Minimum Wage Raise May Yield Minimum Benefits

Minimum Wage


Several Ontario workers saw their minimum wage rise to $14 an hour in the New Year. The new general minimum wage took effect January 1, 2018, “to help workers and their families who are struggling to get ahead in a changing economy,” according to a news release published on Ontario.ca. The standard is then set to increase again on January 1, 2019 to $15.

This increase in minimum wage came with the passing of the Fair Workplaces, Better Jobs Act, 2017: a new legislation that includes wide-ranging amendments to Ontario’s Employment Standards Act, 2000 and Labour Relations Act, 1995 as well as the Occupational Health and Safety Act.

Other changes include increased family medical leave, a new domestic or sexual violence leave of up to 10 individual days and up to 15 weeks of job protected leave, and ensuring workers are entitled to at least three weeks’ vacation after five years with the same employer, among other things.

According to Ontario.ca, such legislative changes are meant to create more opportunity and security for workers in the province, as its growing economy’s nature of work has changed, leaving those on part-time, contract, or minimum-wage work struggling to make ends meet at home.

Currently, approximately 6.6 million workers are subject to being replaced by new technology, a shrinking manufacturing sector and less union jobs. The pay raise may be beneficial to those who are finding themselves in a tight spot and unable to buy basic needs like groceries and school supplies for their children. In Ontario, 1.5 million workers make less than $15 an hour. With the minimum wage change, 55% of all retail workers will be getting a raise.

On the flip side, small businesses that employ minimum wage workers and make low profit might have to lay off workers to compensate for the increased cost of operations. This also means lower bonuses or lower wage increases for the higher earners that remain employed at the business. A reduction in profitability also means an increase in prices for their products and services. A crucial part of Ontario’s economy, small businesses are employment generators. Unfortunately, it is possible that businesses may become unsustainable and be forced to reduce production or shut down operations altogether. The Ministry of Labour wanted to help those making minimum wage with affordability, but did not increase the employers’ ability to pay, nor provide any means of compensation.

Another party affected by the increase in minimum wage are teens and young workers trying to get their foot in the door. Employers can’t afford to hire more inexperienced or unskilled workers. According to Financial Post, “past minimum wage increases have disproportionately impacted teen employment, thereby both depriving them of a stepping stone into work skills and marketability.

How about workers already making $14 per hour? Are they now considered minimum wage workers? It is unclear whether those currently paid $14 per hour will get a raise when minimum wage catches up to their pay. Online consensus is that it’s not assured by any means. There is no automatic or legislated increase for them. It seems unfair that a job which requires a certain amount of skill and knowledge, or diploma or degree for entry-level jobs, now earn the same as a high-school student flipping burgers at a local fast-food joint. In the long-term though, wages may be pushed upwards because of unions and workers demanding higher pay. However, none of this is set in stone. An employee can always ask for a raise, but be prepared to justify it.

Higher minimum wage rates sound great to students and those looking to gain experience in entry-level jobs. The new legislation however, is likely to have the opposite effect as smaller businesses might not have the means to hire workers or even continue to function.


Helen Jacob | Staff Writer


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