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Wages Gro-o-ow In Ontario!

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A Look At The Proposed Increase To Minimum Wage In Ontario

One thought that is shared amongst almost all millennials is that the cost of living is increasing at a much faster rate than income.  In a perfect world, there would be parity between inflation of costs and inflation of wages.  This isn’t a perfect world though and these trends tend to work more on reaction rather than cooperation.  After much fanfare – Ontario is on the cusp of raising the minimum wage. This is part of the Fair Workplaces, Better Jobs Act, 2017.  Due to the impact on retail and food service chains, the reactions are mixed.  These employers often use a large number of minimum wage (or close to) workers to operate their business.  I believe this is both a good, and necessary step towards improving our economy.  Only time will tell if the effect is positive or negative.

History Of Minimum Wage In Ontario

In reference to the Government of Canada website the minimum wage in Ontario has grown by 155% in the past 30 years.  Workers were entitled to at least $4.55/hour in 1987. Working full-time at 40 hours/week with 2 weeks vacation that would equate to an annual salary of $9,100.00.  In 2017 the minimum wage (for someone 18 or older) has risen to $11.60.  On the same basis would be a salary of $23,200.00. In a 3 person household this is just above the poverty line.  While that bump seems significant – we are talking about a period of 30 years.  The cost of living has increased at a significantly higher rate than that.  For example a liter of gas was going for about $0.40.  That cost has tripled in the same amount of time.  Housing in some markets is even crazier but I’m not going to start a housing rant today.

Minimum wage has gone up fairly consistently year after year (with a few gaps where it was stagnant for several years).  Typically this change has been less than $1.00 increase. Although after 9 years of no increases 1995-2004 the increase was $0.30.  That is less than $0.04/year.  The proposed changes will bring Ontario’s minimum wage to $14.00/hour in 2018 and $15.00/hour in 2019.  At $15.00/hour – the full-time worker would make a comparable salary of $30,000.00/year.  While they won’t be living on easy street, that is a decent sum to have as a minimum.

What This Means For Business

Footing the bill for this increase will be the many employers throughout the province.  What is going to be interesting to see how some businesses react.  What will the wages of workers currently making what the new minimum wage will be.  For example – if I started a job making minimum wage several years ago and have had several merit-based raises during my employment I might find myself currently at $14-$15/hour.  Tenure, experience and previous efforts could be flushed down the drain leaving me making the same amount as a new hire?  Doesn’t seem fair but the government cannot force companies to provide raises to employees – they only need to meet the minimum.

Another interesting change in employment standards will have a big effect on some of the trades.  Part of this proposal is to mandate a minimum of 3 paid hours for every 24 hours an employee is considered on-call.  I am currently working in a trade (albeit at the office level), where technicians are required to be on-call.  This means that even though they are not scheduled, they can receive a call to go into work at any time.  Assuming that employee already works 5 days a week – they would be entitled to at least another 6 hours of pay for the remaining 2 days.  One part of this that isn’t clear is if those 6 hours would be paid at an overtime rate, or at their standard rate of pay.  I’m sure more details will be available if this act is passed.

Why This Will Be A Good Thing For Ontario

If this legislation passes, I truly feel this will be a positive step for Ontario.  Any person who works a full-time job should be entitled to a basic living wage.  At $30,000/year ($2,500/month) a person should be able to rent a half-way decent apartment, pay their utilities and put food on the table.  There won’t be any luxurious trips or fancy cars and things might get tight based on the number of kids in the house.  Hopefully the cost of living won’t increase too significantly which would null any positive changes to wages.  The fact is that while we can’t all be rich – there is no requirement for a certain percentage of the population to be living in poverty.

As the economy improves, everyone should be able to enjoy the fruits of their labour.  Increased wages for those making the minimum will put less strain on other government funded programs.  Thousands of families will be able to improve their quality of life which should have a positive effect on communities as a whole.  With a larger gap between welfare and minimum wage, there is more incentive to work hard and to grow.

The large retailers are going to get a bit of a hit no doubt. They should also see increased revenue as people will have more to spend.  Our young workers will have a bit more money from their part-time jobs which will allow them to save for goals like post-secondary education.  With less reliance on student loans, they will be set up for more success as adults entering the workforce.

You May Say I’m A Dreamer

I’m well aware that such a large change to the minimum wage over such a short amount of time could have some negative impacts.  I have worked in a role where I had to manage the cash flow of a small company and having an almost 30% increase in labour cost over a period of a year would be quite difficult to manage.  I truly feel this legislation will pass and will be a big plus for our province.  I’m hopeful that the other provinces follow suit and do great things across our country.

You can read through all the proposed changes here.

What would this increase mean for you in your family? Do you see it as a positive or negative move by the government?  Feel free to share even if you are outside of Ontario.

Scott

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