“Paying good wages is not charity at all – it is the best kind of business” – Henry Ford


Weekly Update – Ontario Minimum Wage Hike Update

July jobs numbers showed Ontario payrolls jumping by 0.8 per cent, with provincial unemployment dropping to 5.4 per cent. This jobless rate is the second-lowest in the country (only British Columbia’s is lower currently), and the lowest figure Ontario has posted since 2000.

As you may know, on January 1, 2018, Ontario’s new $14 per hour minimum wage took effect. Prior to the new standard minimum wage, there had been fierce debate as to the potential consequences.

Economists and business owners feared economic slowdown, reduced hiring, reduced hours those already employed and layoffs, while exposing the economy to upward inflationary pressure; on the other hand, proponents of the hike argued that low-income earners – for whom the increase would most affect – would benefit positively by having more disposable income.

It is generally understood that the lowest earners spend a proportionately higher percentage of their net income on the basics: shelter, food, clothing, etc. Supporters of the increased minimum wage argued that this increased disposable income would funnel directly back into the economy via increased spending on the necessities, providing a boost to the economy and to government coffers (increased income and sales tax).

So far, the proponents seem to have been correct with their argument. The labour market is still strong, contrary to critics’ worries. Of course, it should be noted that the economy as a whole is still expanding, so we haven’t seen how the increased minimum wage will affect employment figures when markets pull back. We will have to wait and see.

Ontario’s minimum wage will increase to $15 per hour starting January 1, 2019.

Ontario’s results (so far) have been in-line with studies conducted in Washington State and U.S. cities with higher minimum wages (Chicago, San Francisco and Oakland, among others). Such studies have “consistently found that higher wages boost worker pay and haven’t led to either job loss or slowdown in economic growth”.

In British Columbia, the minimum wage increased officially on June 1, 2018 from $11.35 per hour to $12.65 per hour. It is still far too early to draw any conclusions on the hourly hike. British Columbia’s minimum wage will increase on June 1st of 2019, 2020, and 2021 until it reaches its intended rate of $15.20 per hour.

British Columbia’s minimum wage increase has been criticized by both the critics of general increases (“let markets determine value”), and by proponents of minimum wage increases, who have argued wages are not increasing fast enough – particularly when compared with the rising cost of housing.


Sources: BNN, Fortune.com, Global News


This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.