Political games will be hiked with wages

Ontario’s minimum wage rises to $14 an hour on Monday, kicking off an experiment that will help us test the major political parties before the election due in June.

It’s a 20 per cent pay increase for most people making bottomend wages of $11.60 an hour now. The Liberals, whose policy it is, say it’s about fairness, distributing Ontario’s economic bounty a little more evenly. The New Democrats say it’s long overdue; the Progressive Conservatives say the Liberals are doing too much, too fast, and they’ll destabilize the economy and put thousands of people out of work instead of helping them.

These are specific claims that we’ll have evidence for and against before long.

You can easily find studies about sharp minimum-wage increases elsewhere; Seattle’s is on its way from $11 US an hour in 2014 to $15 an hour in 2021, and if you want evidence that it’s led to low-wage workers losing hours, harming them overall, scholars at the University of Washington have that. And you can just as easily find plausible scholarship that actually, the hike (up to $13 so far) has overall been a boost for the working class.

Over the next few months, the Progressive Conservatives will make sure we hear a lot about the formerly hard-working people whose employers can no longer keep them on — people whose jobs get taken up by managers who don’t have to be paid more for doing extra work, or taken over by computers. Fifty thousand jobs or more could vanish, they say, and it’ll be especially hard on young people with the fewest skills. The Tories will emphasize higher prices, especially for services like child care, where relatively few payers cover the wages of each worker.

Higher prices will hurt, and some businesses will surely go under, and it’s glib to say that they deserve to fail if they can’t afford to pay $14 an hour instead of $11.60. Jobs paying $11.60 an hour are still jobs. A marginal business is still a business, employing people and doing something useful for customers, and losing it will hurt.

That said, some businesses that were failing anyway will fail just a bit faster because of the minimum-wage hike, or their owners will see a convenient outside force to blame. Consider the pre-Christmas business of the Black Tomato restaurant in the Market, whose owner has been trying to sell it for a year and now says he’ll just close. That story probably didn’t have a happy ending coming no matter what.

The Liberals will emphasize the hard-working people who keep their jobs and get just a little more breathing room — an extra $19 a day for an eight-hour shift is a whole lot when you were making do on $93. Typically when poorer people’s incomes increase, they go spend the money on goods that make their lives a little better, a little more comfortable, a little more efficient, and the governing party’s obvious hope is that that money will trickle up into the rest of the economy rapidly, making up for the lost business profits and higher prices customers will pay. Ontario’s unemployment rate is well under six per cent, the lowest in many years and well below the national average, so if there’s a time for a minimum-wage hike, it’s now.

The Progressive Conservative position actually concedes a lot of this ground.

“I think everyone wants to get to a $15 minimum wage, but it’s the pace,” leader Patrick Brown said when the Liberals announced their plan.

His criticism of the minimumwage hike isn’t that minimum wages are an unjustified, jobkilling interference in the free market for labour, which is the classic conservative view. Yes, some people make more money under minimum-wage rules than they otherwise would, but other people don’t get jobs at all because their work just isn’t worth $14 an hour. If a job is worth $5 an hour and someone’s willing to work it in 2018, why should the government forbid it? Also, employers and employees have ways of getting around the minimums, like hiring people as freelancers and contractors, paying them for piecework.

That she’s rushing too hastily to do the right thing is criticism that Kathleen Wynne is pretty happy to take, at least in the abstract. But by June, we should have some concrete indications about whether the damage to Ontario is greater than the benefits — a marked increase in unemployment among young people, a loss of part-time jobs without the slack being taken up by full-time ones. More empty storefronts, fewer help-wanted signs. Whoever’s right should get some bonus points when we decide whom to trust with the government for four years.

I think everyone wants to get to a $15 minimum wage, but it’s the pace.