Pages tagged "In the News"

The Progressive Economics Forum: The headline you didn't see: $15 per hour will have a big net effect

Posted on Media by · September 12, 2017 2:05 PM

By Michal Rozworski

You wouldn’t know it from today’s headlines about impending job losses, but an analysis of the impact of Ontario’s move to a $15 minimum wage from the province’s Financial Accountability Office shows a net benefit for Ontario workers.

Overall, this is a much more cautious report than what the Ontario Chamber of Commerce and its allies had furnished, noting both the costs and benefits of $15. While the media is focusing on job loss figures (more on this below), the report predicts a big overall rise in incomes. Even if we assume its job loss estimates come true, the FAO says real labour income will go up by 1.3% after taking into account any negative effects, with over 60% of that going to the bottom 50% of households.

Anything raising wages (*cough* CEO pay) will create impacts elsewhere. The important point here is that this report admits that $15 is a poverty- and inequality-fighting shift. Some jobs will be lost, but others will be created. (Lagging) productivity will rise. Even a very modest bump in inflation could push growth upwards. Today’s growing but imbalanced economy is well-placed for a boost for low-wage workers.

Returning to the job loss figure, the FAO report is another in a long line to present a skewed picture of minimum wage research, relying exclusively on the old view that features high estimates of job losses focused on teens. The recent, landmark Canadian study from David Green and Pierre Brochu (2013) is not mentioned — using modern methods, the pair found lower elasticity estimates (the percentage effect on employment for every 10% increase in the minimum wage) that would predict far lower job loss. Nor do the FAO economists mention the extensive work of Arin Dube and colleagues from the US, today’s leading minimum wage researchers. Dube and co. reevaluated US teen studies and found employment effects either effectively zero or very, very small — even among teens!

(It’s surprising, given the FAO’s focus on poverty, that they ignore Dube’s recent work on this issue as well, which found substantial decreases in the number of people living in poverty coming from minimum wage increases. In fact, it will be very interesting how the FAO calculated the distribution of income impacts and what they imply about poverty rates.)

Today’s new minimum wage research, if applied to Ontario would predict job losses anywhere from half of what the FAO is putting out to ten times smaller to nil (some studies, including well-known papers, have even shown small but positive aggregate employment effects). In short, there has been a tectonic shift in the economic consensus towards negligible job loss. This leads one to wonder how 50,000 jobs lost is to be a mid-point estimate.

Here is my main take-away: the FAO shows a $15 per hour minimum wage having a net benefit for Ontario workers and reducing inequality; that it ignores new minimum wage research only means that its already positive conclusions should be much stronger and job loss estimates lower.

Read the Progressive Economics Forum

Toronto Star: Ontario must toughen law to protect temporary workers: Editorial

Posted on Media by · September 11, 2017 2:10 PM

By Star Editorial Board

Bill 148 would strengthen temporary workers’ rights in some ways, but not in others. It’s not too late for the government to address the shortcomings of this legislation.

https://www.youtube.com/watch?v=bf1FCv4WPf0

Just over a year ago, Amina Diaby, a temp agency employee working at Toronto’s Fiera Foods, died tragically on the job. Her hijab got caught in a machine, strangling her.

She was the third temp agency worker to die at a factory owned by Fiera Foods or one of its affiliated companies since 1999.

As a result of Diaby’s death Fiera now faces charges in court on Thursday under the Occupational Health and Safety Act for failing to make sure that loose clothing was not worn near a “source of entanglement.” Her death is also being investigated by Toronto police.

While nothing has been proven in court, and no charges have been laid by police, Diaby’s death highlights what critics say are flaws in the Ontario government’s new labour legislation, Bill 148.

The bill is in many ways a leap forward for worker protections in the province, but as Diaby’s case makes clear, it could be better. The measures it contains to improve working conditions for the province’s growing number of temporary workers, for instance, should be tougher – much tougher.

For example, as highlighted in reporting over the weekend by the Star’s Sara Mojtehedzadeh and Brendan Kennedy, as it stands now hiring through temp agencies limits companies’ liability for accidents on the job, reduces their responsibility for making sure that employees’ legal rights are respected, and cuts costs — all at the expense of workers’ safety and earnings. 

are respected, and cuts costs — all at the expense of workers’ safety and earnings.

The legislation now before the Ontario legislature does not address these concerns. As a result, the growing trend toward hiring temp workers — creating an increase in precarious work — may continue unabated.

