Polarization around new minimum wage
We live in polarizing times, in a world often depicted as black and white.
So it’s not surprising that provincial government consultations on the coming $15 minimum wage show stark divisions. Business groups argue it’s a disastrous move that will actually hurt minimum wage workers who will see their hours reduced, or their jobs disappear altogether. Workers and their advocates, especially the working poor, say the new wage will improve their lives and make them more productive citizens, better able to contribute to the economy and society.
Who’s right? To begin with, let’s acknowledge that the new minimum wage isn’t a black and white issue. There’s too much demonization on both sides of the debate and that doesn’t help anyone. There are legitimate arguments on all sides.
Consider, for example, the argument made by PC leader Patrick Brown and some business groups that this is too much too fast. The wage will go from the current $11.40 to $14 Jan. 1 next year and then $15 the next January. That’s a 30 per cent increase in a little over two years. It’s a significant incremental cost. In Seattle, Wash., a recent study found that some workers are not benefitting from the $15 an hour wage. That study is disputed by others that show the opposite.
Advocates point out that one of the reasons the Ontario increase will be so significant, is because the wage was artificially low, in part because it was frozen for a decade by the Conservative government of Mike Harris. From 1995 to 2003 it was stuck at $6.85. Had there at least been inflationary increases during that period, the jump today wouldn’t be so daunting. That’s a compelling point.
It’s fair and right to acknowledge that the higher wage will have a negative impact on some employers and workers. That’s to be expected. Changes this dramatic don’t happen without fallout. But the bigger question is: Do the benefits of a higher minimum wage outweigh the negative effects? To that question, the answer is an unequivocal ‘yes’. That’s why so many other jurisdictions, here and in the U.S. are contemplating or already have moved to a $15 wage floor.
Writing in Maclean’s, economist Armine Yalnizyan points out that when higher-income households see more income, it tends to go toward savings and discretionary spending like travel. But when lower income households see more income, she writes, “… they spend virtually all of it. Most goes to food (more food or eating out), better health care and more education.”
That sentiment is echoed by 53 economists who jointly penned an essay on the subject concluding the new wage is a “good idea and one that is economically sound.” They’re right. Drawbacks considered, the new minimum wage is good social and economic policy, and deserves the broad support it is receiving.