By now, you’ve seen at least one Facebook status update about Ontario’s new plan to raise the minimum wage to $15 that was solely praise-hands emojis, and another that spelled out in great detail why this is the end of the world as we know it.
So… which one is it?
Well, as with most political issues, it’s both and neither—all at the same time. So let’s discuss.
Why do people think this is a bad thing?
One of the biggest arguments that you’ll hear is that this will disproportionately hurt small businesses. Whether it’s your independent local coffee shop, or your favourite vintage clothing store, it’s true that people are one of the biggest costs of doing business, and this increase represents a big jump in cost.
This type of added expense can also eat into a business’s profit margins quickly, which are usually pretty slim to begin with—local or not.
Since businesses are typically v. interested in making money, critics of the minimum wage hike will argue that such a significant cost increase—those people, always costing us money!—will mean more companies will set up shop elsewhere; somewhere with a cheaper labour force.
And finally, with the minimum wage increase curbing the money-making superpowers of businesses both big and small, you’ll hear arguments that ultimately, this increase means prices will go up for you and me.
Why do people think this is a good thing?
Well, it’s mostly because of the people angle.
As much as the arguments against the wage hike are focused on businesses, we’re also talking about real live humans, who are currently earning $11.40 an hour under Ontario’s minimum wage. If they work 40 hours a week, for 50 weeks a year, they’re earning $22,800 annually.
Think about all the articles you’ve read recently about the price of housing, the price of avocado toast, and your current budget. Could you make it work on $22,800 a year?
That’s $1,744.17 a month after taxes, for context.
The cost of living in Canada isn’t cheap, especially when you factor in some of our more famously nutso housing markets. People still need to live in those cities and work in coffee shops, and restaurants, and bookstores, and… well, you get the idea.
For these folks, a raise from $22,800 for full-time work to $30,000 for full-time work is pretty huge (and let’s be real, it still doesn’t mean they’re swimming in money).
If this is all a little bleeding-heart for you, there’s a purely economic argument to be made for the $15 minimum wage, too.
When people are barely covering their basic needs every month, they’re not really out there spending money and fuelling the economy… but if their income goes up to something a bit more liveable, all of a sudden they might actually support a local business once in a while.
If only we knew what was coming… oh wait.
Minimum wage increases aren’t some newfangled idea, like rompers for men or fidget spinners. In fact, the concept is so dated that there’s been time for a healthy amount of academic debate around it, and multiple studies completed, although they’ve all been focused on the U.S. market.
Still, the findings have been pretty interesting in terms of refuting a whole lot of the uninformed panic happening in your social media feeds.
One discussion paper, out of the IZA Institute of Labor Economics—an independent economic research institute based in Germany—found that a 10-percent increase in the minimum wage would increase food prices by about 4 percent, and increase overall prices by a paltry 0.4 percent. Another more recent review found that while yes, there are tradeoffs involved in raising the minimum wage (duh), the outcomes couldn’t be generalized across all businesses, industries and locations.
So we don’t have a crystal ball to know what will happen, and the issue can’t just be boiled down to “prices will go up” or “jobs will be lost.” But if the cost of this wage increase to me is a 4-percent increase on my lattes—and it means the person making them can actually afford to live in the city where they’re making the latte—I’m into it.
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