Minimum-wage hike will test Ontario’s big parties

Ontario’s minimum wage rose 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 bottom-end 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 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 US$11 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 the hike (up to $13 so far) has overall been a boost for the working class.

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 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 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 a bit faster because of the minimum-wage hike, or their owners will see a convenient outside force to blame.

The Liberals will emphasize the hard-working people who keep their jobs and get 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, and the governing party’s obvious hope is that money will trickle up rapidly, making up for the lost business profits and higher prices.

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 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.

His criticism of the minimum-wage hike isn’t that minimum wages are an unjustified, job-killing interference in the free market for labour, which is the classic conservative view. That argument says 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 Kathleen Wynne is 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.

Whoever’s right should get some bonus points when we decide whom to trust with the government for four years.