Temporary jobs — which include but are not limited to temp agency jobs — have grown at more than four times the rate of permanent jobs since the 2008 recession, according to Statistics Canada. In food manufacturing, for example, temp jobs have boomed by 110 per cent in Toronto in the past 10 years while permanent ones have increased by less than 3 per cent. 

In fact, temp agencies can hardly keep up with demand. Over the past decade, the number of temp agency offices in Ontario has increased by 20 per cent, with some 1,700 operating in the GTA alone. Temp jobs now account for an estimated 120,000 full-time equivalent positions

This growing legion of workers needs protection. But while Bill 148 will improve the lot of temporary workers, there are many things the new legislation should address but doesn’t.

Consider safety. Research conducted for the Toronto-based Institute for Work and Health suggests that companies contract out risky work to temps. That’s because when a temp gets hurt, the company is not fully responsible because the temp agency assumes liability at the workers’ compensation board, saving their clients money on insurance premiums.

Not surprisingly, then, data from the Association of Workers Compensation Boards of Canada shows that while temp agencies operating in non-clerical sectors and construction represent less than 2 per cent of the workforce, they ranked in the top 10 for the highest number of reported injuries over the past decade. That’s compared to more than a thousand industries across the province.

Meanwhile, figures from the Workplace Safety and Insurance Board show that non-clerical temps are more than twice as likely to get hurt on the job in 2016 as their non-temp counterparts.

Despite these alarming statistics, Bill 148 would not require joint liability for agencies and their clients for all workplace rights and injuries, providing little incentive for the client company to create a safe and equitable workplace.

Nor does the bill limit the percentage of a company’s workforce that could be hired through an agency, or limit how long a company can employ workers as temps before having to make them fulltime.

As a result, companies will be able to continue to employ as much of their workforce as they want in this precarious fashion for as long as they want.

The bill no doubt takes steps to improve the lot of temporary workers. It will, for instance, rightly require equal pay for equal work for temporary and permanent workers. That should help to reduce the attraction of keeping people on a temporary work status for months and even years, rather than hiring them fulltime and giving them security and benefits.

But this measure, too, does not go far enough. The bill mandates equal pay only for “substantially” similar work. Critics say companies can fudge job descriptions to preserve pay imbalances between temporary and permanent employees. That should be addressed.

There is no question that, overall, Bill 148 is a major step in the right direction.

It expands the legal definition of “employee,” for example, to make it harder for companies to classify workers as “independent contractors” and thus deny people who work full time the appropriate pay and benefits.

Another section would make it easier for employees in certain sectors, such as cleaning staff and home-care workers, to form unions. Other reforms would require companies to provide fair notice before rescheduling shifts and improving emergency leave.

These protections, along with Premier Kathleen Wynne’s promise to phase in a minimum-wage hike to $15-per-hour, up from $11.40 an hour, signal a welcome commitment to decent work and decent pay. Such a commitment, it would seem, requires the government to go one step further.

It should take a second look at Bill 148 and strengthen its measures covering temps both to protect our most vulnerable workers and to further encourage employers to make more jobs permanent.

As the Star has argued before, growing evidence has demonstrated that everyone benefits when workers’ rights are protected and collective bargaining is strengthened.

There’s still time to improve Bill 148 to protect temporary workers from abuse, injury and even death. The government should act. 

Read the Toronto Star Story

Globe and Mail : On minimum wage debate, analysts are missing the forest for the trees

Posted on Media by · September 10, 2017 4:18 PM

By Shannon Rohan and Kevin Thomas

Investment analysts need to ask some hard questions when business groups say the planned increase in Ontario's minimum wage may force companies to raise prices on consumer goods and slash jobs.

In recent analyst calls held by Metro Inc. and Loblaw Cos. Ltd., executives indicated that planned minimum-wage increases in Alberta and Ontario would add significantly to labour expenses and put pressure on the industry in 2018. Both companies are committed to mitigating those impacts by accelerating efficiencies and achieving cost reductions, but the take-away for analysts was that the retail industry is facing a significant cost increase in the short term.

Unfortunately, that echoes the prevailing view among many on Bay Street and in executive suites across the country – that workers are exclusively a cost to the business. That may be why investment analysts walk away from these quarterly calls only having heard – and only having asked, for that matter – about the cost side of the equation.

The other side of the equation warrants much more attention: how paying higher wages and improving workplace practices can be an investment in the business.

