Liberal’s minimum wage hike endorses poverty

by | Feb 7, 2014 | Editorial

Eleven dollars an hour is not enough. Yet it’s exactly what minimum wage workers in Ontario will be receiving come June this year.

Put simply, the 75-cent increase the Liberals announced Jan. 30 is more of a food bank handout than a significant policy change.

The increase means that someone earning minimum wage for 40 hours each week will now come home with an extra $120 per month before taxes – or what basically amounts to a grocery bill.

No doubt many Ontarians could use this boost; according to Food Banks Canada, more than 375,000 people used food banks in the province last year.

But what the wage increase won’t do is substantially elevate anyone’s standard of living. Yes, it may relieve some pressure on the food banks, or pay some cell phone bills, but it will likely accomplish little else.

In fact, according to the Workers’ Action Centre, the increase to $11 an hour still leaves minimum-wage workers 16 per cent below the poverty line.

A provincial government – or any government, for that matter – that allows the minimum wage to remain out of line with the cost of living is, in effect, saying that it’s okay for people holding down steady jobs to live below the poverty line.

It is an endorsement of poverty.

For this reason, the number of advocacy groups spearheading the call to raise the minimum wage for $14 an hour is reasonable and necessary.

Not only that, but as more and more Ontarians work for minimum wage, the need for higher pay is only going to increase. Between 2003 and 2011, the proportion of minimum wage employees in the province more than doubled to from 4.3 per cent to 9 per cent of the work force, according to a Wellesley Institute study.

Of course, there’s the argument that if the minimum wage goes up substantially, the cost of goods and services increases accordingly, essentially rendering the increase dubious.

There’s also the idea that an increase will hurt businesses and they will be forced to cut hours and jobs. But keep this in mind: if a business can’t provide workers with a livable wage, it is a failure as an employer.

Furthermore, the veracity of these claims is questionable.

In the U.S., big-box retailer Costco manages to pay its employees an average of  $21 per hour, the Huffington Post reported in November. For new hires, hourly wages start at $11.50.

It’s also worth noting that if minimum wage employees make more money per hour, they’re earning more in less time. So if hours are cut, workers are essentially paid in free time, which they can use to get a second job, something that would have been considerably more difficult with a full schedule.

On the other hand, if jobs are cut, it is still undeniable that some low-wage workers would have been elevated above the poverty line.

If Ontario really wants to support workers, looking beyond a 75-cent hike is necessary. Meanwhile, the plans to tie future increases to inflation are double-edged. Linking pay increases to inflation is only judicious if wages are fair to begin with.

Currently, this is not the case. The province might as well have made it mandatory for employers to hand out $100 Loblaw gift cards to workers every month. The impact would be much the same.