Minimum wage debate rages on

Ontario’s rate rising 75 cents to $11 per hour – but can employers afford it?
By Liz Foster
|Canadian HR Reporter|Last Updated: 02/25/2014

A teenager flipping burgers at the local fast food joint — that image is most often evoked by organizations arguing about a raise in minimum wage.

For the Canadian Federation of Independent Business (CFIB), this teen represents the typical minimum wage earner. He lives at home with his parents, is upgrading his education and will only work a minimum wage job for a fixed period of time. And while a wage hike will have no lasting effect on his life, it will have a significant impact on his employer.

For Unifor — the largest union in the private sector representing more than 300,000 Canadian workers — this teen is just a small part of the bigger picture. He is now competing for minimum wage jobs with university graduates who are moving back home when they fail to find a job in their field.

On Jan. 30, the Ontario government announced the minimum wage will rise by 75 cents from $10.25 per hour to $11 per hour. The change will take effect on June 1, 2014.

While the CFIB is worried the increase will have a negative impact on employers and the job market, Unifor is calling for an even larger raise. It seems that in the aftermath of the announcement, praise for the province is only coming from one place — that teen flipping burgers.

The increase came on the heels of a report and recommendations made by the Minimum Wage Advisory Panel (MWAP).

Panel members represented various organizations including the Retail Council of Canada and the Ontario Federation of Labour. In its report, the MWAP made several recommendations to create a more transparent and predictable process for raising the minimum wage.

Based on these recommendations, the new rate reflects the rise in Ontario’s consumer price index (CPI) since the province’s last minimum wage increase four years ago.

Proposed legislation would tie future raises to the CPI, with increases announced by April 1 and coming into effect on Oct. 1.

The MWAP also recommended an ongoing research program be established by the province to continue gathering and analyzing information to address issues surrounding increases in the minimum wage.

“We want to make sure that we depoliticize the manner in which minimum wage is determined in the province,” said Ontario Labour Minister Yasir Naqvi.

“In the past, it has been a political decision and minimum wage has been determined (on) an ad hoc basis. We wanted to ensure that the manner in which we determine minimum wage is fair for Ontarians who live on minimum wage and predictable for businesses that create jobs in our economy.”

A raise in the minimum wage has a huge impact on employers, said CFIB senior policy analyst Nicole Troster, and making the changes predictable is crucial to their success.

“It’s hugely important for employers to have adequate notice and to have some predictability in the system so that they can adjust their costs and their operations accordingly,” she said.

When the wage is raised, colleagues who earn more also expect an increase, said Troster. With wages for all employees pushed up by minimum wage rates, employers are faced with additional payroll taxes as a result.

“The amount of money that’s available for all of this is basically the same, but all of a sudden you have these additional costs,” she said.

Employers often compensate for the additional costs by reducing the number of positions available, so hikes in minimum wage “actually hurt the people it’s supposed to help,” said Troster.

But this line of thinking is nonsense, according to Jerry Dias, Unifor’s national president.

“It doesn’t matter what is happening in the economy,” he said. “Employers will never, ever support workers getting an increase. That’s just inherent in their philosophy. But the only way we can have an economy that works is when everybody can contribute.”

In order to accomplish that, a more meaningful increase in minimum wage is needed, said Dias. While he agreed tying future increases to the CPI would benefit both workers and employers, Dias said an increase of 75 cents is not enough to lift minimum wage workers above the poverty line.

“Employees that are working today at $10.25 an hour are working and living well below the poverty levels,” he said, suggesting minimum wage be raised to $14 per hour.

“Fourteen dollars an hour is nothing wonderful by any stretch of the imagination, but at least it’ll take you above the poverty level.”

A hike to $14 per hour would make Ontario’s minimum wage the highest in the country by more than 27 per cent. The raise to $11 brings Ontario’s minimum wage in line with the current Canadian leader, Nunavut. (See table above.)

The increase does not bode well for the province’s ability to compete, said Troster, who predicted a raise to $14 per hour would prove disastrous for employers.

“Ontario lost 39,000 jobs last December,” she said. “Minimum wage hikes will do nothing to address those lost jobs or to continue creating new ones. There are better mechanisms out there to help low-income earners.”

Instead, Troster suggested raising Ontario’s basic personal exemption for income tax, which would allow employees to keep more of what they make, or investing in skills training to allow workers to leave minimum wage jobs behind on a more permanent basis.

For now, the only thing that teen flipping burgers can count on is an extra 75 cents an hour and the guarantee he’ll be brought up by both sides as the debate on minimum wage wages on.

ACROSS CANADA

Minimum wage rates
(as of Feb. 1, 2014)

Alberta

$9.95

British Columbia

$10.25

Manitoba

$10.45

New Brunswick

$10

Newfoundland and Labrador

$10

Northwest Territories

$10

Nova Scotia

$10.30

Nunavut

$11

Ontario

$10.25

Prince Edward Island

$10

Quebec

$10.15

Saskatchewan

$10

Yukon

$10.54

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