QOTD:$15 minimum wage. Good? Bad?

[Shwa Girl]

ON announced that they are going to have a $15 minimum wage. AB also is working towards a $15 minimum wage too.

Is this a good idea or a bad idea?

[brunt]

At the risk of sounding like Scrooge, it is not only a bad idea, it is an incredibly bad idea. As with many well intentioned ideas, while it seems like it could be good on the surface, it will hurt those that the idea is supposed to help the most.

There are far more consequences to such an action that simply raising the wages of the lowest paid employees. It is these secondary effects, so often ignored by governments, either willfully or through naivete, that makes it a bad idea. Government intervention will always distort the economy by changing the decisions of all participants in voluntary transactions.

There are basically three conditions under which people work for minimum wage:

1. Young workers with no previous experience
2. Low margin businesses
3. Businesses run by greedy capitalists

I added the third point even though I personally believe that it is an extremely rare occurrence, however it is the image of a filthy rich businessman, closeted in his back office, smoking a cigar and counting his piles of gold coins while cackling at the injustices being endured by his underpaid employees that starts this line of thinking.

Let's address each of these points.

1. By raising the minimum wage, you have now just made it more attractive for people who would otherwise not be working - the retired, the stay at home spouse, and those already with another part time job. By making these jobs more attractive to people with more experience, you have just increased the competition for these jobs, making those with no experience less likely to be hired in the first place.
2. Low margin businesses, by definition, do not have a lot of wiggle room as far as expenses are concerned. Raising the minimum wage will make a barely profitable business unprofitable and therefore not viable. These sorts of businesses are low margin due to the fact that the market that they occupy is very sensitive to price. Therefore, these businesses, unless family run and therefore not effectively bound (although legally bound) by minimum wage laws, will cease to exist.
3. For most businesses, including those run by "evil capitalists", the largest expense is wages. If somebody is motivated entirely by greed finds that their largest expense is going to increase by 32%, you can bet that things will change, and not for the better for the workers. Government forgets that the alternative to making an unacceptably low level of profit is shutting the business down, not grinning and bearing it. Long gone are the days of the capital-intensive manufacturing businesses where shutting down a business meant huge costs to the owner.

In short, just like rent controls, the idea may sound appealing on paper, but it will hurt those that it purportedly helps in the long run.

[Ciel]

I like the idea but chose the third choice in the poll. Much is assumed that those working are consistently getting a certain number of hours per week at their places of employment (as employees or contractors). Then when carbon taxes are added to utility bills, that alone puts pressure on the remaining disposable income to cover other needs.

When costs go up, that living wage is still going to be a dance of making do of what's left to live on after payroll deductions. Housing, food, transportation, health, recreation and let's not forget clothing.
In other news, an app called Hyr has traction in Toronto and NYC for on-call hospitality/marketing staff. Everyone's a contractor and gets paid within 48h. But you cannot plan much on gigs.

[Ciel]

Ontario's Employment Standards Act is due for updating and a report on proposed changes is the topic of this employment lawyer's column: http://www.thespec.com/news-story/73...ct-make-sense/

[Shwa Girl]

I don't think the Ontario Liberal government cares about people who earn minimum wage. I think they care about votes they can get, with this goodie.

Employers who have the means and the right industry, have already talked about using robotics or automated technology, instead of hiring humans.

[mulock]

I live in Nova Scotia and read about the minimum wage in Ontario being raised to $15/hr and the first thing that came to mind is business owners will simply offset the increased wage costs by increasing the price of their products/services....so in the end, everyone loses out as everything will end up costing more. I don't believe raising the minimum wage is the answer, and instead the focus should be on making education easier to access for those who wish to pursue it and thus enter into jobs/careers that pay more. I view minimum wage increase as a band-aid solution.

[Shwa Girl]

I live in Nova Scotia and read about the minimum wage in Ontario being raised to $15/hr and the first thing that came to mind is business owners will simply offset the increased wage costs by increasing the price of their products/services....so in the end, everyone loses out as everything will end up costing more. I don't believe raising the minimum wage is the answer, and instead the focus should be on making education easier to access for those who wish to pursue it and thus enter into jobs/careers that pay more. I view minimum wage increase as a band-aid solution.

I agree. About the prices going up and about the education.
Starting September 2017, some people in ON can get their college or university courses free.

[Shwa Girl]

By the way, the Ontario $15 minimum wage won't start right away. Jan 2018, they want to raise to $14/hr from the current $11.40. October will be $11.60.
If they win, it will all start in 2019.

Proposed Changes to Ontario's Employment and Labour Laws
May 30, 2017 10:04 A.M.

