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A $14 minimum wage could put Ontario on the right side of history

January 28, 2014

4-minute read

Six months ago, when Ontario Premier Kathleen Wynne struck a panel to review the province’s minimum wage, the debate was still stuck in a 20-year-old business frame.

The business frame is predicated on fear. It projects a worse-case scenario response to even the slightest of minimum wage increases: job displacement, higher costs for consumers.

It ignores evidence that a higher minimum wage reduces staff turnover, improves productivity and saves businesses money in the long run.

It ignores evidence that low-wage workers spend their money in their local economy, which is good for business.

It dismisses the harsh reality of trying to make ends meet on poverty wages.

The business frame limits the answer to the question ‘how high should the minimum wage be’ to simply: how much is business willing to pay without threatening mass layoffs.

But over the past six months, as Ontario's minimum wage panel went from community to community, something started to shift on the minimum wage frame.

The grassroots campaign to raise Ontario’s minimum wage to $14 an hour began gaining ground.

The idea that a minimum wage should lift workers out of poverty was being promoted by a growing number of organizations.

The discussion about what it takes to make ends meet – the real life struggle of workers trying to get by on $10.25 in such an expensive province – was taking centre stage.

South of the border, there were mutually galvanizing developments. Fast food and retail workers were taking to the picket lines to secure a $15 an hour wage.

The incoming mayor of Seattle came in with a directive to raise all city workers’ minimum income to $15 an hour.

Efforts are underway to raise the minimum wage in some 30 states right now.

And, as he is expected to do again during his Tuesday night State of the Union address – with an anticipated executive order to raise that country's minimum wage for federal contracts from $7.25 an hour to $10.10 – President Barack Obama has pointed to the need for a higher minimum wage as one of the ways in which to address income inequality.

He’s got a lot of support. In the United States, some 600 economists have urged President Obama to enact a three-step raise of 95 cents a year for three years.

In Ontario yesterday, the minimum wage panel began to slowly move the goal posts by recommending the provincial government index the minimum wage every year to the cost of living (the Ontario Consumer Price Index).

As CCPA Ontario economist Kaylie Tiessen points out, in 2013, that would mean the minimum wage would have risen to $10.82 an hour – which means if all the Wynne government does is increase the minimum wage to Ontario CPI, a minimum wage earner working full-time, year-round would still fall 20% below the Ontario poverty line (Low Income Measure, Ontario).

That’s just not good enough,” CCPA economist Armine Yalnizyan rightly says. “If you want people to pull themselves up by their bootstraps and they can’t working full-time, full year, you’ve got a problem. And it’s not good enough for a government to stand by and say they’re okay with that.”

The latest speculation – that Wynne is considering raising the minimum wage to only $11 an hour – falls far short of public expectations.

The minimum wage panel may have moved the goal post a bit, but they’ve thrown the ball at the Wynne government, and the pressure for the Premier to commit to a game plan to raise the minimum wage above the poverty line – we actually recommend raising it to within 60% of the average industrial wage – is immense and growing.

The conversation about what’s an acceptable minimum wage is shifting rapidly, south of the border but, also, right here in Canada.

Certainly every time we've tested the minimum wage as a solution to income inequality in public opinion research, the majority of Canadians have chosen it as a solution they would support.

Doctors have come out in favour of a $14 minimum wage because they see in their patients the health ramifications of workers living in poverty. Hamilton businessman and living wage advocate Mark Chamberlain took to Twitter yesterday lamenting: “It continues to amaze me that we could be debating such a critical health issue in this manner in this day and age. Imagine needing 600 economists to agree that we should deal with SAR's or West Nile virus or H1N1 or...”

Living wage movements are erupting in more than a half dozen Ontario communities. The public school board in Hamilton has become the largest public school board in Canada to resolve to pay its employees a living wage – which is higher than the legislated minimum wage.

Ontario has every opportunity to get out in front of this growing shift in employer expectations.

The political reality in Ontario today is that a politician peddling anti-worker, low-wage solutions can count on getting a rough ride, even by their own followers.

A leader who is ready to champion a higher standard of pay – especially for the lowest paid workers in the province – may well discover they're on the right side of history.

Now Premier Wynne has already indicated she has no intention of raising the minimum wage to $14 overnight and that she is looking at an option that would yield incremental increases.

Had the previous administration committed to that viewpoint and continued to raise Ontario’s minimum wage by 75 cents a year as it had between 2008 and 2010, the minimum wage would be $13.25 an hour today (hat tip to the CCPA’s Andrew Jackson Student Intern Kayle Hatt for pointing this out). It makes sense to put the campaign to raise Ontario’s minimum wage to $14 an hour within that context. We’d practically be there if the province hadn’t subjected minimum wage workers to a three-year wage freeze.

Which other set of workers in the income spectrum haven’t seen their wages rise for a three-year period? As Kaylie Tiessen has noted, Canada’s highest paid 100 CEOs earn, on average, 373 times more than Ontario minimum wage earners.

A $14 minimum wage is a small ask, comparatively. But in terms of getting ahead of the curve on this rapid shift in pay expectations for low-wage workers, the political, social and economic returns could be worthwhile.

Whether the provincial cabinet has arrived yet at that reality or not, $14 – not $11 – remains the target goal in Ontario. That is simply how rapidly the conversation on the minimum wage has shifted.

Trish Hennessy is director of the CCPA Ontario office.

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