People in Ontario have been celebrating the government’s implementation of a $14 per hour minimum wage, but I wouldn’t start popping champagne just yet. While the increase in minimum wage claims to fight poverty and improve the lives of Canada’s minimum wage workers, it fails to accomplish this for a variety of reasons.
For starters, businesses almost always end up passing these increased costs onto consumers, often out of necessity. A business is only able to stay open so long as it is profitable, thus any rational business owner is looking to maximize their profits. While some may view this in a negative light, this fundamental phenomena of capitalism is what has driven up living standards and productivity over the past few hundred years. Despite this, inevitably, there has been a wave of people choosing to place the blame on the corporate giants such as Tim Hortons for cutting employee benefits as a result of raising the minimum wage. Phrases such as ‘corporate greed’ and ‘violating human rights’ have been recklessly thrown around, revealing the irrational, emotional component of their argument.
Looking at the situation from a logical standpoint, it doesn’t matter if the Tim Hortons franchise is owned by a billionaire or someone who is barely making ends meet; at the end of the day the only way to ensure the longevity of the business, and the jobs of the individuals who work there, is by making the necessary changes to ensure that the business is as profitable as possible. This means either laying off workers, reducing hours, cutting benefits, raising the price of goods, or likely some combination of them all. The fact that some or all of these effects must take place is a result of basic economic forces, which have all been well-verified. There is no reason to expect this case to be any better for the plight of the common citizen, in fact, it may well be worse.
The recent trend in automation is likely to worsen the effect of minimum wage increases on consumers. Surely these mandated increases in wages will make it more profitable for employers to replace workers with technology in at least some instances. Already we see minimum wage workers at McDonald’s and movie theaters across the nation having their jobs replaced by machines, and artificially raising the minimum wage is only going to accelerate this trend. This means that labor will be further depressed than in normal circumstances.
This where we see the true effect of policy of this kind. The few people who manage to obtain or retain a minimum wage job at the new, increased wage are better off. However, this also creates many more people who cannot find a job or who see their hours greatly reduced due to businesses being forced to pay their workers more. Adding to the suffering of these individuals is that the price of goods gets pulled up with increases in minimum wage. In effect, this policy widens the divide that it is intended to bridge.
While there are good intentions in having a minimum wage, it should be clear by now that the net effect on workers is actually a negative one. This should raise alarm bells for students. One must wonder what the government’s true motivation was for imposing such a measure. Is it purely altruistic as they would have the public believe?
Perhaps, but maybe Kathleen Wynne and the rest of the Ontario Liberals were merely seeking to raise their abysmal approval ratings before the provincial election in the summer of 2018 by hoodwinking uninformed voters. After all, according to a poll from Ipsos, Wynne is behind the Progressive Conservatives and tied with the New Democrats for the lowest approval rating of any sitting premier.
