The Alberta government announced last week it will increase minimum wage to $15 per hour by 2018, setting off a discussion on whether Ontario should follow.
According to the Alberta government, the change will take place in three stages, starting with the minimum wage increasing to $12.20 per hour on Oct. 1 this year, $13.60 in October 2017, and $15 in October 2018. The result will be a nearly 34 per cent increase to minimum wage over a three-year period.
The Ontario minimum wage is currently $11.25 per hour, increasing to $11.40 Oct. 1.
Several economists have said there is concern that such an increase in the cost of labour, particularly for small businesses, could lead to higher consumer prices and more unemployment, according to various news reports.
“[The Alberta wage increase] seems driven by political purposes to fulfill an electoral promise rather than by sound economic rationale,” José Galdo, an economics professor at Carleton University, said. “This hike will largely exceed changes in the consumer price index and productivity put together.”
According to the a statement from the Alberta ministry of labour, roughly 59,000 Albertans are earning the current minimum wage, and nearly 300,000 earn less than $15 per hour. More than half of those earning less than $15 an hour are the “heads of households or their spouses.”
While these people could benefit from a wage increase, Galdo said the benefits of a minimum wage increase may not outweigh the costs.
“There is no free lunch. Low-skill workers who are the potential beneficiaries of these hikes, will benefit only if they keep their jobs,” he said. “The production cost will increase due to this hike, [and] businesses could react by reducing hours worked or number of workers . . . no employment means no wages.”
The implications in Ontario of a wage increase are still unknown, though many labour groups, such as the Workers Action Centre (WAC), have advocated for a similar increase to the minimum wage. According to the WAC website, the group wants Ontario to raise the minimum wage to $15 per hour, and that wages should be based on 35-hour weeks.
“We need a minimum wage of $15 to bring workers and their families 10 per cent above the poverty line—and a commitment to annual cost-of-living adjustments,” said a statement from the WAC.
Ontario traditionally raises its minimum wage depending on an annual inflation index that takes place in April. The last published report by the Minimum Wage Advisory Panel was in 2014.
According to a profile of small businesses in 2014, written by the Alberta government, the largest concern of a wage increase to $15 is the effect on small businesses, which make up 95 per cent of businesses in Alberta and are responsible for 35 per cent of job creation.
According to Statistics Canada, the Alberta unemployment rate has risen to 8.4 per cent. This unemployment correlates with the recent decrease in the value of oil in Canada, upon which many Alberta industries depend.
