$15 an Hour Minimum wage increase in Ontario could have unintended consequences

A Column by Sam Oosterhoff, MPP, Niagara West – Glanbrook

Posted September 12th, 2017 on Niagara At Large

Niagara West-Glanbrook MPP Sam Oosterhoff

While many of us enjoyed summer with friends, family members, and the occasional ray of sunshine, the Legislature’s Standing Committee on Finance and Economic Affairs toured the province listening to the public’s perspective on Bill 148, the “Fair Workplaces, Better Jobs Act, 2017”.

Although this bill makes a series of changes to the Employment Standards Act, public attention has been focused on the provisions which will increase Ontario’s minimum wage from its current $11.40 an hour up to $15 an hour.

In recent years, minimum wage has been tied to the rate of inflation, such that it increases incrementally, with the cost of living.  However, Bill 148 will have minimum wage shoot up by 32 per cent in less than 18 months.

Business owners have been voicing their concern that such a drastic wage increase will have unintended consequences across the province. They expect that this will result in fewer jobs, fewer working hours, and greater automation. Small business owners across Niagara have been telling me that these increased labour costs could also cause a spike in the price of everyday consumer goods and services from a cup of coffee to a haircut.

According to an independent study commissioned by the Ontario Chamber of Commerce, this wage hike threatens up to 185,000 jobs.  As Chamber vice-president Karl Baldauf said: “Should the government move forward with these vast, unprecedented reforms, there will be significant, sudden and sizable uncertainty for jobs and economic growth in Ontario.”

On September 12th, the Financial Accountability Office of Ontario (FAO) came out with its own independent assessment of the impact of Bill 148.  Since businesses which face higher payroll costs tend to respond by laying off inexperienced workers, the FAO says “job losses would be expected to be concentrated among teens, young adults, and recent immigrants”[1].

Even the NDP government in British Columbia is reconsidering their initial plan to raise the minimum wage to $15 by 2021 – and they were planning to take 2 years longer than Ontario to phase in this raise!

Sadly, fifteen years of Liberal government have put the necessities of life almost out of reach. Whether it is sky-rocketing hydro costs, increasing fuel costs due to cap-and-trade, or the countless new taxes that have been implemented by McGuinty and Wynne, life is harder under the Ontario Liberals. Hardworking families are struggling just to keep their heads above water.

The government should commit to a proper economic impact analysis, and avoid rushing through legislation that is expected to have significant unintended consequences.

It’s not that the $15 minimum wage increase is a bad idea in itself. It is the manner of implementing it and the time frame that are in question.  A higher minimum wage will not help the most vulnerable in our province if those Ontarians do not have a job to wake up to in the morning.

(Niagara At Large welcomes commentary from all of the municipal, provincial and federal representatives in the region, regardless of their party affiliations. We do so in the spirit of providing a forum for civil, diverse discussion and debate on this online news site.)

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 “A politician thinks of the next election. A leader thinks of the next generation.” – Bernie Sanders

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2 responses to “$15 an Hour Minimum wage increase in Ontario could have unintended consequences

  1. No surprise that a Conservative MPP would not support a respectable minimum working wage of $15 per hour.

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  2. Like the vast majority of those my age, I have had my share of “Mac Jobs” and minimum wage work opportunities. Like the same vast majority of those my age, when I wanted more money I provided either more service, more skill, in short more benefits to my employers. I earned it.

    To some extent, keeping minimum wage increases to that of inflation rate is fair and makes some sense (except it only serves to increase inflation). Primarily, this is a status quo approach: nothing really gained and nothing really lost. Raising minimum wage at a rate higher than that of inflation ignores the principle of fair wages for fair work. A raise, other than that to match inflation, demands nothing in return. It is in fact a raise over and above a “keeping up” approach. Increases in wages should be a response to increases in value given for the service the wages compensate.

    There is, however, no logical reason to give someone more money simply because they are there. To get more money, one should provide more benefit in return: more skills, better service, more productivity, more sales, and the like. To simply give a raise to those earning minimum raise, beyond that to keep up with inflation, demands more from the employer who gets nothing more in return. Well actually, employers get more expense to earn the same income. Income remains the same in no small part because the wage earners are neither doing more nor giving more to increase the employer benefit through increased sales and productivity.

    All the planned raise hike will do is increase costs to employers with no benefit accruing. Higher costs mean employers will take more cost-saving measures. Often that means fewer employees. We may see a higher minimum wage, but we will also see fewer jobs and fewer employees. If those earning minimum wage want more income they can get more skill training, be more productive, or help the employer make more sales through products or services the employer offers to the public to bring income into the business to the benefit of all who are part of the organization.

    Surely simply raising the basic income does nothing to make for more successful businesses. On the contrary, wage raises without any cost-benefit to those who must pay those wages only decreases employer income to grow the business and to create even more jobs. Now we will have fewer jobs and even less benefit to those buying the goods and services the employees were providing. Even the consumer gets not additional benefit from the higher prices that result when more money is paid to those who are not required to do more to earn it.

    Want more money? Get more skills. Improve productivity. In short, earn it!

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