Minimum Income or Minimum Wage?

Facing a 30 percent plus increase in the minimum wage over the next 18 months has many local businesses wondering how they are going to fulfill this potential legislative demand.  We put 24 small business owners and managers in a room with the Minister Responsible for Small Business, and Peterborough MPP Jeff Leal for two and a half hours, and the overwhelming feedback was that the proposed changes were “too much; too fast”. From restaurants to retailers, manufacturers to Not for Profits, all were talking about fewer hours for employees, fewer new hires, job cuts, automation and increased prices. Anyone who wishes to criticize the small business owner for this reaction needs to spend some time with them, finding out just what it takes to meet payroll these days.

Meanwhile, earlier this year the provincial government announced three pilot projects (Lindsay, Hamilton, and Thunder Bay) designed to test the concept of a Basic Income Guarantee.  Under the program single recipients would receive up to $16,989 from the government, less 50% of any income earned.  Calculations show that the income one would have to earn before they were no longer eligible for a portion of the basic income amount would be $33,978.

If minimum wage increases go through and the employee works a 40 hour week, their yearly earnings before taxes would be $31,200.

Over the next three years, the Basic Income Pilots will also measure outcomes around:

• food security
• stress and anxiety
• mental health
• health and healthcare usage
• housing stability
• education and training
• employment and labour market participation

​Outcomes from this study have the potential to provide very good information on which to base a decision on how to best serve vulnerable workers and those on low incomes.

And yet, the Government is not willing to wait. Instead they are pushing through $15 Minimum Wage legislation on such a short timeline that even employees are worried, recognizing that in order to make $15/hour they need to have a job…

There’s no doubt all eyes are on Seattle right now as that city moves forward toward a $15 minimum wage.  Many aspects of the Seattle policy have been studied, but a recent study from the University of Washington showing the latest increase to $13 resulted in a decrease of income paid to low-wage employees of $120 million or a loss $125/month for each worker. This suggests that the concerns of the typical small business owner and their employees are valid.

Ontario’s minimum wage is currently tied to the Consumer Price Index and has been increasing yearly since 2014.  The Ontario government had the forethought to establish Basic Income Guarantee Pilots to assess the impact of such a program on low income workers.   The impact of free tuition for students from low income households has not been fully assessed.  These are good policies and pilots that could reach into the core of the issue of income security and make a difference.

Business can be a willing partner, but forcing a 30 percent plus increase through wages onto small and medium sized businesses at a time of high hydro rates, increasing WSIB and CPP premiums, and more inspectors to police it all, challenges the perception that Ontario is open for business.

Read more on the issue:
Enough talk about the fat cat business owner

The unintended consequences of a $15 minimum wage

keepontarioworking.ca

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