There is strong evidence that paying workers more, offering meaningful training and promotion opportunities and providing predictable schedules and hours – in short, the type of labour-law reforms now on the table in Ontario – can result in better business outcomes. Businesses that implement a decent work strategy can benefit from more loyal, hard-working and productive employees. They can realize productivity gains, higher retention and lower turnover, and ultimately better financial performance.

For example, research conducted by MIT professor Zeynep Ton found that companies that nurture their employees and pursued a good jobs strategy achieved improved operational execution, ultimately resulting in higher sales and profits in the retail stores that she studied.

Similarly, a study by the Boston Consulting Group found that over a 10-year period, companies that appeared at least three times on the Fortune 100 Best Places to Work list outperformed the S&P 500 by 99 percentage points.

In Ontario, a recently formed group of businesses provide living proof that decent work can pay off. The Better Way to Build the Economy Alliance (BWA) is a group of employers that support decent work and are benefiting from greater productivity and profitability for their businesses while at the same time improving job and income security for their workers. These employers will be coming together to share their experiences on Sept. 12 in Toronto at a conference hosted by the Centre for Labour Management Relations and the Better Way Alliance.

We will be there to provide a perspective from the growing number of investors in Canada and around the world that are recognizing the business benefits associated with decent work. We'll be speaking about why investors and investment analysts need to start seeing the forest and not just the trees when considering the implications of labour-law reforms.

To do that, on the next round of quarterly analyst calls, let's ask how companies intend to take advantage of the positive opportunities afforded by Ontario's Fair Workplaces and Better Jobs Act. How will they capture increases in consumer spending as a result of the boost to the minimum wage? How will they seek to deploy their employees in ways that will improve their customer-service scores? How will they invest in their workers to improve internal promotion and retention rates? How will they manage the short-term increases in labour expenses to make them more competitive in the long run?

These kinds of questions will give us a much more accurate picture of how companies are productively and successfully managing their work forces. They will also help to communicate to corporate executives that investors support innovative strategies that build long-term value and that we understand the benefits of fairer workplaces and a more equitable economy.

Read the Globe and Mail Story

Globe and Mail: Ontario labour reforms nothing to fear, some small-business owners say

Posted on Media by · September 10, 2017 2:16 PM

By Saira Peesker

Peterborough Examiner: Wage hike is about removing poverty in Ontario

Posted on Media by · August 21, 2017 4:22 PM

By Dr. Rosanna Salvaterra

Re: Minimum wage hike will hurt, especially in Peterborough, according to study, Aug. 14

The proposed increase to minimum wage continues to be debated here in Peterborough, but what appears to be missing from the debate is attention to the fact that increasing incomes for the lowest wage earners in our communities will also have benefits. These include decreased food insecurity and better health outcomes, especially for our children. It is unfortunate that an artificial divide has been created that seems to pit business owners against their employees, forcing everyone to choose a side. We all share in the responsibility to find solutions that benefit the health and well-being of ALL our citizens. Reducing poverty is one of the best actions we can take as a society.

The Canadian Centre for Policy Alternatives (CCPA) has just released a report titled "Losing Ground" that shows that in this province income inequality has grown dramatically over the past 15 years. According to the CCPA, the bottom half of families raising children in Ontario saw its share of earnings fall to 19 per cent of total labour market income between 2000 and 2015. This is far worse than what is occurring in other provinces. There is ample evidence showing that the wider the divide is between the lowest and highest incomes, the worse the health outcomes are for everyone--rich and poor alike. There is a health imperative in working towards greater income equality and a $15 minimum wage is but one step in moving us in that direction.

I am concerned that the impact analysis highlighted in your recent article seems to focus solely on the direct economic costs to businesses without factoring in the potential benefits to both business owners and to our communities. Those benefits will not only be economic (e.g., more money in the pockets of low income workers, lowered demand on social assistance programs, higher productivity rates) but social and health-related as well (e.g., healthier workers, better nourished children and stronger communities).

Dr. Rosana Salvaterra, Medical Officer of Health Peterborough Public Health

Read the Peterborough Examiner Story

 

Catholic Register: Churces fight wage 'fear-mongering' of $15-an-hour minimum wage

Posted on Media by · July 26, 2017 4:35 PM

By Michael Swan

A $15-an-hour minimum wage, new rules to help unions organize, across-the-board increases in vacation and emergency-leave time and scheduling rules to prevent employers from suddenly cancelling shifts at the last minute are all getting strong support from churches and faith-based intervenors at cross-Ontario hearings into labour law reform.

