Monday, July 24, 2017

Ontario's Minimum Wage - Good or Bad?

First, I want to warn my readers ... this post is so unlike what I usually write about. I'm normally one of the most non-politically motivated people - I still am really, but what's been happening in our province has to be of concern to anyone who lives here, whether you have a political leaning or not.

The minimum wage in this part of Canada (Ontario) is currently set at $11.40/hr and scheduled to go up to $11.60/hr in October of this year. What some people may not realize is that there isn't a standard minimum wage for every occupation, so what you do to earn money can make a difference in what the minimum wage is (see the link above) and what industries or people are exempt or have exemptions applied (see the Employment Standards Act).  To understand it all, you almost need to be a lawyer... but really, none of that is what this article is about.

It's about the changes coming to the minimum wage here, and the increase to $15.00/hr. Sounds like a big increase, right?  It's not going to happen all at once though - it is stretched out between now, and 2019, and while some seem to think it's going to be great to have a nice increase like that, you also have to look at the other side of the playbook.
How much will our taxes increase by 2019?
  • How much will the cost of housing increase by 2019?
  • How much will the cost of hydro and natural gas increase by 2019?
  • How much will the cost of gasoline increase by 2019?
  • How much will the cost of ... well, anything at all increase by then?
Will any of of that increase to $15.00/hr actually increase the spending power of those earning it, or will it all be eaten up by income taxes and increased expenses? You don't think an increase in the minimum wage is going to stop these increases do you? The cost of the increase has to come from somewhere. Production costs for employers will increase, which in turn will increase the cost of wholesale products ... retailers (who also employ people) will be faced with increased costs to buy the product, and increased costs for their labour ... turning those increases (or part of it) onto the consumer.

In case some of you haven't figured that out yet ... that's us. We're the consumer. All of us, even those who think the large increase will be a good thing.

By the time the increase rolls around:
  • We may have less large employers as they flee Ontario (not just because of minimum wage - Ontario has other issues too).
  • We may have a lot less jobs because employers can't afford the minimum wage.
  • We may have increases in all sectors to such a large degree that people can't live above poverty levels.
If it turns out there are less jobs, then competition for those jobs will also be harder. Employers may be even pickier about who they hire.

While the Globe & Mail paints a rosy picture of how this increase can be good for the economy in Ontario, they point to studies and books from the early 1990s ... and what Ontario was like 10 years ago is far different than in it is today.  Now we have the likes of Kathleen Wynne and Justin Trudeau - the Tag-team of Terror for Ontarians.  If our economy is left up to them, we might just as well all move to the US ... Donald Trump can't be any worse that our pair of money-spending talking heads.

The Globe points to BC as a success, but the cost of living in BC is horrendous - everything costs more and it really isn't commensurate with your earnings. On top of that, a senior's CPP pension income isn't based on where they live, so if you live in BC when you retire and don't have your own investiment or private pension coming in to top it up, things could be tough (tough enough in Ontario). Why would Ontario want to emulate that huge mess? Business Insider reports Vancouver, BC as being one of the ten most expensive cities in the world to live in, while no city in Ontario made that list.

I would agree with that the possibility exists for there to be some benefit in the future, but I don't know that it's going to involve the creation of new jobs the way the Globe & Mail economists predict. I assume there may very well be some new business in some sectors, but at what cost? Already there are businesses in Ontario looking at the possibility of closure; moving out of the province (maybe out of the country); closing down; cutting jobs ... and of course because a lot of this lies in the future, nobody really knows what will happen.

I'm not an economist, and not making any predictions. More like observations and hopes that it won't all turn bad on us.

Other sources indicate that businesses are already asking for tax cuts to offset the wage increase, and The Toronto Sun reports on businesses considering their futures in Ontario.

... and that's before it even happens. The increases to the minimum wage take place between 2018 and 2019 - January 1 of each year (to $14 and $15 respectively).

It would be great if the Globe was right ... but the people painting these wonderful futures aren't living in the same world as the low-middle income families/individuals. When you live in the middle world, things are a lot different. When you live in a senior's world ... things are more than a lot different.

Right now, I find myself being hugely thankful to the guy I've been married to for all these years. If it weren't for him, we wouldn't be where we are right now. He invested wisely, and he keeps reassuring me that we are comfortable for now, and for some years into the future. Not rich or wealthy, but all our needs are covered, including a vacation place in Florida. We're luckier than many seniors.

The part that I'm really concerned about ... if something were to happen to my guy and I was alone, things would not be so good. Yes, I get parts of both his pensions (but only a part of it), but no drug coverage, no vision care, no dental care. I am not old enough to qualify for the seniors drug plan, nor young enough to get affordable extended health care coverage.

Making Ontario worse ... that should be Kathleen Wynne's tag line.

Her website says this:  "I'm interested in your thoughts about how we can work together to build a better province for all Ontarians."

But really ... she's not. She's interested in rich Ontarians and how she can further her career. Not how she can really help the financially berefit; the middle class, or the working poor.

More on Kathleen Wynne's Ontario:

Goose Down Jackets
HydroOne and Wynne
Approval Ratings even after cutting Hydro Rates
Ontario, Hydro & Wynne

There's so much more than than those few issues - a simple search for "Ontario" and "Wynne" will turn up tons of results - and yes, some pro, some con. Like everything there are 2 sides ... it's just that "her" side (expenses, costs increasing, money, money, money) is so much bigger than our side.

Note that this is a personal opinion piece.

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