With the Ontario minimum wage increase in full force, some students are ecstatic about being able to fill their carts with more than just KD and frozen pizza. Meanwhile, cuts in hours have left other students deeper in debt than ever before.
This year, the Ontario Liberal government increased the minimum wage in the province from $11.60 per hour to $14 per hour. This dramatic change in the minimum wage has resulted in a lot of discussion among economists and workers about the impacts.
On the one hand, some argue that the increase has been a good thing for workers and more money equals greater spending ability.
Others argue that increasing the minimum wage has hurt the people it is supposed to help by creating less availability in the job market.
Minimum wage and the Canadian job market
According to Steven Tufts, an associate professor of geography at York University who studies labour geography, populism, and labour market adjustment and integration, increasing the minimum wage is a positive thing for the economy, because it helps low-wage workers.
“The first thing it does is that it really puts the money into the pockets of people who’ve been working for low wages,” he said. “The second thing is that it benefits everybody eventually in the labour force, because as people at the bottom get raises, people who are already making $14 an hour will get bumped to $15 and $16 and so forth, even though that takes a little bit of time.”
He added that an important part of the increase is that it takes money from corporations and puts it in the hands of workers.
Ian Lee, a professor in Carleton’s Sprott school of Business, has a different perspective on the increase. He said he believes increasing the minimum wage harms workers, because it has the potential of reducing job openings.
“I predict that there would be less opportunities, less minimum wage jobs offered as we go forward,” he said. “What the government has done is to provide incentive to people to use less people, because labour is now more expensive.”
In response to the minimum wage increase, some students have been experiencing cuts in hours as businesses attempt to save on worker costs.
According to the 2018 Ontario Labour Market Report, January job losses were the highest recorded in Ontario since January 2009.
While part-time jobs declined by 59,300 in the new year, full-time jobs increased by 8,500.
Taking the biggest hit so far this year were young people aged 15 to 24 who saw the loss of 4,600 jobs ahead of the minimum wage increase, with the loss of another 25,800 when it was rolled out in January.
Caitlyn Rogozynski, a second-year journalism student at Carleton, said the minimum wage increase has put her into more debt than ever before due to a cut in her hours.
“My hours got cut a lot this year,” she said. “Last year and the year before that, nothing really happened in terms of hours for me, but I’m down to one shift a week since the minimum wage went up.”
Along with a cut in her hours, Rogozynski added that many of her coworkers were let go from her job at Hot Topic, a counter-culture retail store at the Rideau Centre.
“I know a lot of businesses have been affected by it because they just can’t afford to pay their employees,” she said. “I think it would be better if it was raised gradually and more business owners, bosses, and management would have more time to adjust.”
How minimum wage works
Minimum wage by definition is the lowest wage an employer can legally pay an employee.
According to Statistics Canada, it was introduced in the early 20th century and was intended to prevent the exploitation of women and children.
Today, each province has their own set minimum wage with Nova Scotia having the lowest at $10.85 per hour and Ontario having the highest at $14 per hour.
In addition to the varying minimum wages, provinces are responsible for setting their own rules around wages and labour.
For example, in Ontario, servers earn less than the standard minimum wage, but are expected to gain supplementary income through tips.
Similarly, students under 18 also earn a lower minimum wage across Canada.
According to Janet Deline, a communications officer at the Ontario Ministry of Labour, part of the reason why the minimum wage was increased was because of a report called The Changing Workplaces Review.
“We had what is called The Changing Workplaces Review, and in that, there were some concerns raised about the minimum wage not being high enough,” she said. “That was one of the considerations that the review and those that partook in it had addressed.”
Jocelyn Wood, a second-year psychology student at Carleton, is a supporter of the increase.
“I think because the costs of things are going up, it’s important for minimum wage to also increase with that,” she said.
Wood added that increasing the minimum wage, however, does have its drawbacks, including the potential for a cut in hours and job opportunities.
Sydney Elliot, a first-year masters student in the Norman Paterson School of International Affairs, has worked several minimum wage jobs, and said there has to be a balance for the increase to be effective.
“I think it’s really important that people be paid enough to live on,” she said. “But the effects of the increased minimum wage are concerning too, so I think there needs to be a balance between the two.”
The CPI and minimum wage
Some provinces, including Ontario, increase their minimum wage based on the Consumer Price Index, also known as the CPI.
The CPI is a way to measure the rate of price changes of things bought by Canadians, according to Statistics Canada. The most common use of the CPI is to measure the change in the rate of inflation or in consumer prices.
The index can be used to evaluate and monitor changes in a person’s financial situation because the prices of goods and services are based—to an extent—on what people can buy, and what they can buy is determined by how much money they have.
“The general minimum wage was based on the Consumer Price Index, so it will go up based on that change every April 1,” Deline said. “Whatever the percentage change for the Consumer Price Index, whenever that went up, the minimum wage would be compensated in the same amount.”
But according to Lee, increasing the minimum wage based on the CPI is not a good idea.
“What they should do is not increase it for some time to come, and they should not index it. There’s been a lot of talk about indexing the minimum wage,” he said. “I think that is a very bad idea, because all that will ensure is that companies will continue to use less and less people.”
Is Ontario’s minimum wage enough to live on?
The main questions people have been asking about the minimum wage increase are: is the minimum wage enough to live on? And does it help or hurt low-wage workers?
According to Tufts, it can be helpful to workers to get a higher minimum wage because having more money means a higher purchasing power.
“When minimum wage workers get an increase of $2 per hour they can buy things, and buying things is quite important to keep the economy moving,” he said. “What’s really important however is that those things that they buy are things that make the economy grow.”
On the other hand, Tufts added that the Canadian economy is good at adapting to jobs in low-wage positions.
“I think in Canada, we really do have a very precarious workforce. We generate a whole bunch of low-wage jobs, so those jobs are going to be there,” he said. “I think the bigger question is how employers are reacting, what benefits they’re going to claw back as workers get $14 and maybe next year $15 an hour.”
But for people like Rogozynski, the minimum wage increase means cutting corners and spending less as a response to less hours at work.
She said the best thing to do if you’re a student affected by the minimum wage increase is to cut corners where you can, and pick up as many extra shifts as possible.
“I haven’t gotten my hair or nails done in months, and it’s something I used to do often,” she said.
Taking advantage of the Carleton food bank, and writing down all of your expenses so you can figure out where you’re spending your money, and what you can live without is another tip Rogozynski said she uses to help keep her head above water.
At the end of the day, she said taking up a second job is a reality that people are going to have to face.
“Try to make as many connections as you can, because at this point, even minimum wage jobs are all about who you know,” she added. “A lot of people are going to have to sacrifice their quality of life, which is really sad.”
Graphic by Manoj Thayalan
