Minimum wage on the rise

Photo by Sam Odrowski

Durham College student Judy Krajcik is happy to receive a slightly bigger paycheque.

Minimum wage has increased yet again, as it has for the past three years in Ontario, from $11.25 to $11.40 this past Oct. 1.

Employees are losing their jobs, having their hours cut and stores are increasing prices, according to the Canadian Federation of Independent Business (CFIB).

The provincial government says the increase in minimum wage is meant to match the inflation in economy.

Peter Stasiuk, a professor of economics at Durham College says, because such a low number of people work minimum wage jobs in Canada the economy won’t be impacted in a significant way.

“Minimum wage going up with inflation isn’t going to affect the economy drastically,” says Stasiuk.

However, the increase is impacting people such as Marina Brock, owner of Brocks Department Store in Port Perry. She does not agree with the government increasing minimum wage as much as it has.

She says to remain competitive in the retail business she cannot raise prices on items in the store, but instead has to cut employee’s hours to budget the payroll.

Brock says the private sector can take care of employees’ wages themselves. “We use to pay employees way above minimum wage before it kept increasing,” she says. Brock would prefer an increase based on merit as oppose to being told by the government what she should pay her employees.

Stasiuk is less concerned with the increase.

“There is an initial shock in October, November when the minimum wage change comes in,” he says. “But the economy settles at new wage levels and new price levels.” This means that the economy will eventually balance out wage increases with price increases.

The Ontario government says the increases in minimum wage is to help fight poverty and help Canadians in their everyday lives. Yet, according to the CFIB, increasing minimum wage does little to reduce poverty because most minimum wage workers are young and do not live in low-income households.

However, the organization says it does strain small business owners when a constantly increasing minimum wage makes it harder for them to attract and retain good staff through wages.

The increase forces small business to look for ways to absorb the cost of an increasing minimum wage through reduced hours, reduced training, and even job cuts, according to the CFIB Minimum Wage Report.

The CFIB has estimated a 10 per cent increase to minimum wage across Canada would cost between 92,300 and 321,300 jobs. The loss of jobs would come in the form of direct job cuts, hiring freezes, and slower employment growth.

Companies that already profit heavily such as McDonalds or Wal-Mart feel little to no effect from the increase in minimum wage because with minimum wage increases comes price increases to balance out profits, according to Stasiuk.

Minimum wage increases are announced by April 1 every year and implemented on Oct. 1.