In Bill 148, the Ontario government has taken two years of study into the changing landscape of work and decided on major revisions to the Employment Standards Act and the Labour Relations Act in favour of a better deal for low-wage, part-time and contract employees.

“The current standards, they really do undermine the value and dignity of workers,” said Sr. Sue Wilson, who runs the Office of Systemic Justice for the Canadian Federation of the Sisters of St. Joseph. Last week she submitted a brief to the committee holding public hearings on the bill, endorsing a gradual raise in the minimum wage to $15 per hour by January of 2019. After 12 days and 10 cities, the hearings wrapped up July 21.

The business community, represented by the Ontario Chamber of Commerce, Restaurants Canada, the Canadian Franchise Association and the Ontario Coalition of Concerned Manufacturers, claim the reforms, particularly a dramatic rise in the minimum wage from $11.40 to $15 an hour, will cripple businesses, raise consumer prices and prompt employers to cut staff.

“It’s simply fear-mongering. The evidence does not support that position,” said Wilson.

A group of 50 economists from universities across Canada signed an open letter in favour of the $15 minimum wage. The economists claim research shows no or little disemployment or inflationary pressure from raises to the minimum wage.

“This is fear-mongering that is out of line with the latest research,” said the June 29 open letter. “The weight of evidence from the United States points to job-loss effects that are statistically indistinguishable from zero.”

For Wilson, who holds a doctorate in moral theology, a minimum wage that gets full-time workers out of poverty isn’t simply a question of economic calculus. It’s basic, Catholic moral teaching.

“If you look at the history of the Church, at the history of Catholic social teaching, popes have been saying — pope after pope after pope — that these issues matter. They are at the heart of our faith. It’s so basic to who we are as a Catholic community,” Wilson told The Catholic Register. “We can’t go to communion every week and then think it doesn’t matter that we don’t create a community that is just and fair for people.”

She particularly relies on Pope St. John Paul II’s encyclicals Laborem Exercens and Centesimus Annus in arguing that the basic social contract should mean work leads people out of poverty.

“These are the kinds of things Pope John Paul II had in mind when he was writing about not treating workers as an economic unit or as a commodity,” she said.

In its submission to the committee hearings, the Interfaith Social Assistance Reform Coalition (ISARC) also makes extensive use of John Paul II’s teaching.

“We are deeply concerned about current employment practices that are deepening poverty, uncertainty and stress for tens of thousands of Ontario workers and their families,” said the ISARC submission.

Catholic members of ISARC include the Assembly of Catholic Bishops of Ontario, Catholic Charities of the Archdiocese of Toronto, the Redemptorist Fathers and the Society of St. Vincent de Paul. Major Jewish, Muslim, Hindu and Protestant organizations are part of the coalition.

Both ISARC and Wilson’s submissions support the minimum wage increase, but ISARC places more emphasis on enhancing collective bargaining rights. Classifying workers as independent contractors or managers just to avoid unionization is fundamentally unfair, said ISARC’s brief.

“This practice demeans workers by treating them simply as an economic unit and ignoring the deeply-felt human need to be identified with the enterprise. Pope John Paul calls it a form of materialism. Catholic documents have long spoken of it as treating human labour ‘as a commodity’, ” said ISARC.

Catholic social teaching doesn’t necessarily compel any particular solution to social and economic problems, the Catholic editor of the libertarian magazine Reason.com said.

Stephanie Slade argues higher minimum wages and more regulation of the labour market makes work the privilege of a few.

“There should be options for everybody to work in the jobs that their skills and their experience level makes them qualified for,” she said. “If you raise that bar, people get locked out of the labour market completely. That’s not fair.”

The social contract doesn’t necessarily mean that workers shouldn’t need the food bank or can’t access decent housing, said Slade.

“The teachings of the Church are clear. We are obligated to care about vulnerable people in the community around us,” Slade said. “But we are not necessarily obligated to support any particular policy that one Catholic says is the only way to help people.”

Wilson sees Bill 148 as just a part of the solution to poverty.

“Poverty is extremely complex. It has to be worked at from many different angles,” she said. “This addresses the working poor. It’s a sector of the population that has been hurting for a long time. It’s an important piece of the puzzle.”

