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
Harry Khachatrian. 