DAVE AGAR

Tuesday, January 28th Commentary

Posted By: Dave Agar · 1/28/2014 7:26:00 AM

Minimum Wage

The Ontario minimum wage is going up from $10.25 an hour where it has been kept for the last 4 years.   Typically that tends to bump other wages up as well, so we could all be getting more because of this.

The Wynne Cabinet meets tomorrow and is expected to finalize an increase based on inflation of the past 4 years.   That would likely take the number to about 11-dollars-an-hour.

There's no doubt this will increase the cost of doing business but from that you should not assume it'll mean fewer jobs in the future.   Yes, years ago there were studies linking a higher minimum wage to fewer jobs but more sophisticated studies in the last few years demonstrate that as long as the economy is expanding and revenue streams are good, businesses will not cancel job expansion plans because they’d be cutting off their nose to spite their face.

Besides, if you are putting more money into people's pockets they usually spend it and it goes back into businesses.

If we do anything at all about the minimum wage it should be to stop linking it to poverty.   Most people who are poor don't work and therefore don't get a wage, let alone minimum wage.  If government wants to attack poverty it should do it through other means and not tie it to the minimum.

And for those critics of the Wynne Government's move to a higher minimum wage, don't even think about using the argument that it will put Ontario at a competitive disadvantage.  Politicians across the continent, as well as in Europe and beyond are all having the same discussion.  In fact, in tonight's State of the Union message to Congress, U.S. President Barack Obama is likely to announce an increase in the federal minimum wage.  And there are moves afoot in more than 20 U.S. states to increase the state minimum.

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  1. Jim posted on 01/28/2014 07:50 AM
    My advice is get a degree in business or economics before you shoot your mouth off about things like minimum wage. First, this will destroy what is left of the manufacturing industry in Ontario. Why would a firm pay at least $11 an hour when they can get the same job done overseas for half the cost? Further, as a firm's cost go up they pass that along to the consumer. So anyone who doesn't get a raise loses buying power, in essence a wage cut. Third, smaller firms and start-up's without a huge market share to absorb the increase in prices likely won't survive or WILL have to lower staff costs somehow. Finally, while firms may not cancel planned job growth it is unlikely that they will go beyond those plans and will instead look overseas for further growth.
  2. Leon posted on 01/28/2014 08:08 AM
    Sorry Dave but you jumped to a conclusion a little prematurely. As long as the productivity of a worker is greater than the minimum wage then there will be no increase in unemployment. The issue with setting a province-wide price floor is we can't account for people that don't produce at a level that would warrant them being paid a minimum wage, which will of course lead to them being let go. This causes hardship, but what do the rest of us care? It's not ours to bear.
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