My perspective - No Winners

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Published on Thursday, January 11, 2018

Kate Jackman - Atkinson
Neepawa Banner & Press

In a debate that pits business owners against employees, minimum wage is in the news again. On Jan. 1, the Ontario government raised the minimum wage by close to 21 per cent; from $11.60 to $14 an hour. For the last few years, minimum wage earners and anti-poverty advocates have been pushing a higher minimum wage as a way to reduce poverty and narrow the widening gap between rich and poor. But businesses are countering, saying that with slim profit margins, higher minimum wages will require them to reduce the number of employees and raise prices for everyone. It’s a complex problem with no clear solution and one in which both sides are right.

Part of the problem is the wide variety of situations in which workers earn the minimum wage. Minimum wage earners include high school students working their first job, retirees looking to make some extra money, as well as those who are working full time to support themselves and their families.

On the other side, a wide variety of businesses pay their workers minimum wage, from mom-and-pop operations, where the business owner is working side-by-side with their minimum-wage earning employees; to large multinationals, whose owners rank among the world’s richest. These businesses have different abilities to absorb wage hikes.

The food service industry illustrates the different sides of this debate. It’s one of the largest employers of minimum wage workers and in 2016, 42 per cent of its workers were under the age of 24. These jobs are an extremely important stepping stone for workers starting their careers— 22 per cent of Canadians had their first job in the restaurant industry.  Additionally, 23,800 Canadians over the age of 65 work in the industry to supplement their income. For many of these businesses, which are usually characterized by low profit margins and high employee turnover, higher minimum wages will inevitably lead to more automation, something we are already seeing.

For many operations, a minimum wage hike will mean fewer positions. For many of the businesses that make up our rural communities, this is the reality— business owners will cover these jobs themselves or cut back their operations. Both of which are a poor use of resources and neither of which are conducive to community economic development.  But that’s not the case for all businesses, many can absorb the hike while still remaining profitable.

What we really want is to see is a pathway up from minimum wage— a tiered wage rate and career progression. We want to help those struggling with poverty, but let’s face it, that’s not the case for all minimum wage earners. We want to see lots of jobs that allow young people to learn about working and acquire the skills they will need for a lifetime of employment. What we want to see are opportunities for workers who become more proficient to earn a higher wage. But this type of solution can’t be legislated and in many operations, the reality is that a higher minimum wage leaves less money available to reward these more valuable employees.

The current minimum wage debate fails to answer the central question: what is the minimum wage? Is it a living wage? Or the base wage for those not fully participating in the labour market? Minimum wage hikes are a blunt tool for a problem that is fragile and complex. What we’re left with is a solution that helps some workers, but will come at the expense of others. It’s hard to know who the winners and who the loses will be, but all eyes will be watching Ontario to find out.