Wage hike would hit greenhouses especially hard

A few weeks ago, the Ontario Legislature’s Standing Committee on Finance and Economic Affairs convened public hearings in Windsor on Bill 148 titled: Fair Workplaces, Better Jobs Act.

Discounting the much current and much abused word “fair” and the contemporary inclination to convert formal bill and statute titles into propaganda statements, the committee’s hearing largely focused on the provincial plan to increase minimum wages in Ontario to $15 per hour by 2019.

There is a wide swath of other labour related issues encompassed by Bill 148, many of which also will require amendments of other provincial statutes.

But for most at that Windsor hearing the issue was dominantly the increase in minimum wage from $11.40 to $15. This could constitute the largest increase in minimum wage in Ontario history.

One highlight of the legislative committee meeting in Windsor was the enormous lack of knowledge about our regional greenhouse industry.

The committee chair, Liberal MPP Peter Milczyn (Etobicoke – Lakeshore), displayed an apparent limited understanding of the greenhouse industry and, specifically, the role and condition of offshore workers who are vital to that agri-food industry.

His view that a new higher minimum wage was essential to assist poor offshore workers is largely based upon popular mythologies associated with past allegations about workers and conditions.

Labour costs run about 40 per cent of the average greenhouse grower’s expenses. A proposed increase in minimum wages could add on several additional percentage points. I shall explain.

The current hourly wage in Essex County’s greenhouse industry is usually $11.43 per hour. Add to this Canada Pension Plan contributions (4.95 per cent); employment insurance (1.63 per cent); vacation pay (4 per cent); the Employer Health Tax (1.95 per cent); and WSIB payments (2.84 per cent). Thus $11.43 an hour becomes, in practice, $13.32 per hour.

By 2019, a $15 per hour minimum wage with all these added costs becomes $17.81 per hour. This constitutes a 33.76 per cent increase.

A typical work week is usually around 50 hours per worker. The number of offshore workers employed obviously varies by acreage of greenhouses but assume an average of 40 offshore workers per medium sized greenhouse. Thus: 50 hours x 40 workers x $4.49 per hour and this would add on roughly $9,000 in costs per week or about $400,000 a year for a medium size greenhouse operation.

Furthermore, under the federal Seasonal Agricultural Work Program, growers responsible for offshore workers must provide twice weekly shopping opportunities often including a bus.

Offshore worker accommodation can cost several hundreds of thousands of dollars and includes furniture and utilities. Workers do pay nominal rents. Offshore workers also have prescription drug plans and full medical coverage.

Beyond offshore workers most greenhouse operations probably would experience additional wage/salary costs that would need to be included. For example, many greenhouses employ 200 to 300 local residents, many of which are part-time. Nevertheless, if minimum wages were to increase by 33 per cent certainly there would be pressure from other employees including permanent staff for similar increases.

In addition, upstream costs from suppliers also faced with a new minimum wage would add to overall operational costs for each greenhouse operation. Hybrid seeds are very expensive. Supplies for shipping and packaging, freight costs to distant markets in Canada and the United States would increase commensurately and I’ve not even touched on hydro rates, cogeneration costs and, perhaps, the final straw for smaller greenhouse operations, prospective cap-and-trade costs.

Finally, of course, the industry is highly competitive especially in the U.S. market. Try explaining to a major food retail chain in the U.S. your costs have increased by 33 per cent, especially when jurisdictions such as Indiana have a minimum wage of under $9 per hour.

If Ontario’s current government is seeking to undermine Ontario’s thriving greenhouse industry, the minimum wage proposed will be one very large prospective coffin nail, with cap and trade as a second nail pending for smaller growers.