Why a minimum wage of $15 will be good for Weston / Mount Dennis.

Note the more than four years of no increase between 2010 and 2014

The chart above shows the modest proposal to boost the Ontario minimum wage as put forward by the Liberals:

$11.40: today’s minimum wage
$11.60: Oct. 1, 2017
$14: Jan. 1, 2018
$15: Jan. 1, 2019

How much would a $15 hourly wage be as an annual salary? Just under $29,000 for someone working an 8-hour day, 20 days a month for 12 months a year. It’s not exactly high living.

Alleged think-tanks like the Fraser Institute claim that as many as 50,000 people will lose their jobs if the MW is elevated to such lofty heights. The Fraser Institute BTW, is one of the many propaganda arms of big business, generously supported by all of us because it has been allowed to call itself a charity. There are also claims that prices will rise as a result. Even the media seems to be repeating (many false) claims of impending doom without checking the facts.

In 2015 about 1.7 million people in Ontario earned less than $15.00 hourly. Incredibly, that’s just under 30% of the workforce. In Weston / Mount Dennis that percentage is likely considerably higher since we are one of the poorest areas of the city.

What we do know is that unlike the rich, poor people don’t send their money to tax havens. They spend it when they get it and largely on local goods and services. Income and sales tax revenues will actually rise as workers will pay more income tax and many may not need to apply for tax credits – a form of government wage subsidy for employers.

A study done last year, reported in the Huffington Post investigated the effects of raising Wal-Mart wages in the U.S. from $10 an hour to $15. The study concluded that revenue for the giant chain would be reduced by $5 Billion annually. Compared to the total annual revenue of $482 Billion, that works out to a hit of about 1%. In other words, raising wages 33% would increase costs less than 1%. Why then doesn’t Wal Mart raise wages? Share prices and dividends might go down.

From: http://www.canadiansocialresearch.net/minwage.htm

Australia has a similar economy to ours and currently mandates a minimum wage of $18.29 – somehow, the universe has managed to stay in one piece. Perhaps Australians believe in fairness more than we do.

Our readers might want to tell local MPP Laura Albanese that they support increasing the minimum wage.

Use the link here:

8 thoughts on “Why a minimum wage of $15 will be good for Weston / Mount Dennis.”

  1. Thanks, Roy! I had a problem with the link, but have written to Ms Albanese my support for the rise. It’s certainly time.

  2. A local news website seems a somewhat odd forum to discuss this issue, and I find it slightly amusing that you should call the Fraser Institute “one of the many propaganda arms of big business” yet then go on to cite a Huffington Post article which in turn cites a study conducted by UC Berkeley’s Centre for Labour Research at the request of a union-backed labour organization.

    Putting this aside, the minimum wage is a very blunt instrument for effecting its purpose. Its relative impact on low income earners in Toronto is very different than in say, Timmins, or in smaller towns with teetering local economies. While a corporate hegemon like Walmart may be able to cut its dividends (they won’t, actually; they will just raise consumer prices), smaller independent retailers, and those which are on the brink of profitability will suffer. Perhaps most importantly, the minimum also has a tendency to push more workers into the black market and into grey market “contracting” jobs to which worker protection legislation does not apply.

    I am no lackey for corporate interests (some days I think we should just repeal the Business Corporations Act altogether), but a more targeted way of assisting low income earners would be through reform of our incredibly ponderous income tax system, which is what the Fraser Institute study actually suggests.

    But don’t take my word for it! (or the Fraser Institute’s); you might have a look at the http://www.fao-on.org/en/Blog/Publications/minimum_wage
    Financial Accountability Office of Ontario’s study on the issue. Unlike the Fraser Institute, the FAO is actually independent, funded by the Ontario Government, for the purpose of advising the legislature (it is also held in singular contempt by the Wynne Liberals). The FAO’s ultimate and straightforward conclusion is that “raising the minimum wage would be an inefficient policy tool for reducing overall poverty.”

    So why is the present government pushing this plan to raise the minimum wage? Well, call me cynical, but it wouldn’t be the first time this government has disregarded independent advice, at the expense of Ontario’s economic prosperity, for the purpose of getting votes.

    1. Eric, thanks for your detailed and thoughtful reply. I don’t believe a local news website like WestonWeb is an odd place to discuss minimum wage because,

      (a) this topic is of vital importance to those readers working for less than $15 an hour;
      (b) our area has a larger percentage of people working for less than $15 an hour so relatively more people (workers and businesses) in our area will be impacted positively on Jan 1 2019
      (c) Our readership is quite politically connected and can influence decision makers.

      You believe that “smaller independent retailers on the brink of profitability will suffer”. I believe that if a business relies on keeping employees in abject poverty in order to survive, perhaps it’s better for all concerned that they pack up and find something else to do. There’s nothing sacrosanct about running a business.

