New minimum wage benefits outweigh cost
It has only been a week since Ontario’s minimum wage increased from $11.60 to $14. And there are no shortage of dire predictions. Some businesses in the hospitality sector have already cut paid breaks and started to make employees pay more for benefits, blaming the provincial government.
Fair enough. Business owners can and will do what they feel they need to in order to protect profit margins. But it’s worth noting that in at least one case, the owners doing the cutting are multimillionaire Tim Hortons franchise owners. They may have the right, but the optics of millionaires punishing minimum wage workers because of actions by the provincial government are not flattering. All this happened in the same week we learned that top CEO compensation in Ontario is just shy of $2,500 per hour. Average worker pay rose by 0.5 per cent in 2016. Top CEOs saw an average of 8 per cent added to their pay cheques. But sure, those minimum wage workers are the problem.
Yes, there will be negative effects, including some displacement. But is the impact outweighed by the overall benefits of paying workers a wage that can keep them out of poverty?
Working 40 hours a week under the old wage means you earn $24,128, before taxes. After deductions, that’s income on or below the poverty line, widely considered to be a bit more than $20,000 for a single person and just under $42,000 for a family of four. Working for the new minimum wage, you aren’t going on any exotic vacations, but you are earning $29,120.
More than 1.7 million people in Ontario live on incomes below the poverty line, according to Statistics Canada figures from early last year. This new wage will lift many above that line. It makes no sense to institutionalize working poverty. So yes, the new minimum wage makes sense.
Is this too far too fast? There’s some merit in that argument, put forth by PC leader Patrick Brown and others. But even Brown isn’t arguing for the status quo, only for a longer phase-in. The government opted not to do that, in part because there was some catching up involved because minimum wage was frozen and flat through most of the ’90s. But yes, this is a lot, and the government needs to do more to cushion the blow for small businesses and nonprofit organizations. Already the small business tax rate has been cut, and further breaks and incentives are in the works and should be expedited.
More than a million Ontario working people will benefit from the higher minimum wage. They won’t be going to the Caribbean. They’ll be spending that money at home, in our economy, in some of the same establishments that are now penalizing them for making a more livable wage. That irony aside, the new wage is a good thing, and the government deserves credit for staying the course.