It’s Time for the Ontario Government to Put Its Money Where Its Mouth Is

In Ontario, the minimum wage has become a political smokescreen, concealing an unproductive government that detrimentally harms the very people it claims to protect. It’s not that advocating for a higher minimum wage is inherently flawed; rather, the issue lies in the Ontario government, under Premier Ford’s leadership, exploiting wage increases to present a façade of addressing the province’s soaring cost of living and growing income inequality.

Since 2020, the minimum wage has been increased four times with the most substantial increase happening this past October, catapulting it from $15.50 per hour to $16.55 – an increase double the previous amount. Ostensibly motivated by inflation, aiding low-income earners, and protecting vulnerable workers, these increments have paradoxically yielded opposite results.

Visual Credit: Jerin John

The intended beneficiaries of minimum wage hikes, including low-income earners and those below the poverty line, remain largely unaffected. Statistics show that, in 2016, 87.5% of people earning minimum wage live in households above Canada’s Low-Income Cut-Off, and 83.4% of the people who are below this threshold make above minimum wage (1). Additionally, 58.4% of minimum wage earners are youth aged 15-24 who still reside with their families, benefitting from financial support and incurring fewer expenses than their independent counterparts (1). This discrepancy underscores a notable disconnect between minimum wage income and a governmental attempt to alleviate poverty.

Contrary to their purported benefits, minimum wage increases have shown a detrimental impact on employment. For teens and young adults, a mere 10% increase in minimum wage reduces their employment by 3-6%. This is harmful to long-term career prospects as it creates a lack of entry-level positions that aid in the development of marketable skills needed for career advancement. Additionally, there is evidence to suggest that minimum wage increases cause significant employment layoffs and reduced working hours–decreasing eligibility for health and dental benefits.

Beyond the impact on low-income earners, minimum wage increases significantly impact small businesses which are a substantial part of our economy and communities. In 2022, Statistics Canada reported that 99.7% of all businesses in Ontario were classified as small businesses. With an increased minimum wage, the cost of operating increases substantially as more money is required to pay wages. In addition to this, the cost of supplies and services also increases as other businesses have to compensate for their increased labour costs. The effect is a two-fold increase as businesses must front the cost of increased labour expenditures on two fronts. These added expenses leave no choice but to raise the cost of product and services to maintain the sustainability of the business. This not only contributes to inflation but causes a financial strain on customers.

For many small-scale businesses, customers on a fixed or limited income could be strained by resulting price increases. With this, many people may no longer afford to spend money at businesses like they did previously, reducing customer bases. This also continues to disadvantage those living in poverty as these individuals now have to deal with an inflated cost of living in addition to the potential layoffs and reduced benefits discussed previously. Small businesses play a crucial role in providing opportunities for individuals with lower socioeconomic status, offering flexible work schedules and developmental opportunities. However, increased operation costs coupled with a dwindling customer base poses formidable challenges for small business owners, jeopardizing the very opportunities they provide.

To genuinely combat income inequality and poverty, a fundamental shift in government focus is imperative. Instead of relying on rapid minimum wage increases, the Ontario government should invest in comprehensive programs that support workers and provide them with better opportunities. Initiatives such as establishing functional subsidized childcare systems, enabling increased workforce participation for women, and investing more in education through grants for skill development programs would address the root causes of poverty more effectively than reactionary wage adjustments.

Overall, rapid minimum wage increases, employed as a guise for an unproductive government, have proven to harm the very people they allege to protect. With each passing day, Ontarians are starting to wake up to this shell game and their new unwelcome reality.

Kennedy (she/her) is a third-year Political Studies student and an Editorial Board member at Political Digest.