Kathleen Wynne objects to $14 minimum wage

 27 January 2014

Premier Kathleen Wynne has welcomed recommendations that would increase Ontario’s minimum wage annually by the rate of inflation but is downplaying the notion the $10.25 rate should be boosted dramatically.

The provincial advisory panel’s report released Monday doesn’t address the thorny issue of what today’s rate should be.

The report also recommends businesses get four months notice before any increase takes effect and that the government review the scheme in five years.

“The reason we asked the panel for advice is that we really want to move away from an ad hoc system — or lack of system — of dealing with the minimum wage,” Wynne said Monday in Thornhill before the report came out.

“The panel is going to advise us . . . that we should index the minimum wage to an indicator and we’re going to look at that advice,” the premier said, putting cold water on the bid to dramatically hike the $10.25 hourly rate.

“I know that there’s a call for $14, but we have to move carefully because this is about making sure that we retain and create jobs,” she said.

“At the same time we have to have a system in place that has a fairness to it that . . . has not been the case for many years.”

The minimum wage has increased 50 per cent in Ontario since 2003, from $6.85 to $10.25 per hour, taking it from one of the lowest in Canada to one of the highest. This report will guide our efforts to ensure a fair minimum wage for Ontario’s workers, improve living standards for the most vulnerable and keep businesses competitive.

Labour Minister Yasir Naqvi pointed out in a statement Monday that the “minimum wage has increased 50 per cent in Ontario since 2003, from $6.85 to $10.25 per hour, taking it from one of the lowest in Canada to one of the highest.”

Media release: Minimum Wage Advisory Panel recommendations provide Premier Kathleen Wynne with opportunity to advance vision for decent work

January 27, 2014

Toronto—The much-anticipated recommendations of the Minimum Wage advisory panel were made public today, revealing a number of modest proposals for regularizing future increases in the minimum wage. The Panel Chair decided that recommending the minimum wage level would be outside the Panel’s scope.

“By recommending the minimum wage should increase annually in accordance with the Consumer Price Index, the Advisory Panel has adopted one of three key demands put forward by the Campaign to Raise the Minimum Wage,” said Deena Ladd, Coordinator of the Workers Action Centre. “This kind of indexation would be a real step forward. But we must also insist that Ontario’s minimum wage generate enough income so that a full-time worker is not living in poverty. As it stands, a full-time minimum wage earner falls 25% below the poverty line, and we need much more than a cost-of-living increase to address his shortfall.”

According to the Campaign to Raise the Minimum Wage, $14 an hour will bring a worker 10% above the Low Income Measure – the standard adopted by the provincial government in its poverty reduction strategy.

“Just last year, in responding to a study on precarious employment authored by the United Way and McMaster University, Premier Kathleen Wynne made a commitment to Ontario workers to develop a decent work agenda,” said Ladd. “Today, the Premier has a real opportunity to make good on that promise by ensuring that a full-time job is pathway out of poverty – not a poverty trap.”

The Campaign to Raise the Minimum Wage is calling for a minimum wage of $14 an hour, increased annually by the CPI. The Campaign estimates that a $14 minimum wage would inject at least $5 billion annually into Ontario’s economy, stimulating consumer demand, generating economic activity and creating jobs.

Ontario Chamber of Commerce: Business to Government: Bring Predictability to Minimum Wage

Posted: 19/09/13

TORONTO, September 11, 2013: Businesses want the Ontario government to adopt a predictable, transparent, and fair process for determining Ontario’s minimum wage, according to a new report released by the Ontario Chamber of Commerce (OCC).

The report calls on government to introduce a new process that would link changes in the minimum wage rate to the Consumer Price Index (CPI), an economic indicator that captures changes in the cost of living.

Currently, Ontario’s minimum wage rate is determined by the government on an ad hoc basis and through unspecified criteria. This method results in sudden increases in the minimum wage, and unfairly exposes employers to unanticipated increases in the cost of doing business.

“We’ve considered all the options at Ontario’s disposal,” said Allan O’Dette, President & CEO of the OCC. “Tying the minimum wage to the CPI will bring predictability to the process. It will allow businesses to plan for increases in their labour costs and protect the long-term purchasing power of workers earning minimum wage.”

Though supportive of regular increases to the minimum wage, the group cautions against temporarily adopting a formula that would see rates outpace inflation.

“We’ve seen convincing evidence that major hikes in the minimum wage will have adverse effects on employment levels, particularly among youth and in Ontario’s retail, hospitality, and leisure sectors,” says O’Dette.

