Minimum Wage Increase… More Like Misfortune

Issues, Minimum Wage Increases.jpg

When you first heard about the Ontario Liberal Party's idea to increase minimum wage back in 2014, your first reaction was probably to be ecstatic. I know mine was — then I realized what a horrible misfortune it would really be for this legislation to pass, which it ultimately did. On January 1st, the minimum wage in Ontario increased to $14 an hour. But what about people not earning minimum wage? Did their salaries also increase $2.40 an hour? The answer is absolutely not, and that is a major issue.

Why, you ask? The increase in minimum wage also leads to inflation, which means more expensive groceries, gas, rent, and even tuition fees. While these inflationary changes won’t immediately take hold, price rises are inevitable. Short term rises (separate from the effects of the aforementioned inflation) will also take place as employers are forced to squeeze their margins to compensate for paying their employees more. A minimum wage hike of 21% could eventually lead to a 21% increase in the cost of rent or groceries. That means that an individual with $1000 a month in expenses would need to pay an extra $210 for the same goods and services — yet only 11% of Canadians have had their paid wages increased as part of the Liberals legislation; the other 89% of working Canadians are unlikely to benefit at all.

What’s more, small and family-run businesses have also been threatened and many have been forced to reduce hours or let people go because they cannot afford to pay the increase. The government has put an unimaginable burden on these businesses, and for many of them it’s only a matter of time before they close their doors for good. But the Ontario Liberals did not take into consideration the potentially negative repercussions of their legislation; instead, they saw a chance to make more money through taxes and seized it without considering how much they would be hurting Ontarians.

Many high school and university students work minimum wage jobs, as they require little skill and are easy positions to replace when the person moves on. Instead of filling these positions, businesses are now combining jobs or eliminating them entirely to save money. And for those businesses that do continue to run as they did in 2017, they will likely be forced to increase prices and reduce their hours to make up the difference. This means that even though individuals are getting paid more per hour as a result of this minimum wage legislation, working Ontarians could be pocketing even less money as a result of diminished hours and increased spending costs.