Monday, June 23, 2008

Another way to pay for wage subsidies

CBC Story: UPEI students to get tuition cut

As I have said in other posts, I support wage subsidies in lieu of a minimum wage for various reasons. A major hurdle in making the shift from a minimum wage to a subsidized wage system would be raising the revenue to pay for the subsidy.

I was critical when Premier Ghiz announced to cut tuition at UPEI, especially while also promising tax credits to graduates that stay on PEI. There is a contradiction in there. Do we have anything for grads to do on PEI or no? If yes, then we shouldn't have to bribe them to stay here. If no, then we shouldn't be lowering tuition to produce more graduates.

Rather than playing this game of chasing your own tail, producing grads we can't use then paying them to live on PEI, we could use that money to develop the work force.

Granted, PEI labour market statistics are somewhat optimistic. From April 2008 to May 2008, the seasonally adjusted unemployment rate went from 11.2% to 9.6%. This is however still a significant departure from the national unemployment rate of 6.1%.

The PEI Government could stop paying to produce new graduates we don't have a place for. It can walk away from its promise to pay graduates to live on PEI. It can use the money it saves to subsidize wages for low income Islanders and remove the need for a minimum wage.

I have argued previously that removing the minimum wage would then create more opportunities for businesses. These opportunities would help create a more competitive economy on PEI, thus creating a need for learned employees, like those that come out of UPEI.

The horse comes before the cart.

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