By Andrew Drummond
October 3rd, 2018
BURLINGTON, ON
Last Wednesday, Ontario Minister of Labour, Laurie Scott announced that Ontario would not follow through on its commitment to raise the minimum wage to $15 on January 1, 2019. The new Ford administration argued that “The increase of 20 per cent this year was a lot for businesses to absorb so we’re putting a pause on the minimum wage,” Scott said. “What we’re doing is that businesses have the chance to catch up but we’re also helping the low-income people in Ontario with tax breaks,”.
The regressive position of the Ford government contrasts with the actions of the government of Alberta which on October 1, raised its minimum wage to $15 across the province. Alberta’s Labour Minister, Christina Gray claimed “Going forward, we know that paying a little bit more to workers will provide greater stability, lower turnover, more loyalty,” she said. “We hear that a lot from businesses that pay at or above that higher minimum wage — that there is a benefit in retention and lower training costs.”
The argument from the Ontario government and other fiscal conservatives is that business has been hurt by the increases in minimum wage and that has caused them to scale back on part time jobs, hurting the most vulnerable. “Employers are finding it hard to cope with the precipitous rise in the minimum wage. In response, they’re cancelling part-time jobs.” said Minister Scott in an editorial for the Financial Post. This statement raises the following questions: What is the reality of this assertion? What impact did the proposed wage raise have on businesses in Ontario and specifically in Burlington?
The evidence is so far inconclusive. In Ontario, 51,000 jobs were lost in January. Many critics of the minimum wage increase incorrectly pointed to this as evidence of the detrimental effect of the policy – however the data told a different and more nuanced tale. In additional to the confusion over the data there was also anecdotal evidence showing that some companies (notably Tim Horton’s franchises) had dramatically scaled back their employment immediately on January 1 as response to the implementation of $14 as a minimum wage.
However, there was not nearly as much focus on the employment numbers after January to measure the long-term effect of the policy. When we look past the January employment figures, we see a different picture emerge. For example, in February, Ontario gained 16,000 jobs. In March another 10,000 were added. By July, Ontario had gained 132,000 jobs since the end of January, more than offsetting the gut jerk reaction from employers when the minimum wage came out. Ontario currently has the lowest unemployment rate it has had over the past 5 years at 5.4%. The argument that employment has struggled under a higher minimum wage appears to be disconnected from the actual employment figures.
For Burlington specifically, we need to understand what a living, rather than minimum wage should be. Living Wage Halton has done an exceptional job of figuring out what the minimum value needed to live here is. They take into account a 4 person family with limited expenses. The family does all its travel on public transit, needs only limited childcare for 1 of 2 children, and has a meagre entertainment budget (a weeklong camping trip and once a year to the zoo). This is measured against the current values of food, housing, and services in Halton to compute what exactly the 2 adults need to earn on a 40 hour workweek to support this family.
The current value for the Halton region is $17.95 an hour. This amount represents the bare minimum that a person needs to make while working full time and supporting a family on two incomes. Against that value, the current $14 Ontario minimum wage is clearly inadequate. A family with minimum wage earners would have a shortfall of $15,800 in their yearly budget just to make ends meet. To cover this shortfall, the family would need additional earnings from part time jobs that made up 22.5 hours a week. While there are obviously some assumptions made here in the makeup piece, (taxes would be lower for example) a family should not need many hours of part time work just to have a meager lifestyle.
The question is then can Burlington businesses afford it? What has been the local result of the increase to $14/hour? There is relatively little unemployment data available at the city level. However, the 2016 census put Burlington’s unemployment at 5.7%, or 1.7% lower than the province as a whole. So Burlington is relatively well off compared to Ontario at large. Extrapolating, if Ontario gained jobs despite (or because of) a minimum wage increase, it is possible that Burlington did as well.
To test this theory, I conducted an informal survey of a number of plazas in Burlington over the past three weeks. At every one of them, there were multiple companies looking to hire. As far as I can tell, every Tim Horton’s in the city is looking for more people, and many clerical/retail opportunities exist as well. If the minimum wage hike had done such damage, why are there so many businesses still looking for people willing to work at that wage?
What all this means is that the closer the minimum wage gets to $17.95 in Halton, the better off all families and by extension our entire community will be. The caveat on this is that it only works if business can sustain it. The evidence is overwhelming that businesses adapted to the $14 minimum wage, and they would certainly be able to adapt to $15 as well.
Businesses are doing Ok, so it’s time to make sure families are doing Ok too.
Andrew Drummond was the New Democratic candidate for Burlington in the most recent provincial election.
Excellent and informed article.
Various governments at all levels have attempted, with varying degrees of commitment, to reduce poverty in our province.
Usually under the banner of some kind of “War On Poverty”.
This is the first Ontario Govermnent since Mike Harris to make that a “War on the Poor”.
That we have poverty in a wealthy city in a wealthy province and then elect a government which deliberately perpetuates that, sadly says as much about us as it does about Doug Ford.
Thanks for the good article about the wages and the fact of life in Halton. i totally wish that if the Liberals had not be returned to power in Ontario, that the NDP had got the mandate to lead our province. With the recent statement from the Ontario Minister of Labour, about freezing the minimum wage at $14 and then cancelling Bill 148, many of the Burlington residents that work for minimum or part time will certainly start to feel the pinch of less money and related labour perks. i only wish we could speed through the next 4 years and then get rid of the dictatorship in Ontario.