The report is based on extensive consultations and surveys with employers from across Ontario. Its release comes as Ontario’s Minimum Wage Advisory Panel begins its consultations in communities across the province.

Read the full report here.


In a recent OCC survey, 60% of employers in the retail, hospitality and leisure sectors say that an increase in the minimum wage will hurt their businesses and force them to lay off employees.

Ontario’s minimum wage of $10.25 is above the national average and the highest in the Great Lakes Region.

The minimum wage in Ontario has increased 50 percent over the last 10 years.

The Ontario Chamber of Commerce consulted with over 1,200 of its members from across the province to formulate its position on the minimum wage.

For more information or to schedule an interview, contact:
Neville McGuire
Manager of Communications, Ontario Chamber of Commerce
T: 416.482-5222 ext. 2410
E: nevillemcguire@occ.on.ca

Charles Lammam & Hugh MacIntyre: Help young workers, don’t raise the minimum wage

Charles Lammam and Hugh MacIntyre, National Post | 13/08/26 | Last Updated:13/08/23 1:30 PM ET

Youth unemployment is still unacceptably high,” noted the Ontario government as it identified priorities in its 2013 budget. Oddly, however, the government is now contemplating a policy that would make it harder for young Ontarians to find jobs. With its newly minted advisory panel, the government is considering ways to automatically increase the minimum wage by tying its future value to changes in inflation or perhaps economic growth.

The panel’s lofty goal is to “come up with a system that will ensure both job creation and income security for all Ontarians.” Achieving it, however, is wishful thinking. Scores of economic studies have found that minimum wage increases result in fewer job opportunities, particularly for the young and low-skilled.

Before the panel gives its recommendations, it should ponder a new study published earlier this month by the National Bureau of Economic Research. Instead of the traditional approach of looking at employment levels, the authors looked at how minimum wage increases impact net job creation (jobs created minus jobs destroyed). After examining data in U.S. states from 1977 to 2011, they found that a 10% increase in the minimum wage led to about a one-quarter reduction in the rate of net job growth. Put another way: increasing the minimum wage reduced the rate of jobs being created, resulting in fewer employment opportunities than would have otherwise occurred.

Of course, one study alone is not convincing evidence of the destructive effect of minimum wage hikes. So consider a comprehensive review of the academic literature conducted in 2006 on minimum wages and employment. Led by Professor David Neumark, an expert in the area, the review looked at more than 100 studies covering 20 countries and found an overwhelming majority of studies reached the conclusion that minimum wage hikes negatively impact employment.

In Canada, more than a dozen studies have examined the impact of provincial minimum wage increases. Based on those findings, a 10% minimum wage hike decreases employment for young workers (ages 15-24) by an average of 3-6%. For young workers most affected — those earning between the current minimum wage and the proposed higher wage — the impact is more acute, with job losses of up to 20%.

To understand why increasing the minimum wage has such negative effects, it is important to recognize how compensation is determined in competitive markets. Compensation is based on the amount employees produce — their labour productivity. For example, if a fast-food employee can produce a maximum $8 worth of output each hour, then her employer would be willing to pay up to $8 per hour in total compensation. In other words, the employer aims to match per unit labour costs with the value of what their employees produce.

If the government imposes a minimum wage rate that results in compensation exceeding an employee’s maximum ability to produce, employers adjust their affairs accordingly. Employers not only respond by decreasing the number of jobs but also byreducing the hours employees work, cutting non-wage benefits like on-the-job training,giving priority to the most productive employees, and/or finding ways to operate with fewer workers and more automation.

There is also a growing body of evidence showing that minimum wage increases actually do little to help households in need.

A 2012 study by prominent Canadian minimum wage experts analyzed provincial data from 1997 to 2007 and found that raising the minimum wage had no statistically discernible impact on measures of relative poverty (including Statistics Canada’s Low Income Cut-Off). One important reason is the bulk of minimum wage workers do not actually belong to low-income households. In a 2009 study, researchers used Statistics Canada data to profile minimum wage earners in Ontario. They found that “over 80% of low-wage earners are not members of poor households” (they define poverty as earning income that is half the median wage). The researchers also found that “over 75% of poor households do not have a member who is a low wage earner.”

If the government is serious about tackling Ontario’s youth unemployment and fostering job creation, then it should steer clear of future minimum wage increases regardless of what formula the advisory panel recommends. The reality is that increasing the minimum wage will actually reduce job opportunities while doing nothing to alleviate poverty.

National Post

Charles Lammam and Hugh MacIntyre are analysts at the Fraser Institute.