Read the Catholic Register Story

Toronto Star: Women, recent immigrants to see big benefits from minimum wage increase

Posted on Media by · July 21, 2017 4:45 PM

By Brooke Taylor

Of the 633,000 people who would receive raises in Toronto, 58 per cent are women and 17 per cent are recent immigrants.

https://www.youtube.com/watch?time_continue=44&v=uLf72sQ53fg

Toronto’s women and recent immigrants will see big benefits from the proposed minimum-wage hike to $15 an hour, according to the Canadian Centre for Policy Alternatives.

The numbers provided to Metro, part of the left-wing think-tank’s Ontario Needs a Raise report, are based on the last six months of Statistics Canada’s labour survey.

Of the 633,000 people who would receive raises in Toronto, 368,000 (58 per cent) are women and 113,000 (17 per cent) are recent immigrants.

Province-wide, 42 per cent of the recent immigrants who would benefit are women.

Read more: Ontario plans big boost to minimum wage, update of labour laws: Cohn

David Macdonald, author of the report and a senior economist with the centre, said the minimum-wage hike is needed to reduce the income gap that persists despite the strength of Ontario’s economy.

“It’s not everyone who benefits from that — just the top one per cent,” he said.

He added that the richest one per cent of Torontonians saw a raise in the last year worth twice what a minimum-wage earner would make annually, even after the hike to $15 an hour.

The numbers come as the Ontario government gathers input on the proposed hike in public committee hearings across the province. The new workplace legislation also includes more vacation entitlements, expanded personal emergency leave and equal pay for part-time workers.

Not everyone agrees with the minimum-wage hike. In a letter to Premiere Kathleen Wynne, Janet De Silva expressed concern on behalf of the Toronto Region Board of Trade.

“The board has conducted its own research on the proposal to increase minimum wage and we find it difficult to understand why now is the time for this drastic change,” wrote the president and CEO of that organization

Macdonald gave his answer: “increased income inequality.”

Read the Toronto Star Story

Niagara This Week: Paying living wage boosts morale, productivity, staff retention

Posted on Media by · June 26, 2017 4:51 PM

By Paul Forsyth

Poverty Reduction Network pegs realistic wage at $17.57

NIAGARA — Damin Starr used to think being a smart boss meant distancing yourself from your workers and paying miserly.

He’s learned the opposite is true.

Five years ago, Starr was at a crossroads: the metal parts and fabricating business he owns with his wife Debra in Vineland was still struggling to recover from the Great Recession of 2008, his workforce was plagued by turnover, and Starr was working tortuously long hours that robbed him of precious time with his wife and six kids.

Starr admits a big part of that was his fault: when he launched Pre-Line Processing he paid his staff as little as he could and he purposely distanced himself from them — in large part because he didn’t want to get close to people he might eventually have to lay off when times got tough.

That led to a workforce that was unmotivated. Starr had to always be there to crack the whip.

“My business was a struggle,” he told a gathering of the Niagara Poverty Reduction Network (NPRN) on June 23 at the McBain Community Centre in Niagara Falls. “I was always at my business because I was always trying to make people do stuff when they really didn’t value what they were doing.

“They felt they were a slave to the environment,” he said. ”They felt there was nothing in it for them.”

That led to Starr spending all his hours at work.

“I became a slave to my own environment,” he said.

By 2012, he knew things had to change if his business was to survive and if his family life was to get the attention it desperately needed. He sat down with employees and asked them what they wanted out of their jobs, and increased their pay so they all got a living wage — pegged by the NPRN at Friday’s announcement at $17.57 per hour.

Starr said he’s now able to work regular 40-hour weeks and take vacations because he knows he has loyal employees who he can trust completely to keep the shop running.

“You have to be able to trust your employees,” he said. “You have to be able to delegate to them and have them take ownership of their jobs.”

The new-found relationship, forged in part due to the living wage, has resulted in better productivity and focus, higher morale and virtually no staff turnover.

Starr and his wife were honoured by the NPRN for being the first certified living wage employer in Niagara.

Lori Kleinsmith with Bridges Community Health Care, which deals with many people in south Niagara living in poverty, said paying a living wage — meant to allow families to fully participate in society through such things as sports and recreation for kids and other community activities rather than simply paying for the bare necessities such as rent and food — may not be possible for every employer.

“We know there are definitely businesses that are not always in a position to increase their wages to $17.57 an hour,” said Kleinsmith, chair of the NPRN’s wage committee. “Many of them are struggling.”

But the hope is to get people talking about the importance of living wages and supporting low-income people through things such as improved transit and more affordable child care, she said.

