Ontario’s Minimum Wage Increase

I’m sure by now you’ve heard that the provincial government announced a couple weeks ago that they’d be raising the minimum wage over the next few years, with increments leading to a minimum wage of $15/hr at the beginning of 2019. Reactions to the announcement have been varied and strong, with some columnists, business owners, politicians, and pundits claiming that the hike will cause massive layoffs and force many businesses to close their doors. Other opinions point to the economic benefits of providing Ontario’s lowest earners with more income: someone who is just getting by isn’t going to save all of a larger paycheck; they’re more likely to spend it. More consumer activity means a more robust economy, and a boost to small businesses that may suffer because of increased labour costs.

In London, one local bar owner used his business sign to express his opposition to the hike, promising to raise prices to accommodate the jump. The president of the London Chamber of Commerce called the move “careless and reckless”.  Local MPPs are even more cynical, calling it “typical Liberal electioneering”. A local radio host and columnist actually argued that eliminating the minimum wage altogether would benefit employees, because a poorly paying job is better than no job.

On the other hand, progressives pointed out that the higher floor will benefit all workers in Ontario: the wages of those who make more than minimum wage will increase, too. The provincial government pointed out that we are in competition for workers with other jurisdictions like Alberta, New York State, and San Francisco. If a person can’t survive in Ontario, they’ll go where they can make enough to get by. They also point to studies that indicate little or no change in employment rates in places where the minimum wage was increased, while critics point to other studies that show a rise in unemployment.

And so it goes. Round and round. Will it be a disaster, or will it lead to increased growth? It’s hard to say. That there’s no consensus shows that measures like this have effects that are hard to predict. So what’s to be done?

From our perspective, we welcome any approach that allows people to live with dignity while working. And though there’s a great deal of work to be done—especially in increasing benefits for those who can’t work, for instance—this is a start. For many people, work is how they define themselves, and as a society, it’s the main way we measure success. When we are asked to tell people about ourselves, our jobs are usually at or near the top of the list of characteristics.  Increasing the minimum wage indicates that we respect all people in Ontario: you can now work and have some dignity.

Ontario’s current minimum wage is $11.40 an hour. This is after several years of increases after it was frozen for nearly a decade from 1995 to 2004. If the minimum wage had kept up with a modest inflation rate since 1995, it would currently be about $13.75 (assuming my math is right). This means that a minimum wage earner today makes almost 20% less than they did in 1995. Two decades of Ontario’s growth has been subsidized by the working poor.

It should also be noted that a $15 minimum wage is still below London’s “Living Wage” of $15.53/hr, Toronto’s Living Wage of $18.52, and the living wage of many other cities in Ontario, including Sudbury, St. Thomas, Waterloo, Kingston, and Hamilton, among others. Also, depending on your age or industry, you may make even less than the current minimum wage of $11.40, and that will continue.

There will no doubt be some adjustments. Business may freeze hiring, cut hours, or increase prices. Others will simply eat the increased cost, as they would any other increase in price. This has the potential to be a very good thing. Everyone deserves to have dignity in work, and this is one small step toward that.