Minimum wage workers would have been poorer in Quebec had it not been for special government benefits for the cost of living.
The increase in the minimum wage planned for this year would not have been enough to offset the effect of high inflation on purchasing power and the time it usually takes the government to adjust to it, estimated Friday a study by the Research Chair in Taxation and Public Finance at the University of Sherbrooke.
The $0.75 increase in the minimum hourly wage (or 5.56%), to $14.25 per hour, set at the start of the year and which will take effect this Sunday, 1er May, would thus have led to an increase in the disposable income of all the main household categories of around 3.2% to 4.2% depending on the case. But it would still have translated into a decline of 0.4% to almost 2% in their ability to cover their basic needs.
This loss of purchasing power would of course have been due to much stronger inflation than usual, due to an average increase in consumer prices of 3.8% last year and a average increase forecast in the last Quebec government budget of 4.7% for this year. It would also come from the fact that, each year, the tax table, the solidarity tax credit or the family allowance are adjusted according to the cost of living, but with a time lag and that this lag would be particularly felt this time had it not been for the adoption of a patch.
This is what the Legault government has said it wants to do by announcing in quick succession the payment of two unique and non-recurring benefits. Announced this fall, the first is intended for the 3.3 million people with the lowest incomes and amounts to $275 for single people and $400 for couples. Announced in March, the second is a tax credit of $500 and is intended for the 6.4 million adults in Quebec who do not earn more than $100,000 per year.
Ensure the bare minimum
With these payments totaling $1,400, the basic needs coverage rate for a couple with two children and both working 35 hours per week at minimum wage (for an individual annual salary of $25,935) should, for example, look like this their disposable income (after tax and transfer and special payments) to increase from $56,946 in 2021 to $60,179 in 2022 (+5.7%) and the rate of coverage of their basic needs from 132.1% to 133, 5%. For a childless couple with only one income at minimum wage, their disposable income should increase from $29,661 to $32,320 (+9%), which would barely cover their basic needs (101.4%).
The estimate of these basic needs corresponds to the Market Basket Measure (MBM), used as the official poverty line in Canada. If forecast inflation is taken into account, this measure should rise this year in Quebec to $22,546 for a single person and $45,093 for a family of four.
A lot of students
In 2021, 205,000 Quebecers worked at minimum wage, or just under 5% of the entire workforce. “It is likely to believe that it is a good part of people who work while studying,” observed the authors of the study from the Chair in Taxation and Public Finance. In fact, 62% worked part-time and 60% were between 15 and 24 years old, compared to 19% who were between 25 and 44 years old, 6% between 45 and 54 years old and 14% aged 55 and over.
“Among the other age groups, the greatest proportion works full time,” continues the Chair. In general, minimum wage employees are as many men (48%) as women (52%). Three in ten do not have a diploma, but 40% have some post-secondary education and 11% have a university degree. Almost three-quarters (72%) are permanent employees. Half (47%) work for companies with less than 20 employees and almost as many for companies with 20 to 99 employees (41%). They are found primarily in retail (50%) and accommodation and food services (20%), manufacturing (5%), health care and social assistance (3 %) or leisure and culture (3%) coming much further behind.
In its study, the Chair also extended its gaze to employees who earn 125% of the minimum wage. She says that she found similar findings “and [même] strengthened”.