After a four-year wage freeze, the Ontario Liberals have announced they will increase minimum wage to $11 per hour starting June 1st. Ontario leads the pack – tied with Nunavut – for the highest minimum wage in the country.
Although this is good news for the lowest paid workers, it’s still a far cry from the $14-an-hour minimum wage anti-poverty groups have been asking for. On the other end of the spectrum, the Canadian Federation of Independent Business, which represents the interests and concerns of small and medium-sized businesses, is opposed to any wage increase at all. The Ontario Liberals seem to have found some middle ground at $11 per hour.
By the Numbers
Minimum wage currently sits at $10.25 in Ontario. The $0.75 increase to $11 an hour is an “inflation catch-up” – 6.7 per cent since 2010, to be exact. Going forward, further increases to minimum wage will be based on increases in inflation. Future increases will be announced by April 1st and take effect October 1st, giving workers and businesses six months to prepare.
Increasing minimum wage based on inflation removes the political element and provides businesses and workers with wage stability to plan for the coming year. It’s a lot better than our current system of ad hoc increases, which saw the Tories freeze minimum wage for nine years and the Liberals freeze it for another four years.
The Workers’ Point of View
The increase in minimum wage was met with a lukewarm reception by anti-poverty groups. “Don’t look a gift horse in the mouth,” as the old adage goes. Workers at the wage floor, who’ve seen their purchasing power fall over the past four years, are receiving a raise at the rate of inflation. While it’s better than no increase at all, it’s not like it will solve poverty overnight.
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Cost Of Living Still A Challenge
It’s hard to make a living, especially in urban centres like Toronto and Montreal on a salary of $11 per hour. If you workr 40 hours per week at $11 per hour, you’d only end up with $22,880 annually – barely enough to cover the rent and the bare necessities like food, transportation, and clothing. In Ontario the poverty line sits at $23,000 for a single person, according to The Toronto Star. If minimum wage was increased to $14 per hour, workers would earn $29,120 – that would be 10 per cent above the poverty line.
The Business Point of View
On the other side of the minimum wage debate are businesses – and not just the giant corporations. Although big business supplies thousands of jobs, it’s small and medium size businesses are leading the pack in economic growth.
Although it’s easy to say higher wages are the answer, wage increases can have unintended consequences. While an $11 per hour minimum wage will most likely be absorbed by businesses, a $14 per hour minimum wage overnight would surely lead to disaster. Not only would it most likely lead to fewer hours and layoffs, it could Ontario’s economic growth, as our minimum wage would be $3 per hour higher than any other province or territory.
Is Real Change A Reality?
So just who are the working poor in Ontario? Although minimum wage is often a pay rate associated with families struggling to make end’s meat, surprising two-thirds are workers are 24 years of age or younger. A lot of workers this age are students and still living at home, so a slight increase in the minimum wage could just mean for spending money.
While it’s difficult to argue that a higher minimum wage is a bad thing, if fighting poverty was the main goal, an increase in minimum wage with inflation won’t help workers much. Although workers will receive a retroactive increase with inflation back to 2010, they won’t receive a lump sum payment for all the money they lost by having their wage frozen at $10.25 the past four years.
If the Ontario Liberals want to target those falling below the poverty line, the best way would be by offering affordable housing and childcare, as well as income tax credits. Ontario may be suffering from a retirement crisis, but for the workers who can’t even afford to put food on the table, retirement is the farthest thing from their mind. Increasing the minimum wage should only be the beginning of a strategy to help low skilled workers become educated and increase productivity – an area where Canada lags the United States – as whole.