How unions can bargain better for low-wage workers

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By: Angelo DiCaro, Unifor Director of Research

Ontario’s recent decision to raise the provincial wage floor to $15 (including for servers) caught many by surprise. The governing Progressive Conservatives campaigned to scrap this exact pay hike when they ran for government back in 2018. Nonetheless, the 65-cent increase is welcome news and – once again – sparks a conversation on the need for living wages across the country.

As anyone who has worked in retail will know, minimum wage hikes are bittersweet.

The assumption goes that when wage floors lift, all workers are better off. In fact, this is not the case – not for all workers. In reality, a minimum wage hike leaves some workers better off and no workers worse off. This is an important distinction.

Walmart got a schooling in this dark-side of minimum wage theory back in 2015.

Facing popular backlash by low-wage workers, organizing for higher pay and a union, the Beast from Bentonville decided to ratchet up starting wages from $9 to $10 per hour across U.S. stores.

Turns out that senior staff – those earning wages marginally above the $10 mark and unaffected by the hike – felt slighted, and rightly so. Many of them simply up and quit.

This phenomenon is not exclusive to Wal-Mart. It is a challenge that all low-wage workers face, including those in unions. The difference is that, through unions (and their ability to collectively bargain) workers have an outlet to fix these sorts of problems, to win justice, without necessarily having to pack up and leave.

Unifor, for example, took the opportunity to address this exact issue in a widely publicized round of supermarket bargaining in Ontario with Metro in 2015. Past minimum wage increases helped lift starting rates for workers in these stores, but left wages stagnant for senior workers. The result? Junior workers got raises, while senior workers stood pat.  Not exactly a fair outcome, as Wal-Mart workers will attest.

Following plans rolled out by the previous Ontario Liberal government, to raise minimum wages each year at the rate of inflation (still in effect today), this problem becomes perpetual.

As a result, the union got creative. Negotiators overhauled existing static-rate pay scales, instead proposing a more flexible, automatic adjustment (colloquially referred to as “Minimum Wage Plus”) to ensure all workers benefitted, proportionally, from any future minimum wage increase. As a result, all Unifor members, in the pay grid, will receive the promised 65-cent pay increase in January. See Figure 1.

Figure 1: Part-Time Wage Scale at Unifor Metro Stores (New Dominion Stores agreement)

Hours Worked

Current Scale

Wages as of Nov. 2021

$14.35 Minimum Wage

Wages as of Jan. 2022

$15 Minimum  Wage

0 – 500

MW

$14.35

$15.00

501 – 1000

MW + $0.25

$14.60

$15.25

1001 – 1500

MW + $0.50

$14.85

$15.50

1501 – 2000

MW + $0.75

$15.10

$15.75

2001 – 2500

MW + $1.00

$15.35

$16.00

2501 – 3250

MW + $1.25

$15.60

$16.25

3251 – 4000

MW + $1.50

$15.85

$16.50

4001 - 4750

MW + $1.75

$16.10

$16.75

4751 - 5750

MW + $2.00

$16.35

$17.00

5751 - 6750

MW + $2.25

$16.60

$17.25

6751 - 8000

MW + $2.50

$16.85

$17.50

8001+

End rates negotiated between union and company

The outcome of this approach has been positive. Wage rates for supermarket workers are far higher than would have otherwise been negotiable, and there is closer political alignment between community struggles for living wages and union contracts. The model is working its way through other contracts, including unionized food service providers and pharmacies.

Low-wage workers have every right to express frustration when minimum wages go up, and they see no benefit. This is a natural reaction to industry-wide employer pay practices, built on unequal and discriminatory treatment.

In retail, it is not hard to find part-time clerks earning wages less than those in full-time jobs, even while doing the same work. The same is true for female-dominated jobs (like cashiers) earning wages far less than male-dominated job, in the same workplace.

Creative bargaining provisions, like ‘Minimum Wage Plus’, cannot overturn decades of employer-led efforts to flatten wage costs, and drive precarious work. They can however embolden low-wage workers to realize that, through unions, real and meaningful change is possible.