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What will a hike in the minimum wage mean for Ontarians?

The Question: Two perspectives
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MICHAEL CHAHLEY/THE VARSITY
MICHAEL CHAHLEY/THE VARSITY

Minimum wage increase sparks pre-election posturing in Ontario

A few days ago, the Premier Kathleen Wynne’s provincial government stood behind the decision to raise the minimum wage in the provinc from $10.25 to $11 as of June 1, 2014. Students are sure to be among those most affected by the imminent increase. While most are heralding the move as a progressive step in the right direction, the increase is not as generous as originally hoped for. Economic growth remains tentative after the 2008 financial crisis in the United States, both federally and provincially, and pushing for $14 an hour, the amount recommended by various grassroots groups, could negatively impact Ontario’s growth momentum. Premier Wynne’s decision to support an increase to $11 per hour proves to be a sensible decision when poverty alleviation and business confidence are both reasonably considered.

Fully understanding why Premier Wynne settled on the increase requires particular awareness of our current political context. About a year ago, grassroots groups, mostly counting on the National Democratic Party’s (NDP) support for their efforts, launched a campaign to battle poverty by tackling the minimum wage in Ontario, as this issue is at the forefront of many voters’ priorities. This is all the more important given that the provincial elections season is fast approaching. The provincial Conservatives’ stance on this issue is no surprise — they firmly oppose any tinkering with the supply-side economics of Ontario’s economy, and they fear that any increase whatsoever will ruin Ontario. This is mostly an exaggerated stance, the result of pre-election posturing.

On the other side of the spectrum, the Liberals, newly concerned with economic competitiveness as much as the Conservatives, aim for a balanced approach that reconciles the most urgent priorities of poverty alleviation with the mainstream determinants of solid business confidence. Further on the political left, one would expect an NDP that strikes a dissident note, calling for at least $14 as the first shot in the battle against what should be Ontario’s first priority: poverty alleviation and employee protection. This, however, is not the case. Ontario NDP leader Andrea Horwath keeps a low profile because the party stands much closer to the Liberals — by a dollar it turns out, in their recommendations for what the minimum increase should be. In doing this, the provincial ndp aims to expand their core voter support base with a warmer touch to commercial and business lobbying interests.

There is another issue to consider: how does the rest of the job market react to this proposal? A quick survey of workplace sentiment regarding this issue reveals a worry that a $14 increase is slanted against skilled labour and the number of years workers spend reaching cherished higher wage levels. Is it fair to higher skilled workers, excluding ceos, to see minimum wage increasingly trivialized their specialized skill sets? Or is a $14 wage fair to the rest of Ontario’s economy, which might suffer from decreased business confidence and go down in global rankings as a destination for foreign investment? There are many such considerations against the grassroots campaign’s advocated wage hike. Wynne’s decision is ultimately being supported by the majority of critics for taking inflation, and fluctuations in the annual consumer price index into account. It may not be what we hoped for, but its something.

Yves Guillaume A. Messy is in his final year, specializing in political science. He is a political commentator on CTV National News.

 

Hike in minimum wage lacks maximum impact

Last week the Ontario provincial government announced an increase in the province’s minimum wage to $11 per hour with a proposal to adjust the wage annually according to inflation rates. The announcement received mixed responses, with local businesses expressing concerns over the economic impact of the increase and anti-poverty activists claiming that the 75 cent hike was not enough to bring workers above the poverty line.  The province’s decision struck a compromise between these voices, with Premier Kathleen Wynne saying, “This is a fair adjustment to the minimum wage and it gives businesses predictability.”

To put this into perspective, the increase for individuals working 40 hour weeks, 52 weeks per year, amounts to $1,560. While workers putting in 20 hours per week will experience an increase of about $780 in their yearly income. While not an insubstantial increase, the reaction among struggling workers, including many students, is clear; it’s a step in the right direction, but a greater leap is needed to make minimum wage a livable wage.

As students, we are faced with a multifaceted conundrum. Our living expenses are inextricably bound to general inflation and other fluctuating costs, tuition being one example. In the 2010-2011 academic year, the first year of Ontario’s minimum wage freeze, tuition for first year Arts & Science students at U of T was $5,216. In 2013-2014 these same students paid $5,809. Over the past four years, tuition for these students has increased by $593 while minimum wage has remained frozen at $10.25.

When combined with other annual increases such as the cost of living in Toronto, public transportation fares for commuters, and the costs of course materials, it is easy to see how students are deeply impacted by changes, or lack thereof, to the minimum wage.

The upsurge in unpaid internships means that growing numbers of students find themselves working for free in order to gain valuable experience in their chosen fields — leaving them unable to work full-time during the summer months to offset costs incurred during the year. In a climate where so much of our future depends on strong academic performance, extracurricular involvement, and relevant work experience, students are forced to choose between financial security now and making advancements for their future.

Some businesses facing decreased profit margins as a result of the minimum wage jump will be forced to cut back on staff size and cut workers’ hours to compensate. Wynne’s proposal to tie future hikes in minimum wage to inflation promises to mitigate these side effects, which are magnified by periods of stagnancy followed by large increases. However, this policy does nothing to palliate the financial crunch businesses will experience come the wage hike on June 1, 2014 — just when many students are hunting for summer jobs.

So yes, the recent increase is welcome news to those working for minimum wage, but is it enough to make a revolutionary difference for students? Not even close. With students’ expenses growing annually, this increase merely reduces the deficit created by the four-year wage freeze, but still leaves students caught juggling career objectives and financial pragmatism.

Samantha Relich is The Varsity’s Associate Comment Editor. She is a third-year student at Victoria College studying criminology and political science.