Cowichan Valley in the last election. The Green party earned 11,475 votes, the NDP 9,603 and the Liberals 8,400 there were also 1,164 votes cast for others. Because the Green party earned the most votes they won the seat and represent 100% of the constituents. Yet they only earned 37.4% of the vote. This means that the other 62.6% of voting constituents are not represented by their desired party and their votes did nothing to help their party provincially. There were 42 (of a possible 87) ridings where the sitting MLA did not earn 50% of the votes, this raises questions as to how well a local representative embodies the will of their riding. On a macro scale we see the results of this play out often in our federal elections. The Liberal party has 100% of the power after earning only 54% of the seats and 39.5% of the votes. This means that over 60% of the country has been effectively silenced by our last federal election. These types of results are not rare either, we have seen it happen both federally and provincially that the winning party earns less than 50% of the popular vote yet holds 100% of the power fairly consistently.
The argument for FPTP lies in its simplicity and its capacity to generate majority governments. We understand the system, there is no tricky math involved in “they with the most votes wins” and understanding voting systems is important to some. Knowing how it counts does matter but what if votes could count in a more fair way?
This is the basic idea of proportional representation. If I vote for a party that vote will definitely help them towards earning more seats in the Legislative Assembly. Pure proportional representation means that we take the 87 seats that exist and divide them in such a way that it is closest percentage-wise to what the people have voted for. So if a party earns 32% of the popular vote they will possess 32% (plus or minus 1.15% due to there only being 87 seats) of the seats in the house and thus 32% of the electoral power. By way of example the Green Party earned 16.8% of the vote in 2017. They won 3 seats, meaning that only 3.4% of the house is represented by the Green party, a representation gap of 13.4%. In a proportional representation system every Member of the Legislative Assembly (MLA) would represent 1/87th (1.15%) of all voters and the Green party would have 14 or 15 seated members. The tradeoff we pay for this system is that you do not vote for your MLA directly but rather for the platform a party puts out. While there is some concern over this it should be mentioned that parties enforce a strict party rule on most bills meaning that members of that party must vote the way the party leadership chooses even if it goes against the will of their region. This severely undermines the local representation argument as choices can, and are, made against the will of the local representative.
The idea of proportional representation also exist in some modified forms which get mentioned in the survey. 
List Proportional Representation could be true province-wide proportional representation or it could divide the province into large ridings with multiple MLA’s coming from each region for example: Vancouver Island votes and 8 seats are awarded closest to the percentage vote for each party. 
Mixed Member Proportional Representation keeps our current system but also has a second voting column and additional MLA’s which represent the province as a whole. These seats are allocated more in favor of underrepresented parties in order to attain proportional representation.
Mixed Member Majoritarian is the same as Mixed Member Proportional Representation except the province wide MLA’s are allocated as a pure percentage of vote and not used as a tool to correct the discrepancies from the FPTP ballot
Single Transferable Vote is the most complicated of the systems but keeps local representation and gives voters a strong voice. Voters rank their candidates in order of preference. If 1 party gets 50% of the first place votes than the riding is called right away (this would have been the case in 45 ridings in 2017). If nobody achieves 50% then the lowest vote earners votes are removed and counted based on their second choice the votes are then re counted. This repeats until a party earns 50% of the vote. If we take the Cowichan valley example (Green 11,475, NDP 9,603, Lib 8,400) rather than simply award the riding to the Greens the Liberal voters, who are the smallest group, would have their votes cast in favor of their second choice and could potentially swing the election results. 
The electoral system is one of the most influential tools in how the province is governed. You can take the survey yourself and give your input at engage.gov.bc.ca/howwevote
 

