Premier Wynne and the Liberal party’s announcement regarding the increase in minimum wage is a vote grab, plain and simple.Unfortunately it is the people of Ontario who will end up paying the price. Just like the vote grab with the gas plant cancellation the Liberals are scrambling to do everything they can to stay in power.
Wynne has an approval rating of 17% as of September the lowest of all current Canadian premiers and she knows she needs to do something if the Liberals want to remain the government. Earlier they announced a rapid high speed train from Toronto to Windsor. But this didn’t have the desired lift in the polls because no one wants to go to Windsor. RIM and Blackberries are all but dead and it is too little, too late. So they pulled the “let’s appeal to the common folk” trick in the hopes of saving their sinking ship.
In doing so they put the burden on small businesses, many of which will not survive. It is easy for people to say, “then they shouldn’t survive” but these are people’s livelihoods, businesses they have invested time, energy, and money in. They represent people’s’ dreams and they’re being destroyed by a selfish, unpopular politician.
There are around 400,000 small businesses in Ontario (< 99 employees) which employ over 85% of private sector workers, that is about 4 million people.
According to statscan [link to the PDF], “While the lowest share of total employment in SMEs occurred in Ontario and Alberta, these two provinces still employed a staggering 87.3 percent and 91.2 percent, respectively, of the private sector workforce.”
An 18.5% increase in the cost of staffing will kill many of these businesses. Let’s say 10% of these businesses close down, that is 400,000 people who will be unemployed and collecting UI.
You will also see a continued consolidation of wealth because mom and pop shops will not survive and you will need to go to the big box stores. If you are thinking “The free market will take care of it.”, it won’t. Ever play Monopoly? The whole point of that game is to teach the pitfalls of capitalism and the free market. What many don’t understand is that the increase in minimum wage will only help temporarily. The cost of goods will go up and services will go up. These small businesses will need to offset that increased expense somehow. In fact some retailers are already sending out signals warning of this.
You might think, “Oh who gives a shit about Little Caesars, there is lots of pizza places” but that is someone’s franchise. That is a small business someone uses to pay their mortgage, their children’s education, to employ people.
Prices in 2017 are 16.4% higher than prices in 2007 and that is without a 20% increase in minimum wage. I suspect prices will sharply rise over the next few years as a result of Wynne’s plan.
I am not against increasing minimum wage, but it should be pegged to inflation like rent is. I get that it is hard to live on minimum wage but rather than asking, “why hasn’t minimum wage gone up?” ask yourself why tuition has increased 40% in the past decade. Or why electricity rates from Nov 2008 to October 2016 increased an average of 10.95% per year. Why has the Canadian corporate tax rate gone from 34% to 26.5% during that same period of time?
If the Liberal government was serious about helping people, they would increase the corporate tax rate, and then use that money to lower the cost of essentials: utilities, transit, healthcare, education (I believe education is essential for a strong, productive society and for increasing earning potential). They would peg the minimum wage to inflation so that the buying power of those making the least doesn’t change.
But then of course, then they wouldn’t get the support of the their corporate friends and be back in the same election predicament.