The cost of living is the top concern among Canadians, so it’s no surprise that the minimum wage is also under scrutiny. That extra $10 in your pocket five years ago won’t get you nearly as far today.
In response to those affordability concerns, every province has raised its minimum wage in 2024 (on top of other increases over the last few years). With one exception: Alberta, where the minimum wage has held steady at $15/hour since 2018.
But before we condemn Alberta as a laggard, it’s worth looking at minimum wage trends over a longer timeframe.
Narrowing in on the larger provinces (those outside Atlantic Canada), there has been a sizeable increase in the true value of the minimum wage (i.e., accounting for higher prices) over the last twenty years. As of 2004, the average minimum wage of the six largest provinces was about $7—equivalent to nearly $11 today—whereas the average minimum now in those same provinces is around $16. This represents an average annual increase in the real value of the minimum wage of roughly 2% per year, much higher growth than we’ve seen in average earnings over that same time.
The same is true in Alberta. Though its value has eroded since 2018, the large jump from $10 to $15 in the years before (amounting to an inflation-adjusted increase of 38%, or 8% per year) has made it so that, over the last couple of decades, Alberta’s minimum wage has increased about in line with other provinces: around 2.4% per year, on average. It’s also worth noting that in 2018, Alberta’s inflation adjusted minimum wage was the highest of any large province ever.
In other words, all provinces, including Alberta, have seen strong growth in the real value of their minimum wages over the last couple of decades. But strong long-term growth doesn’t say anything about what the appropriate level for a province’s minimum wage should be. That’s a much more complicated question. The answer depends in part on society’s values, including whether the minimum wage should be a “living wage.” Importantly, it also matters how (and how much) businesses respond to a higher minimum: by cutting back on staffing; raising prices; or some combination of the two. Figuring out these effects is something economists have been trying to nail for decades.
Nonetheless, Alberta’s situation illustrates how quickly, and unexpectedly the value of a minimum wage can erode if increases are made at discrete and sporadic decision points rather than through planned and formula-driven adjustments (which, importantly, businesses can better plan for). In Alberta’s Report of the Minimum Wage Expert Panel published just a few years ago, the panel stated, “Looking ahead, Alberta’s minimum wages are expected to remain one of the highest for the foreseeable future.” I guess we’re past that foreseeable future.
Have an indicator you want us to look into? Email us at media@businesscouncilab.com.