The Ontario government has announced its intention to introduce proposed legislation, The Fair Workplaces, Better Jobs Act, 2017. The legislative proposals include broad ranging amendments to Ontario's Employment Standards Act and Labour Relations Act.
While the province's economy is strong and growing, the nature of work has changed, leaving many workers struggling to support their families on part-time, contract or minimum-wage work. Workers in Ontario have the right to strong protections at work. Fairness and decency must continue to be the defining values of our workplaces. These legislative changes seek to create more opportunity and security for workers across Ontario.
Minimum Wage Increases
Ontario is increasing its minimum wage rates - generally, the lowest rate that can be paid by employers to employees.
If passed, the government is proposing to increase the general minimum wage to:

• 14 per hour on January 1, 2018
• $15 per hour on January 1, 2019

The special minimum wage rates for liquor servers, students under 18, hunting and fishing guides, and homeworkers will be maintained, and will increase by the same percentage as the general minimum wage.

Minimum Wage Categories	Current to Sept. 30, 2017	Oct. 1, 2017 to Dec. 31, 2017	Jan. 1, 2018 to Dec 31, 2018	Jan 1 2019 to Sept. 30, 2019
General Minimum Wage	$11.40 per hour	$11.60	$14.00	$15.00
Students under 18 who work not more than 28 hours per weekwhen school is in session, or work during a school break or summer holidays	$10.70 per hour	$10.90	$13.15	$14.10
Liquor Servers	$9.90 per hour	$10.10	$12.20	$13.05
Hunting and Fishing Guides	$56.95: Rate for working less than five consecutive hours in a day	$58.00	$70.00	$75.00
	$113.95: Rate for working five or more hours in a day whether or not the hours are consecutive	$116.00	$140.00	$150.00
Homeworkers (employees doing paid work in their own home for an employer)	$12.55 per hour	$12.80	$15.40	$16.50

https://news.ontario.ca/mol/en/2017/...bour-laws.html

[tjthemanto]

Don't forget in ON on January 1, 2018 the minimum wage is becoming $ 14/hr.

So make sure your employer pays you accordingly - mostly retail , fast food , restaurant, warehouse , security guard , temping agencies type of work they try to screw you on wages.

[lilo0003]

Then there is all those people already making over minimum wage but under $14.00 that have had raises from their employers that will just move to $14.00 so no incentive there. Any raises earned are now lost. My teen falls into this bucket. He has worked his part time job for 18 months and has received two raises. As of January 1st he makes the same as a new hire. Not that I believe a 17 year old living at home needs to earn $13.15 an hour. But I also do not agree that his work to earn raises is now negated by this.

[Shwa Girl]

Then there is all those people already making over minimum wage but under $14.00 that have had raises from their employers that will just move to $14.00 so no incentive there. Any raises earned are now lost. My teen falls into this bucket. He has worked his part time job for 18 months and has received two raises. As of January 1st he makes the same as a new hire. Not that I believe a 17 year old living at home needs to earn $13.15 an hour. But I also do not agree that his work to earn raises is now negated by this.

I am hearing rumors that some students may lose hours when the $15 rate come into effect. The rumor is for students working in retail (grocery stores). I think some are planning to ask their permanent part time employees in grocery stores if they want full time hours. I think that they may do away with student summer part time hours.

Only a rumor. Does not apply to all part time positions.

[Frugalbigmama]

I am hearing rumors that some students may lose hours when the $15 rate come into effect. The rumor is for students working in retail (grocery stores). I think some are planning to ask their permanent part time employees in grocery stores if they want full time hours. I think that they may do away with student summer part time hours.

Only a rumor. Does not apply to all part time positions.

Not a rumor. It is happening everywhere. Student hours being reduced everywhere. Happened at my son's old job months ago. Just heard from someone that our CT is doing layoffs now.

[Shwa Girl]

Sorry about your son @Frugalbigmama .

[lilo0003]

I am hearing rumors that some students may lose hours when the $15 rate come into effect. The rumor is for students working in retail (grocery stores). I think some are planning to ask their permanent part time employees in grocery stores if they want full time hours. I think that they may do away with student summer part time hours.

Only a rumor. Does not apply to all part time positions.

He is just taking a wait and see approach. Currently he does 3 5 hours shifts a week so losing one will be fine. He works because we want him to have a work ethic so it's not about the money or saving for school But we know kids who need to earn the money so this will suck for them. I don't think retail is going to offer part time employees full time positions as most are trying to avoid the cost of benefits. I think we will just see a reduction in staffing.

[MillieH]

Stores are already preparing for the wage increase.. Walmart has put in 8 self serve checkouts... McDonalds has a self serve order system.. I think there are going to be less jobs and increased prices..