The Rightist War on Minimum Wage
One of the aims of the Ford government, which it pledged to do before taking power, was to roll back the minimum wage gains that started under former premier Kathleen Wynne. On September 26, the Ford government started to move forward with their plan by stating that it will end the guaranteed minimum wage program started by the Wynne government. This was also spurred upon by pro-business groups and associations, such as the Ontario Chamber of Commerce, which seeks the repeal of Bill 148, which increased the minimum wage to $15, on the basis that Bill 148 would make it harder for businesses to grow their businesses and hire employees. Bill 148, apart from the planned increase of the minimum wage to $15, also contained two paid, job-protected emergency leave days provided for all workers, increased holiday entitlement, mandated equal pay for casual and part-time workers doing the same job as full-time workers, along with boosted protections for temporary agency workers. Ford himself, before becoming premier, has considered any possible minimum wage increases a “tax grab”, hinting that all it would do would mean the increasing of taxes for Ontarians. In place of the minimum wage program, Ford would provide tax cuts by removing everyone earning less than $20,000 from the tax brackets.
The Conservative and pro-business efforts to repeal Bill 148 however, would, rather than improving Ontario economically, end up making Ontarians worse off. One of the reasons why this would hurt it economically is that minimum wage workers would be worse off. Not only would Ontario minimum wage workers lose the $15 wage gain if Bill 148 s repealed, they would also lose various benefits provided by Bill 148 such as the paid job-protected emergency leave days that are provided for all workers, as well as mandated equal pay for casual and part-time workers that do the same jobs as full-time workers. Temporary agency workers would also lose the protection that was originally supposed to be granted to them.
Furthermore, Ford’s promised tax cuts would not be of any benefit to low-wage workers, whereas an increase in the minimum wage would provide more of a benefit in helping workers pay their taxes. Assuming that the wage rate remains at $14 per hour, a minimum wage earner would have to pay for $859 in provincial income tax when factoring in the proposed tax cuts. However, had the minimum wage been raised, as the Liberals and NDP proposed, the full time minimum wage worker would be left with an extra $2,080 in gross annual income. This means that the minimum wage increase leaves the worker with about $700 more than Ford’s income tax credit would.
Evidence further proving that minimum wage increases actually make workers have more money in their pockets was further provided by economist Sheila Block, whom, after analyzing the Canada Revenue Agency figures from 2015 and noted that two-thirds of the 4.9 million Ontarians making less than $30,000 already pay no income tax and for those that do pay the income tax, they would save around $485 if Ford’s tax break come into fruition. If an increase to the minimum wage is granted however, they would earn at least an extra $1,950 a year before taxes, which leaves them $1,500 richer. Therefore, providing tax breaks may ultimately not be as effective in keeping money in the pockets of workers and taxpayers in contrast to a wage increase.
Minimum wage, when implemented across Canada, has also been seen to have little effect on unemployment. In Alberta, while unemployment rate did rise 0.1% after a minimum wage increase, it would fall back to it’s original level six months after it was made. In Ontario, the increase of the minimum wage from 2005–2014 actually led to the decrease of unemployment. Similar trends could be seen in British Columbia.
As reported by the Globe and Mail on July 2018, Ontario’s job market, rather than the decline and stagnation warned by businesses and their advocates, actually continued to expand. It was reported by the globe and mail that the province added 61,000 new jobs in July and the jobless rate fell from 5.9 per cent to 5.4 per cent, the lowest level since 2000. Many sectors of the economy saw increased employment, particularly accommodation and food services, which added a total of 7,100 since the wage increase at the start of 2018.
Apart from overlooking the fact that increases in the minimum wage has not caused the job crisis feared by employments, along with the impotency of the tax cuts to really help workers, Conservatives also overlook other consequences of reducing the minimum wage. By freezing the minimum wage and subsequently providing tax cuts that may ultimately prove to be ineffective, the government would have less money to spend on services such as transportation. This may actually end up undermining low income workers targeted by Ford’s tax cuts as they may cut off lower income earners that do not own a vehicle themselves from affordable transportation.
The positives of minimum wage may be fine and dandy one may ask, but could it be argued however that minimum wage may make it harder for businesses to maintain profits and hire workers as they have to pay workers more than they can already make? CEOs themselves it is argued had to make supposedly tough choices to deal with minimum wage gains. For instance, when Kathleen Wynne increased the minimum wage, Tim Hortons responded by cutting out all paid breaks, meaning that for an 9 hour shift, they would only be paid for 8 hours and 20 minutes. This was further followed by a cut in the benefits package of Tim Hortons employees. New employees and employees working less than 5 years have to cover 75% of the costs out of pocket, while those that have worked for more than 5 years have to cover 50% out of their pocket. Tim Hortons is not the only business to take action against their own employees in order to maintain their profits under the guise of “surviving” wage hikes; in response to Wynne’s wage increases, Loblaws laid off 500 office staf to cut costs, while Sobeys cut 800 office jobs across Canada.
Yet the question that must be asked is “are these businesses really forced to cut benefits to avoid bankruptcy or are they more driven by greed”? It should be noted that Canadian businesses are not in a precarious situation themselves, and that they themselves have made bloated salaries significantly more than what they give to their employees. Canadian CEOs on average, make around $50,000 by lunchtime in a day’s work, with the 100 top-paid chief executives of publicly traded companies netting $10.4 million on average, or 209 times the average income of the average Canadian worker by 2016. These CEOs, according to senior economist David Macdonald, were constantly at the forefront of the movement against minimum wage. With these astronomical profits, it must be asked, are these CEOs really scraping up earnings themselves and facing the risk of bankruptcy if they were to adapt minimum wage policies, or are they willingly opposing minimum wage policies to maintain their bloated earnings?
Ultimately, while Ford claims that his repeal of the minimum wage, combined with his tax cuts would be advantageous to the population, the existing evidence shows this is not the case. Workers are more likely to benefit from the increases that the liberals and the NDP promised to uphold during the election as shown by projections. Despite fears of unemployment, the steady increase of minimum wage in Ontario through the years has not resulted in any massive unemployment, with the gains under the Wynne government actually leading to more employment. By contrast, reducing the minimum wage in favor of tax cuts would not provide workers with a larger profit margin and might retroactively make workers worse off by inhibiting government spending on services relied upon by low wage workers such as transportation. The only people who would benefit are greedy businesses that are able to preserve their bloated salaries while feigning economic deprivation at the expense of their workers, whom they tried to disenfranchise themselves during the wage increases, in order to justify maintain a status quo where they are the only ones that benefit — and many of them are themselves leading the charge to persuade a Conservative government supportive of their interests to uphold their end of the bargin in subverting any opportunities for fairer wages in Ontario.