      The vast majority of minimum wage earners do not work for mom and pop outfits. They work for large corporations who exploit the fact that workers low wages are topped up by governments through tax credits. Some of these corporations import cheap labour through the Temporary Foreign Worker Program which depresses wages locally and throughout an industry e.g. coffee shops although I think this has declined somewhat recently.

      You equate the Fraser institute’s reports on the topic with UC California’s Berkeley’s study. Unlike the Fraser Institute, I don’t believe that UC California compromises its research independence by taking large sums of money from the likes of the Koch brothers or Peter Munk.

      As for the FAOO’s study, raising the MW may be an inefficient tool for reducing overall poverty but they do say that, “Existing research also suggests that there is no significant impact of minimum wage changes on adult employment.”

      The minimum wage stayed stalled at just over $10 for more than four years. Was there a boom in employment and profitability during that time? Unemployment has steadily declined during the most recent raft of increases.

      The bottom line for me is that I wouldn’t want to be earning minimum wage and wouldn’t wish it on anyone. I know governments have a cynical and opportunistic eye on upcoming elections but regardless of motivation, I hope the Liberals can survive the barrage of criticism and do the right thing.

    2. Because I can’t miss a chance to talk economics–bear with me!–the wage increases will be passed on according to the price elasticity of the goods being sold. I said bear with me!!

      Ontario-grown tomatoes? The price won’t change. The market is too competitive. Tomato growers on the edge of profitability will lose their jobs. Others will be less profitable.

      Gas? It will go up, because gas is an oligopolistic market with a price-inelastic good.

      Will Walmart raise prices? Probably a little, but they have stiff competition from grocers and Amazon; they’ll eat some of the cost and pass along some of the cost.

      And, for what it’s worth, a passed-along price isn’t a bad thing; it means that the rich(er than minimum waged) pay more.

      Now, is this the best way to redistribute money? No, probably not. I hear great things about the earned income tax credit. And simplifying taxes is never wrong.

  3. I do not think the fact that the Faser Institute takes money from corporate interests necessarily calls the legitimacy of their research into question. I have known some respectable academics who have prepared research for them including a very fine professor of economics from my undergraduate days.

    That said, I am not saying one should turn a blind eye to the fact that the Fraser Institute tilts rightward (economically speaking) either. At the same time, to say that because the Berkeley study did not take corporate money, it is beyond reproach, is to ignore the fact that organized labour has its own vested interests to protect and promote, and that even if these interests are less insidious than corporate profits, they do not always align with the public good.

    When it comes to research bias, the issue is not so much the answers to the questions, as the questions themselves.

    So yes, I would draw a rough equivalence between the Berkeley study and the Fraser Institute on this particular issue. There are seldom any sources that are free of bias, although it’s hard to find fault with the FAO.

    You say,

    “I believe that if a business relies on keeping employees in abject poverty in order to survive, perhaps it’s better for all concerned that they pack up and find something else to do. There’s nothing sacrosanct about running a business.”

    This is a bit of a strawman. I certainly do not think employers have a right to exploit their workers. However, I do think that there is work which is not driven by desperation and, in the view of both the employer and the employee, is worth less than $15 per hour. Again, we should keep in mind the wide economic disparity across Ontario, in terms of cost of living, wages and unemployment. However, what we’re talking about for the most part here is youth employment (and part-time work). Youth employment is very important and should be actively encouraged through every policy means available.

    By contrast, FAO study contends that only about one quarter of the beneficiaries of a rise in the minimum wage will be low-income families (as the FAO study says, much of the rest will go to teenagers, who make up 60% of mimimum wage earners, and the last thing teenagers need is more money). Now, if a rise in the minimum wage were the only way to ameliorate the economic position of low-income families, notwithstanding how blunt an instrument it is to this end, perhaps it would be worth considering, but it is not the only policy option available, nor is it the only way of passing on the costs of social welfare to capital.

    The Liberals are not motivated for a second by sympathy for low income workers here, or “doing the right thing”. If they were, they would have agreed to implement tolls on the gardener and ploughed that money back into public transit, which would have been one surefire way to actually assist low-income workers.

    And don’t even get me started on hydro.

  4. It’s not mainly youth employment that will be affected. 1.6 million people’s pay will be increased with a $15 MW.
    We often take our example from the US where the MW has a huge range across various states but federally is US$7.25 or about CDN$9.47. Australia is a better equivalent country to Canada and set a AU$15 minimum wage in 2010. It has since risen to $18.29 and their financial system hasn’t collapsed. (Our dollar is roughly par with theirs.)

  5. Wage increase will help those that need it most, but it will not help clean up Weston Rd.
    The debate of $15 should be more about if its increasing too quickly rather then it being too high… another issue is the amount of taxes we pay only to see the liberals misspend money like it grows on trees……sadly $15 will not help clean up Weston nor rid us of the liberals……

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