Review of The Minimum Wage in Canada

We are a group of concerned first-year University of Guelph-Humber students writing to address the pressing issue of minimum wage in Canada. The current minimum wage levels across the country are inadequate for individuals and families to sustain a basic standard of living. Rising costs of living, inflation, and reductions in work hours are creating significant challenges for those dependent on minimum wage jobs. As university students, we witness the struggles of our fellow citizens in various contexts—through media reports, on the streets, and in our own lives.

Background and Research

On November 22, 2017, the Ontario government, under Premier Wynne, enacted Bill 148, known as the Fair Workplaces, Better Jobs Act. This legislation mandated significant changes in workplace practices, including raising the minimum wage. Effective January 1, 2018, the minimum wage was set at $14 per hour, with a subsequent increase to $15 per hour scheduled for the following year. For students, the wage was set at $13.15, while liquor servers received a minimum of $12.20 (Government of Ontario, 2018). Unfortunately, this increase has had negative repercussions, leading to approximately 59,000 job losses in 2018, with projections estimating a total of 60,000 job losses by 2019 (StatsCan, 2018; Canadian Press, 2018).

The rise in minimum wage has also been accompanied by adverse economic effects, particularly inflation, which impacts both consumers and businesses. Approximately 60% of minimum wage workers are young people aged 15 to 24, and the wage increase has resulted in a noticeable decline in youth employment rates. Employers, often preferring to hire more experienced workers, are more likely to let go of less experienced youth. This trend is particularly concerning as many students rely on minimum wage jobs to finance their education.

The Current Status of Minimum Wage

As of now, the Ontario minimum wage stands at $14 per hour. Despite the initial promise of increased wages, many citizens are finding it difficult to make ends meet. Ontario's cost of living continues to rise, especially in urban centers like Toronto, where average rent hovers around $2,000 per month. This reality puts significant pressure on those earning minimum wage, as they struggle to cover basic necessities.

Moreover, in the wake of these changes, new Premier Doug Ford has proposed freezing the minimum wage at $14, halting further increases (Government of Ontario, 2018). This decision raises concerns about the long-term implications for workers who are already facing financial strain.

Key Considerations

The ramifications of low income extend far beyond mere financial struggles. Individuals living on minimum wage often face poor nutrition, inadequate housing, and declining mental health. A low income can lead to a vicious cycle where individuals must cut back on essential expenses, including food and healthcare. Although Canada has universal healthcare, many individuals still face barriers to accessing necessary treatments and medications.

To illustrate the disparity between income and living costs, consider the following table:

As shown, a full-time worker earning minimum wage in Ontario would gross approximately $2,240 per month, which is insufficient to cover the average rent in Toronto. This gap leads to financial instability and, in many cases, contributes to mental health issues as individuals grapple with the stress of meeting basic needs.

Lessons from Other Jurisdictions

Exploring how other provinces address minimum wage can provide valuable insights. Minimum wage rates vary significantly across Canada, ranging from $10.50 to $15 per hour. Several provinces have implemented innovative strategies to support low-income workers. For example:

• Nova Scotia: Allows employers to pay based on productivity rather than a fixed minimum wage, ensuring fair compensation for workers.
• Alberta: Has paired minimum wage increases with reductions in business taxes, supporting small businesses while helping low-income earners.
• British Columbia: Introduced the Fair Wages Commission, which gradually raises minimum wage rates to meet living wage standards over time.

These approaches demonstrate that it is possible to balance the needs of workers and businesses while ensuring that individuals can support themselves adequately.

Challenges of Raising Minimum Wage

While raising the minimum wage may seem beneficial, it can lead to unintended consequences. For instance, higher wages can prompt employers to reduce hours or benefits, automate processes, or outsource labor to countries with lower wage standards. This shift could ultimately lead to fewer job opportunities for Canadians.

Moreover, the increase in minimum wage can also affect employees earning just above the minimum, as their relative pay may diminish in the face of rising inflation and increased living costs. Small businesses may struggle to adapt, facing higher operational costs that could inhibit growth and job creation.

Conclusion and Recommendations

In conclusion, the current minimum wage in Canada is insufficient for individuals to lead stable, healthy lives. People are living with financial insecurity, unsure of how they will meet their basic needs each month. To address these challenges, it is essential to consider a balanced approach to minimum wage policy.

We recommend:

• Raising the minimum wage to reflect the actual cost of living in urban centers.
• Implementing gradual increases to allow businesses to adapt without compromising their viability.
• Providing support programs for small businesses to mitigate the impact of wage increases.

By adopting these measures, we can foster a healthier economy that benefits both workers and employers. Canadians deserve fair compensation that allows them to thrive, and it is crucial for the government to take decisive action to improve the situation for all.

References:

• Government of Ontario. (2018). Fair Workplaces, Better Jobs Act.
• StatsCan. (2018). Job Loss Statistics.
• Canadian Press. (2018). Employment Trends in Ontario.