“If we don’t do that, we’re going to continue to see far too many families, struggling, not meeting their basic needs and unfortunately many living in very deep poverty,” said Kleinsmith.

Glen Walker, chair of the NPRN, said the outcry from some business organizations over the province’s announcement that it’s increasing the Ontario minimum wage to $15 by 2019 shows there are misconceptions about the impact of decent wages on employers.

“There’s always lots of myths and rumours around: you raise something and everybody’s going to be struggling and suffering and businesses are going to be eliminated,” he said. “At the end of the day, research is saying … no, it’s not.”

Tom Cooper, director of the Hamilton Roundtable on Poverty, and co-founder of the Ontario Living Wage Network, said Niagara is joining part of an international movement to pay living wages.

“They’re part of a growing movement of progressive employers right across the province who are saying yes to higher wages because they have seen benefits,” he said.

Starr said he may only employ about five people, but he’s hoping to inspire other businesses to adopt a living wage policy.

“I’m employing people,” he said. “If I’m going to do it, it’s got to make their lives better.

“If it doesn’t do that, I haven’t met my obligations as an employer,” said Starr. “That’s what I came to realize.”

Read the Niagara This Week story

Macleans: Why a $15 minimum wage is good for business

Posted on Media by · June 02, 2017 5:01 PM

By Armine Yalnizyan

Boost the minimum wage and you boost the economy from the bottom up, writes economist Armine Yalnizyan. That means more demand for what businesses have to sell.

This week the Ontario government introduced plans for truly sweeping labour reforms. Perhaps none is more important—and controversial—than the proposal to raise the minimum wage to $15 an hour by Jan. 2, 2019.

There’s an argument to be made that going so far so fast could kill the goose that lays the golden egg, destroying jobs at a time when more are desperately needed, particularly for the young.  The counterargument is that this would add another gold-egg-laying goose to the mix, and spur the demand that creates jobs in the first place.

Unsqueeze the driver of growth

Domestic consumption drives the economy, in Canada and around the world.

Household purchases account for 57 per cent of Canadian GDP, a rising share of economic activity since the Great Recession of 2008 because business-to-business purchases, business investment and exports haven’t found their mojo since.

Housing costs have been rising in the biggest cities where most of the population lives. That is eating up even more disposable income, constraining how much of the monthly budget is left to make purchases from domestic and international producers.

When higher income households see wage gains, some of it goes to savings. Additional consumption also often flows to vacations and luxury goods, often imported. In other words a non-trivial part leaks out of the local economy.

When lower income households see a sustained rise in incomes, they spend virtually all of it. Most goes to food (more nutritious food or eating out), better health care and more education. Sometimes it also goes to rent (moving to a better neighbourhood). Almost all of this spending stays in the local economy.

So boost the minimum wage and you boost the economy from the bottom up.

Spur productivity

You may be surprised to learn nearly 30 percent of Ontario’s labour market earned less than $15 an hour in 2016. The nation’s biggest labour market has more people working at low wages than any other big economic engine of Canada (Quebec, B.C., Alberta).

While some workers may lose their job after the minimum wage increase (more on that in a minute), a very large number of workers will see an important pay hike, and that will loop back into the economy. Increased consumer spending will grow the top line of businesses, and increase the need for more workers to meet the higher demand for goods and services…and earning better pay.

Rising costs will also raise productivity, something virtually every business and economist says we want and need.

That’s harder to do if you’re doing things the way you’ve always done them.

Canada has been running a low-wage economy for decades, relatively speaking, according to Statistics Canada.  In fact, at last count Canada outpaced the U.S. in the reliance on low-wage work. Within Canada, Ontario has the highest reliance on low-wage work.

Boosting wages may knock out some jobs and some marginal businesses. The remaining enterprises that rely on low-wage work will see improved productivity, less absenteeism and turnover, reducing recruitment and training costs.

We shouldn’t rue the loss of a few poorly paid jobs, particularly when rising minimum wages also help meet the twin challenges of the early 21st century: constrained revenue growth and higher service needs due to population aging.

We’ve got to spur change, and a substantially higher minimum wage will surely spur change.

Job loss and (teen) angst

Economic theory offers a perfectly reasonable assumption: a higher minimum wage leads to job loss. Theory has not been borne out by evidence, with one possible exception: teenagers.

Let’s take this in two steps: research on job loss, and teen troubles.

