Wage Hike – The wrong way to do the right thing?

For many Canadians the wage hike comes as a much needed relief – It represents affordable housing, and for those of us who live paycheck to paycheck, every dollar counts. Why wasn’t this done sooner, and why would anyone oppose this?

While every dollar counts, others are counting the dollars. According to a July study by The Canadian Federation of Independent Business, 34 percent of Ontario’s smaller businesses would consider relocation or closure in response to the increase.

For these businesses, tight profit margins force expenditure cuts wherever possible. In their view, Ontario is becoming an unnecessary expense – a cross too heavy to bear.

However not all who oppose the wage hike, oppose wage hikes – many critics of Kathleen Wynne’s ‘full steam ahead’ approach, are misconstrued – they want progressive wages, not ones full of steam.

There is merit to this point – the Canadian Centre for Economic Analysis found that a more gradual wage increase over a 5 year period would put fewer jobs at risk. Mitigating job risk should not be overlooked – The Bank of Canada estimates as many as 60,000 employment losses from the wage increase.

A 5 year gradual implementation would have afforded the economy time to adapt. Rather, it now faces an unprecedented single wage increase. Was this wage increase rolled out too fast?

Absolutely, but it was baffling to me why Kathleen Wynne, our Premier since 2013, would neglect the opportunity to get an early head start on a more gradual implementation.

According to Mike Crawley in a CBC article, Wynne previously supported inflation based nudging of the minimum wage – she saw it as “a really good process …. That actually depoliticizes the increases to the minimum wage.”

In those days a “predictable and sustainable” increase of the minimum wage were very important to her – what changed?

Well the wage increase did not come too early, nor did it come too late – It came just on time. On January 1st, the minimum wage became 14 dollars an hour, and is promised to raise to 15 by next year. An amazing coincidence – The minimum wage hike comes right before an election. Evidence suggests a gradual hike would have been less turbulent for the economy – but that would have been inconvenient for Kathleen Wynne.

She compromised the implementation of a 15 dollar minimum wage – A wage that many of her most ardent critics do not necessarily disagree with. She did it for political expediency, and while the Progressive Conservatives are hampered by scandal, it is the perfect time to capitalize on the jewel of her campaign.

 

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