Tag Archives: Minimum Wage

IN DEFENCE OF DOUG FORD FREEZING THE MINIMUM WAGE

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On November 21, Bill 47 was enshrined in provincial law. The much-maligned bill eliminates a bevy of provisions passed under the preceding government’s Bill 148, the Fair Workplaces, Better Jobs Act. The crux of the controversy surrounding the bill is that it freezes the minimum wage at a substantial $14 an hour, instead of the previously planned $15 an hour.

Many progressives, including students, have voiced their concern over the bill. But given the state of the economy following Kathleen Wynne’s tutelage, this freeze is Doug Ford’s best option and the right path forward for Ontario.

Legislation cannot overwrite the market

As pure as the intentions may be in advocating for higher wages vis-à-vis government mandates, it is not possible to legislate away poverty. Economic intrusions like artificial wage hikes always come prepackaged with unintended consequences.

At the end of the day, one individual’s wage is another person’s cost. Employment is the voluntary contract between those two individuals. The agreed upon wage is ordinarily set by basic market forces: supply and demand. Efforts by government to intervene in this contract cannot benefit the employee without affecting the employer.

As their costs of doing business increase, employers react. Industries such as food and entertainment lay off staff, cut their hours, or hike prices. As reported in the Financial Post, Ontario restaurants hiked prices in response to Wynne’s wage hike. Accordingly, in January, the province saw “food inflation [rise] to its highest annualized increase in nearly two years.”

As also noted by BMO Capital Markets’ senior economist, Robert Kavcic, the restaurant price hikes were a direct result of the Liberal government’s policy. In the same period that saw the province’s minimum wage jump 21 per cent, Ontario’s restaurant prices grew at a faster rate than any other province in the country.

Restaurants weren’t the only industry to feel the economic ripples of Wynne’s progressive proclivities. The Canadian grocery conglomerate Metro estimated its costs incurred from the wage hike to exceed $40 million. As a result, the firm said that it plans on cutting staff hours, in addition to reducing the number of 24 hour stores in the GTA.

The service sector also felt the pinch of rising costs. In Collingwood, Little People’s Daycare closed its doors permanently, citing the steep and swift spike in minimum wage.

The hike hurts low-wage workers — including students

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Economists HATE This. Eliminate Poverty With This One Weird Trick: The $9000 Minimum Wage!

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On Tuesday, Ontario’s provincial government, undeterred by the province’s title-claim to the world’s most indebted sub-sovereign borrower (one-third the population of California, and twice the debt!), raised its minimum wage to a whopping $15 per hour.

Left-leaning lemmings were instantly filled with vim and vigour, proclaiming the minimum wage hike a social justice victory.

The Canadian Broadcasting Corporation (CBC) led with, “How the Liberals went from cool to hot on $15 minimum wage.” Abandoning business decay as cause for concern, CBC ran another headline, “Ontario’s minimum wage raise a ‘small business killer,’ say critics, but for many it means feeling ‘human’.”

Reveling in hysteria and self-dramatization, liberals immediately decried the new law’s detractors as being cold-hearted and uncaring toward “working class families”. As the CBC’s own headline suggests, if you oppose the government-mandated minimum wage, you oppose people “feeling human.”

Here, in no particular order, are a list of reasons Canada’s Liberal government is making a terrible mistake by raising the minimum wage.

A Minimum Wage Hike Prices Low Skilled Workers Out of the Job Market

I got my first job in the summer of 2010. I was 17 years old, working as a lifeguard earning a generous (personally, I was very happy with it) $14 per hour.

At the time, the minimum wage was around $10 per hour.

I was making close to 50% over the minimum because prior to landing the job, I’d spent more summers than I can recall taking swimming lessons, as well as taking and completing first aid and lifeguarding courses.

What do you think would happen if the bare minimum you’re legally allowed to pay an employee jumps up to $15?

Naturally, lifeguards will also need a sizeable raise to maintain an incentive for people to expend the time and money on the required training. There’d be no reason to go through the trouble of becoming a lifeguard if you’re paid the same wage as a grocery store employee, who requires no prerequisite training, and has far less responsibilities.

This also means that companies employing lifeguards will prioritize hiring and keeping people with experience. This logic applies to jobs across the board. What you’ve effectively done is price low-skilled and inexperienced workers entirely out of the labor force. Their new “minimum wage” is now zero.

Youth unemployment in Ontario is higher than the national average. A recently published government jobs report showed that despite a slight January decline in national unemployment (5,700 less persons working than January of 2016), youth unemployment in Ontario was nearly 3 times harder hit (18,900 persons between 18 and 24 working in February of 2017 than in February of 2016). The Liberal government has a genius plan to address this. Make hiring unskilled, inexperienced young people more expensive!

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