Ontario set to increase minimum wage
Earlier this month, the Ontario government announced that it will increase the minimum wage from 14.35$ per hour to 15$ per hour on Jan. 1, 2022. This increase will also affect those in the service industry, who are currently compensated at 12.55$ per hour, as it will increase their wage to the same 15$ an hour. As with any increase in the minimum wage, controversy has followed.
I am acutely aware that there is an economic school of thought that wishes to do away with the minimum wage entirely. People of this persuasion believe that any increase in the minimum wage will increase unemployment, as companies will be less willing to hire workers if the cost of labour increases.
The other side points out that the effects on unemployment are small if minimum wage increases are correctly implemented. All companies have to pay this new rate, so there is little impact on competition.
It is important to recognize that both sides in this argument are aiming to achieve the same goal. That is, more people should be employed at wages that allow them to live comfortably. The controversy comes from the means, not the ends.
On this issue, I find I cannot escape notions of fairness that are absent from a purely economic analysis. The U.S. federal minimum wage, for example, is 7.25$. States may set the minimum wage higher, but a plethora of states, including Kentucky and Alabama, still go by the 7.25$ federal standard.
I could not accept, in good conscience, a minimum wage this low.
The Ontario government cited tireless people who have continued to work during the pandemic as the motivation for the increase. This is not the correct way to characterize this decision. Because decisions to increase the minimum wage can seldom be defended on purely economic grounds, they must necessarily be defended on moral grounds.
There are many companies currently employing a slew of workers at the minimum wage who could afford to pay more. The argument is simply that companies with billions in profit have a moral obligation to pay a wage that allows workers to live a comfortable life.
I do not enjoy the rationalization that many people left-of-centre feel they must engage in on this issue. They make technical-economic points, rather than pointing to a moral position that most people agree on. The minimum wage should be increased because companies are able to pay higher wages while still making huge profits, and thus they have a moral responsibility to do so. Stating this another way is playing semantics.
People who wish for an increase to the minimum wage do need to define terms. We have heard “fight for 15$” as a slogan for higher minimum wages for years. If all of a sudden, the movement transforms into “fight for 20$”, it’s likely that this will hurt the cause. Cost of living changes are one thing, but if your eventual goal is something akin to a Universal Basic Income, it’s better to divulge that from the start.
The increase in the Ontario minimum wage is a good step forward. It was expected of any political party and should not be seen as political gamesmanship. The “fight for 15$” is now over in Ontario, but the reaction to this change remains to be seen.