A 2016 study examining 78 years of federal minimum wage hikes in the U.S. (between 1938 and 2009) showed no correlation between those increases and job losses, even in sectors most affected by such policies.

Between 2013 and 2014, 13 states increased the minimum wage. The majority of these states saw above-average job growth.

A review of studies suggests even where the impact of minimum wage increases is not “benign,” job loss evidence has to be weighed against what happens to the purchasing power of the remaining workers.

The point is, even where there are job losses, other opportunities open up, and there is more purchasing power to spur demand.

Furthermore, higher minimum wages improve not just the top line, but the bottom line of business. Exhibit A: Walmart, which last summer reported higher than expected profits, partly due—according to the company—to paying its workers higher wages.

But what about the kids?  A paper written for the Ontario government in 2007, and widely cited of late, says a “10 per cent increase in the minimum wage is likely to reduce the employment of teens by three per cent to six percent.”

This is a serious issue. Though their unemployment rate has been very slowly falling, young Canadians (15 to 24) are the only demographic group who have seen their employment rate remain far below pre-crisis levels. This means there are more young people simply out of the labour force. A growing group of idle young men has never produced a happy turn of events.

But minimum wage policies are not the only worry young workers face. Their unemployment rates go up even when the inflation-adjusted value of minimum wage declines, because macroeconomics swamps all. Any reduction in demand will mean last hired is first fired. That means young people and newcomers always have higher unemployment rates, no matter the level of the minimum wage.

The new normal?

A more nagging problem is that “failure to launch” has led to more people in their prime earning years working minimum wage jobs.

In Canada, the proportion of people aged 20 to 24 working a minimum wage job doubled since pre-recession, as did the proportion of people aged 25 to 54. The proportion of older workers (55+) working minimum wage jobs grew much more slowly…but it’s the fastest growing age cohort of workers.

The fact is, a higher proportion of teenagers work at a minimum wage job in most provinces across Canada today than a decade ago (49 per cent across Canada, 70 per cent in Ontario in 2016), but a growing proportion of adults have been doing so as well.

In 2016, 64 per cent of minimum wage workers across Canada were not teenagers, up from 52 per cent in 2006. In Ontario, the proportion of minimum wage workers who are not teenagers has risen from 45 per cent to 61 per cent in a decade.

When do we start to be concerned about the macroeconomic effects of so many workers having to wait for a law to change before they get a pay hike? Have you ever tried to change a law?

In the 1950s and 1960s, the manufacturing sector provided a growing share of middle class job opportunities, thanks to strong unions. In the 1970s and 1980s, growth of the public sector (and its organization) accomplished the same.

It’s unclear where the next middle class will come from, but until we figure that out, it should be clear why people are raising the roof about raising the wage floor.  It may only be one tool to help low-wage earners—others include reforms introduced this week by the Province of Ontario, more affordable housing and  child care, and more ways to pursue collective action—but it’s a big one.

Why is $15 the magic number?

Most people agree that today’s $11.40 an hour minimum wage in Ontario is too low to make ends meet, unless you can depend on others’ incomes.

But why is $15 an hour the “right” amount for a minimum wage in Ontario?  Why not $30 or $100 an hour?

There is no articulated policy reason for the $15 minimum wage, but there could and should be.

Some say it should be enough to lift someone out of poverty if they work full time and full year. Historically, however, minimum wage wasn’t about poverty reduction. It was about acknowledging the inter-relationship of all work, and making sure no one got left too far behind as wages grew.

In many European countries public policy sets the minimum wage in relation to other workers’ wages, at between 50 per cent and 60 per cent of the average wage.

Today the average hourly wage in Ontario is $26.43.

Half of the average is $13.22; 60 per cent is $15.86

The government’s proposal to raise the minimum wage to $15 an hour by January 2019 will bring it to roughly 55 per cent of the average wage, if wage growth keep pace with inflation in the intervening period.

Once you have reached the target level, annual inflation adjustments should take care of increases; but the level should be reviewed every five years, in case things are getting out of whack.

This makes the process rooted in logic, and predictable, both of which rightfully improve business buy-in.

By the way, there is no legislated minimum wage in Sweden, Finland, Norway, Denmark, Switzerland, Iceland and Italy.

The reason? Collective bargaining covers all workers, and minimum pay in these agreements is most commonly between 60 and 70 per cent of average wage rates.

Still think $15 is too rich?  The negotiated minimum in Denmark is the equivalent of C$22.50. The legislated minimum in Australia is C$17.70.

