Minimum wage hike not all good news

Exactly what did Premier Kathleen Wynne think was going to happen when she hiked minimum wage by more than 20 per cent in one year?

The move is advertised by Wynne’s Ontario Liberal government as a bold, progressive move to improve the lives of those on the lowest incomes.

But by ordering such a steep increase over such a short period of time, Wynne has taken the credit for alleviating poverty, while not actually getting her hands dirty with the issue.

She has left it up to businesses to figure out how to find the extra pay of up to $5,000 per worker per year.

So she has lost the right to criticize when businesses respond, legally and very predictably, by cutting costs and raising prices.

The news has been dominated this week by some Tim Hortons franchise owners elsewhere in Ontario, who have informed employees that their breaks would no longer be paid, and other perks discontinued.

Wynne said these tactics were “the act of a bully.”

First off, the changes announced are legal and have no relationship to bullying.

Second, if Wynne wants to make unpaid breaks illegal, the power is all hers.

Third, if Wynne had spent more time in the private sector, she would know that this kind of cutting back is exactly

what happens when business is put under pressure.

Unlike other companies like McDonald’s and Starbucks, Tim Hortons franchises are not allowed to raise prices. Owners can either absorb the cost themselves, or they can cut costs. And businesses aren’t charities.

Wynne’s comments make me think of a person putting five steaks on a table at which seven hungry people are seated, and then recoiling in horror as they fight over the food.

None of this is a surprise. “We always said there would be some unintended consequences,” said Art Sinclair, vice-president, public policy and advocacy, of the Greater Kitchener Waterloo Chamber of Commerce.

“There would be layoffs, or cutting back on some hours.”

Because the wage increase is so dramatic, businesses can’t wait to make changes, he said. “Adjustments have to be made right now.”

There is a lot of uncertainty about the future.

Some have predicted that businesses will use technology to get rid of certain jobs. Some restaurants and coffee shops might cut their hours. Others will demand more skills from those minimum wage earners, to earn more for the company.

Jawad Ghabra owns two Shawerma Plus restaurants in Waterloo with his family, and says they will have to raise the wages of all the workers, not only those who make minimum wage. Those with more skills and experience expect to earn significantly more than those on minimum wage.

That means prices for the food will have to go up — “but we can’t do it today” because there’s a lot of competition among Middle Eastern food establishments near the universities. And also, students don’t have a lot of money to pay more for food.

Ghabra isn’t sure what will happen next, but he is thinking of ways to make the business more desirable for customers.

That could mean offering “unique” dishes not found elsewhere, or expanding the catering capacity as a way of generating more income. He thinks “we’re going to go in the hole for a few months” while it all shakes down.

Alleviating poverty is an issue so big and important, it calls for a joint response between employers, governments and social service agencies.

But just as she wrung her hands and did nothing last year while Sears employees were tossed off the ship, Wynne has thrown the wage issue over to businesses to deal with — then criticized their solutions.

That’s not leadership.