Bill 148 and Increased Minimum Wage

Bill 148, a significant labour bill called “The Fair Workplaces, Better Jobs Act 2017,” includes a number of proposed changes to Ontario’s labour laws. Arguably most controversial among them is a proposed sharp increase to minimum wage, pushing it from the current $11.40/hour to $15/hour by Jan. 1, 2019. The biggest jump would be from $11.60/hour to $14.00/hour at the start of the year in 2018. That single increase represents a jump of over 20%. It is this sudden increase that is most alarming for many farming businesses, and it should be of concern to low wage earners as well.

In January 2014, the government’s Minimum Wage Advisory Panel released its report after significant consultations and review of the literature on the issue of minimum wage. In it, Chair Anil Verma noted that “there was near universal agreement on making the process of revising minimum wages transparent, predictable, fair, and less ‘political.’” Subsequent to this report, the government established a formula for increases to the minimum wage based on the Consumer Price Index (CPI).

While the push to a higher minimum wage seeks to address social issues among vulnerable workers, this new proposal creates a lose-lose situation because large wage hikes have negative impacts both for business owners and for low wage earners. The same Advisory Panel Report notes that academic research in Canada shows that the negative impacts on employment from minimum wage increases “were substantially larger when they involved a large minimum wage increase compared to a cumulative series of smaller increases.” This means a sudden jump in minimum wage is likely to result in job losses and reduced new job opportunities. It may also result in reduced hours of work or greater precarious employment, both issues that the government in fact seeks to reduce.

For those sectors that must compete internationally for the price of their goods, nationally and internationally uncompetitive wage rates make it harder for businesses in Ontario to thrive. These sectors cannot easily pass their increased costs onto consumers. Ontario’s fruit and vegetable farmers, for example, have to offer locally competitive wages, but they also have to compete with the global price when selling their products. The horticulture sector is highly reliant on farm workers, with labour forming up to half of its business costs. Small and medium farm businesses will feel this pinch most acutely. In the long-term, uncompetitive wage costs will push labour-intensive primary production and food processing industries to leave Ontario, which will negatively impact our economy and our access to local food.

The CFFO is working with other farm organizations to bring these concerns to the government’s attention. The CFFO recognizes the importance of a livable wage and believes that work should be economically valued to encourage greater dignity and participation in the workforce. Our concern is that the economic impact of a sudden change to an uncompetitive minimum wage is likely to negatively impact both Ontario workers and Ontario businesses.

 

Opinions expressed in the CFFO Commentary are those of the author, and do not necessarily represent CFFO policy.

Posted by Suzanne Armstrong on July 14, 2017

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4 Comments

  • John Verbinnen says:

    Thank you for addressing these concerns. We need to do this collectively because as one business owner we have very little power or impact. In our business we are looking at a major problem with this bill that could bring us to the point of disaster. We employ 10 full time employees and up to 25 season employees. We can’t calculate the cost of this bill because all our input costs will be higher as well as our labour. Everyone is going to have to raise their prices so in the end it is the government that is the big winner. I am not politically minded and I am very concerned about our business and the people we employ. The Lord has graciously provided for us but he does not guarantee that times will continue to be as good as they have been. We learn that from Ecclesiastes – “However many years anyone may live, let them enjoy them all. But let them remember the days of darkness, for there will be many. Everything to come is meaningless.” Ecc 11:8. So we are to be prepared for a time such as this. Our human nature wants to hold onto the good life but we must learn to put more of our trust in God and not in our leaders.

  • John Sebok says:

    Besides your reasoning above, accelerated robotics use will certainly happen in all business sectors and, personally I will cease to tip restaurant staff.

  • Harold Stewart says:

    The Ontario Government would seem to be trying to discourage small business. Jumping minimum wages, health taxes, prov pension plan, huge gov debt that will have to paid off with higher taxes, regulations and rules pouring out like a dam breaking?

  • Richard says:

    This government is all about survival at any cost. The problem is that we, the citizens, are paying the cost and we just can’t afford it.

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