Both countries pay their lowest-skilled workers much more than we do, but have unemployment rates similar to Ontario’s, around six per cent.

The elephant in the room: big business

Raising the minimum wage raises costs for business, there is no denying; and the affected businesses are not just small business.

Businesses large and small have been making the case that they can’t afford paying more for labour going back to when laws were first proposed to curb the use of seven year-olds in coal mines or put an end to 16-hour workdays.

Of course, there will be some job losses, and some smaller businesses that go under. There are always some marginal businesses for whom any higher cost—electricity or any other input, a legal dispute—will mean The End. That is genuinely heart-breaking for that business.

But small business isn’t the only beneficiary of minimum wage laws.

Low wages help maximize profits. Period.

Did you know at least half of all minimum wage workers in Ontario work for employers with over 500 employees?  That’s a growing trend. The same is true in most other provinces.

It’s unclear why governments need to protect corporations, but not the workers they hire.

And it’s also unclear why businesses (and many economists) bemoan the increase in minimum wage but are mum about ballooning compensation of employees at the top, from senior management to the CEO.  After all, these are also rising input costs. That should also trigger concerns about prices, employment levels and solvency, n’est-ce pas?

Businesses will understandably worry that uncertainty from south of the border may make all of this more challenging to implement. Let’s pause on the fact that Ontario’s economy is expected to enjoy the fastest growth in Canada in 2017.

But it’s true. The future is uncertain.

What’s not uncertain: the slow drip of unresponsive labour market regulations and mostly unenforced rules over the past quarter century has shifted bargaining power towards employers, against workers.

That was just challenged in Ontario.  And not a moment too soon.

 Read the Macleans Story

Ottawa Citizen: Carpinone: Yes, it is possible to pay your workers a high minimum wage

Posted on Media by · June 01, 2017 1:00 PM

By Jessica Carpinone

I attended the announcement of the $15 minimum wage at Queen’s Park this week, along with labour organizers and activists that have been fighting for better wages and working conditions. I was there because I felt it was important, as a small business owner, to lend my voice to the conversation about decent work.

I run a small bakery in Ottawa with nine employees and two owners, which has, from day one, been committed to paying workers a living wage. Last year, we also introduced a full benefits plan for full-time employees. We put out schedules two to four weeks in advance, offer paid sick days and almost exclusively hire full-time permanent positions.

I am writing this now to tell other business owners that raising the floor is difficult, but is in fact 100 per cent possible.

It is by no means easy to run a small business. After three-and-a-half years, my personal income is just starting to creep up to what I need it to be in order to be self-sufficient. I contributed a lot of sweat equity into the bakery. My partner and I did not start with much capital, had to make money quickly and the personal sacrifices (mental, physical, financial) have been immense.

Running a bakery, restaurant or café is hard. It is harder than hard. I am absolutely not dismissing business owners’ legitimate fears about their companies’ financial health and viability. But I vowed, from the time when the bakery was nothing but an idea, that I would not build a business based on low-bar labour standards.

I just knew we could do better than poverty-level minimum wage, unfair scheduling practices, zero sick days, no breaks, endless days, wage theft and all the other practices so common in the food industry.

I do, however, want to state unequivocally that keeping people impoverished is not the answer to our problems.

Small businesses, especially retail and restaurants close all the time. One of the biggest factors is that commercial rent rates have appallingly low controls on them. When our leases come up for renewal, our landlords can give our spaces away to the highest bidder.

But businesses also close because of city construction that turns customers away; because they lose out to competitors; because of poor management; or simply because owners decide to move on. There are a number of reasons why businesses close, but paying fair wages is not one of them.

We have to stop taking advantage of low-wage workers as a means to keep our businesses afloat.

I cannot stress this enough: well-paid and satisfied workers are better for business. Not only are they willing to work hard for you, but their satisfaction is felt by customers. I can’t even begin to imagine the headaches of constantly hiring and re-training. The costs to training alone would sink me, no matter how low the minimum wage.

Our society does not have a wealth problem, we have a wealth distribution problem. We need to figure out how to level that playing field. We can surely do better.

This legislation is a start in that direction, because it raises the floor of wages for all workers and offers more stability and protection for those who need it most. I urge you all to support this new legislation.

Give it (and your workers) a chance to prove to you that the sky will not fall. Less poverty will be good for all of us.

Jessica Carpinone is a baker and co-owner of Bread by Us Bakery in Hintonburg.

Read the Ottawa Citizen Story