Expediting Minimum Wage Increase a Hasty Move

I have never been against boosting the minimum wage but I do believe the Ontario government may be moving a little too quickly.
The Liberal government’s proposed legislation on labour reforms would see the minimum wage, which is currently set to rise with inflation from $11.40 an hour to $11.60 in October, being boosted to $14 on Jan. 1, 2018, and $15 the following year.
A $3.40 increase in a matter of 15 months is a pretty big hit.
In the U.S., where $15 is becoming the target in some jurisdictions, the plan is usually to get there by 2021 through smaller increments.
The Ontario government is holding committee hearings on the proposed bill and will travel the province to get public input.
Those on the committee undoubtedly will get an earful from small-business operators, those with their own shops as well as those with fast-food franchises.
They, of course, will be objecting, subscribing to the following mantra:
“When the government imposes a higher minimum wage, employers face higher labour costs and are forced to respond by decreasing other production expenses. As these employers cope with the increased costs of a mandated wage raise, they often respond by cutting the jobs available to less-experienced and less-educated employees. The result is that these individuals, who already have few employment options, find it more difficult to get a job.”
A Canadian Press story this week indicated a coalition of groups, including the Ontario Chamber of Commerce, Restaurants Canada and the Canadian Franchise Association have sent Premier Kathleen Wynne a letter slamming the arbitrary increase.
“Many Ontario employers, especially small businesses, are now considering closing their businesses because they do not have the capacity to successfully manage such reforms.
“The business community was wholly aligned with your government’s previous approach, which allowed for increases to the minimum wage that were predictable and protected against arbitrary political decision-making.”
Predictable indeed. But whereas Wynne’s approach to raising the minimum wage is too fast, the old approach, 20 cents or so at a time, was too slow.
And as for businesses closing because of the present heavy increase, I have trouble buying the claim.
I look at it this way.
If an employer can’t afford to pay employees a proper wage, that employer probably shouldn’t be in business in the first place. (I would have said proper living wage but minimum wage in its present state could hardly be considered that).
I believe if the business owner is providing a product or service that is required by the public, the public will be prepared to pay for the true cost of the product or service.
And any employer who can lay off an employee(s) to reduce costs obviously didn’t need that employee(s) if the work can still be done.
When it comes to fast-food franchises, parent companies are going to have to back off a bit in their drive for increased profits by squeezing franchisees.
The Canadian Press story noted 50 economists in Canada have just signed a letter in support of a $15 minimum wage.
“For many years, many in the economics profession were also very concerned about the possibility of disemployment of people with minimum-wage jobs,” said Lars Osberg, an economics professor at Dalhousie University.
“A whole raft of new studies in the last 20 years have indicated that disemployment effect is very small. On average you could say it is small to negligible.”
I think we have to let things play out.
I don’t believe the doom and gloom scenario painted by the Ontario Chamber of Commerce, Restaurants Canada and the Canadian Franchise Association.
But I also believe the Ontario government should back off a bit in its time frame for getting to the $15, 2020 or 2021 being about right.
Employers should get the big bucks because they are putting their money on the line, but employees should be able to expect that a fair wage is part of the process.
Doug Millroy can be reached at dmillroy@gmail.com.


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