LNG Exports: environment and economy

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 The BC NDP have announced that they will ‘conditionally’ support Liquefied Natural Gas (LNG) projects moving forward including plans to export LNG. While they are yet to release exactly what these conditions are, the BC Green Party has taken a strong stance against it, with leader Andrew Weaver stating that the NDP would not succeed on a vote of no confidence should they choose to proceed with LNG projects.
The Project at the center of the discussion is an export terminal from Kitimat B.C., which would deliver LNG to plants in Japan, China and Korea. NDP leader John Horgan is currently on a trip to Asia, in which he will meet with investors interested in importing LNG from the province. The project is looking for a final investment decision early this year in order to commence construction. It would require a yes vote from all 4 investment parties: Royal Dutch Shell (50%), Petro China (20%), Mitsubishi Corp. (Japan, 15%) and Korea Gas Corp. (South Korea, 15%).
Lower than expected global prices have slowed, and even halted, many projects since LNG was first championed as the future economic backbone of British Columbia by the B.C. Liberals. As these prices find a new upswing there may be new opportunity in the market. There are still significant barriers in the way of exporting LNG across the pacific. The gas must be chilled to -160 degrees Celsius in order to condense it into liquid form. It must then be maintained at that temperature while being transported and then re-gasified on the receiving end. This process creates an expense in the range of $2.15/MMbtu before considering extraction and transportation to the coast. LNG prices meanwhile have ranged from $4.50/MMbtu to just over $11/MMbtu in some markets within the last 3 years. Fluctuations this aggressive mean that there will be times when LNG production will be incredibly viable but there will likely be cycles where any production for export occurs at a loss.
The politics of this decision are simple: If Weaver and the Green Party are serious about dismantling the coalition then the decision is in Horgan’s hands. He can approve of a LNG deal and immediately launch a new election or choose not to support it and stay in power.
Weaver’s position is firm based on the environmental beliefs of his party, and the reality that the expansion of oil and gas sectors means an increase in greenhouse gas emissions (GHG’s). The Carbon Tax, B.C’s carbon control mechanism, does not apply to any exported LNG as it is only applicable for fuels burned within our borders. While the argument submitted by the Liberal Party that replacing petroleum energy with LNG is a reduction in GHG emissions is true at face value it is unlikely that this will be the role of LNG overseas. With rapidly increasing energy demands coming, as large numbers of the Asian population increase their living standards, the LNG sector will be supporting new infrastructure rather than replacing what already exists. Resulting in a net increase in GHG’s. Weaver and the Green Party are serious about making moves towards meeting emissions reductions targets, which have a history of being set and subsequently ignored both on a national and provincial scale. Without launching into a full-scale conversation on the realities of climate change, it should be said that there is widespread agreement that reductions need to occur on an accelerated timeline. At the same time, without all actors being fully on board, reducing emissions at home comes at a cost and has the potential to be without payoff if reductions aren’t made elsewhere.
Economically there are jobs to be created, local mayors of the benefitting region (Kitimat, Ft. St. John and Dawson Creek) have all actively campaigned for the strong support of the project. Like all infrastructure jobs, the vast number of positions are temporary and will only be needed during construction. The National Energy Board (NEB) estimated that there would be 3000 to 5000 jobs created during the construction phase but only 100 to 200 permanent jobs at the end of construction. Still for communities that are struggling to create sufficient employment 3-5 thousand temporary jobs are an impactful proposition.
Ultimately this is another difficult energy decision Horgan faces, which could cost him his position as premier of B.C and trigger another election. Without the 3 ridings represented by the Green Party, the NDP would no longer hold a majority in the Legislative Assembly.
 

What the MSP Reduction means for now and how we move towards elimination

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Starting this year the MSP will be reduced by 50% for every citizen of British Columbia as a first step towards eliminating the fee entirely within the next 3 years. The income threshold for having the fee eliminated will also be raised from $24,000 annually to $26,000. What this announcement lacked was a plan to get from where we are now to complete elimination. Regardless of how that should happen there are several strong arguments as to why the MSP should be killed.
The first issue with the MSP is simply how regressive it is in nature. Individuals with better jobs which included comprehensive medical often have their premiums paid by their employer as a component of their medical coverage while poorer individuals are forced to pay for their medical out of pocket. Because of this lower income brackets have paid a higher percentage of their income towards medical than wealthier individuals. While there was some scaling of the fees the top rate of $150 ($75/person) was charged to any household earing over $30,000 annually meaning there was no distinction between a two adult household where both parties worked full time earning the minimum wage and the top earners in the province.
The other issue the NDP cited was the administrative costs of gathering this fee separately from income tax. The administration of the MSP coupled with Pharmacare has been outsourced to Maximus BC, a private firm on an extended contract. Though the annual numbers are not yet published BC paid the company $489 million for a 10 year period ending in 2015 or about 50 Million annually. While eliminating the MSP will not eliminate these costs entirely, (Pharmacare plus some medical billing will still funnel through this system for the time being) simplifying our revenue streams will surely reduce overhead. Based solely how the MSP has been collected in the past, simply moving the fee to be included in income tax will save the province millions of dollars, while providing a break for the poorest amongst us.
It is not all good news however. While the reduction in cost will be nice on the consumer end medical costs continue to grow in the province. We have an aging population demographic and have seen a steady increase in medical expenditures. While a reduced MSP is nice, a reduced MSP without an alternative income stream may be concerning. In the 3 year window of reduced but not yet eliminated MSP all the administrative costs continue to exist while the province brings in half the revenue. Medical costs continue to rise and wait times for any non emergency services such as specialist visits and elective surgeries are sometimes years rather than months.
The province projects that these reductions will lead to $953 million dollars in savings for citizens. Meaning the elimination of the MSP will reduce provincial revenue in the area of 1.8 billion dollars. While this may seem like an insurmountable sum the reality is that every other province has a state sponsored medical system that collects healthcare revenues through income tax. BC has become one of 3 (Ontario and Quebec) provinces to charge individuals medical premiums, and the other two do so within the framework of income tax. All of this is to say that despite being one of the most economically sound provinces in the country BC citizens are paying more for their medical while the government has reduced its spending consistently over the last 10 years
The NDP have promised more public spending on most fronts. This makes sense as we have seen no growth in government spending despite the growth in population and GDP. It also likely means a tax overhaul which will raise taxes amongst the upper class. As a part of the broader conversation reducing and eventually eliminating the MSP is one of the easiest moves towards poverty reduction in our province. 
While it is clear that the elimination of the MSP is a fiscally responsible and socially progressive move it is important that any definitive judgement be withheld until we know what the plan is going forward.