One of the Ford government’s first acts when it was elected in June 2018 was to reverse the previous government’s improvements to the Employment Standards Act. Those changes included an increase in the minimum wage from $14 to $15 on January 1, 2019 and a commitment to adjust the minimum wage by the rate of inflation annually ever after.
On Tuesday, the Ontario government reversed course and announced that the minimum wage would rise to $15 an hour after all, beginning January 1, 2022.
The three-year delay in this increase came at a cost to workers. Many minimum wage workers put their own health at risk to keep working on the front lines of our economy throughout the pandemic. The three-year delay in raising the minimum wage to $15 cost them dearly.
Using Public Use Microdata File (PUMF) data from Statistics Canada’s Labour Force Survey, we estimated what that cost was.1
How large was the average income loss?
For a worker who was working full-time, full-year, throughout the pandemic, the income loss would be more than $6,000 over the three years between 2019 and 2022. However, we know that many minimum wage workers, especially during the pandemic, worked part-time hours.
Using data on hours worked, we estimated the cost of the delay in increasing the minimum wage. It showed that the cost to the average minimum wage worker was $1,236 in 2019, $1,070 in 2020, and $863 in the first nine months of 2021. Cumulatively, the delay in raising the minimum wage cost these workers an average $3,170 over the three-year period.
These losses will not be quickly recovered with the increase in the minimum wage to $15. To recover this lost income, the average worker would have to work an additional 9.5 weeks in 2022 to recover the money they have lost to date.
How many workers were affected?
In 2019, on average, there were 680,000 minimum wage workers in Ontario. That number dropped dramatically to 453,000 in 2020. From January to September 2021, the average number dropped further, hitting 405,000 as the impact of the pandemic continued to be felt.
Despite the decline in workers, however, the total number of hours worked by minimum wage workers climbed over the first nine months of 2021 as people worked more hours.
What was the total loss of income to minimum wage workers?
Across all minimum wage workers, the loss of income was $841 million in 2019, $484 million in 2020, and $350 million over the first nine months of 2021. Cumulatively, the delay in raising the minimum wage cost these workers $1.7 billion.
An increase in the minimum wage to $15 an hour is not only late, it is an inadequate response to the enormous challenges facing low wage workers after 20 months of a pandemic. Food banks have linked the increase in precarious work and low-wage work to greater use of their services.
The Justice for Workers Campaign is calling for measures to ensure decent work, including a $20 minimum wage for all workers, along with paid sick days, equal pay and labour laws that provide greater protection.
(1) We used the PUMF counts for workers making $14 or less from January 2019 to September 2020, and the counts for those earning $14.25 or less from October 2020 on, and the estimates for total hours worked each month for these workers.