Business coalition sounds alarm over Ontario’s minimum-wage hike
Keep Ontario Working Coalition warns that minimum wage increase will cost households an extra $1,300 a year.

TheStar.com
Aug. 14, 2017
Rob Ferguson

Ontario’s plan to raise the minimum wage to $15 and other workplace reforms will cost the average household $1,300 a year and put 185,000 jobs at risk, says a coalition of business groups opposed to the change.

“Making $15 an hour is great, but only if you have a job,” Karl Baldauf of the Ontario Chamber of Commerce, a key member of the Keep Ontario Working Coalition, told a news conference Monday.

The coalition commissioned what it called an “independent” study of Premier Kathleen Wynne’s plan to raise the minimum wage to $14 in January and $15 a year later. The study was conducted by the Canadian Centre for Economic Analysis.

Baldauf said “the unintended consequences are alarming,” as more employers would be expected to replace workers with self-checkout systems and ordering kiosks, for example.

The warnings are in contrast to a letter released earlier this summer by about 40 economists, including a number at universities.

They maintain the change is not as dramatic as opponents suggest because the minimum wage is, adjusted for inflation, barely $1 higher than its value in 1977, even though average productivity of workers has risen by 40 per cent over the same period.

Labour groups questioned the study, with research analyst Michal Rozworski of the Ontario Confederation of University Faculty Associations questioning the $1,300 figure and calling it “too high by a significant factor.”

Labour Minister Kevin Flynn said he will review the study from the coalition, calling it “just one in a long list” of analyses on the minimum wage.

He maintained the government “will not back down.”

“We need to address the lack of fairness in today’s workplaces, and the social and economic stagnation that would come with doing nothing,” Flynn said in a statement.

Businesses will benefit because the almost one-third of people living on the minimum wage would have more money to spend when it is raised, he added, noting the provincial unemployment rate is below the national average.

“We don’t believe that anyone in Ontario who works full time should struggle to pay their rent, put food on their tables or care for their families,” Flynn said.

“Many businesses across the province have come out in support of our plan, because it helps them attract employees, reduces their labour turnover and encourages employees to become more invested in the business.”

The new study, revealed Monday by the coalition, raises the possibility that 185,000 low-wage jobs could disappear in the next two years due to the extra labour costs, according to the Canadian Centre for Economic Analysis.

That could leave vulnerable workers worse off in a set of circumstances that “undermines the intent of this legislation,” said Baldauf, who noted that women and youth would be hardest hit.

The costs of raising the minimum wage 32 per cent in such a short period, from current $11.40 an hour, will cause inflation to rise 0.7 per cent, the study predicted, and the impact would be expected to be $1,300 a year to households.

Baldauf added that, at $23 billion in the first two years, the impact to the business community is much bigger. It’s a number that makes it impossible for Premier Kathleen Wynne to provide meaningful “offsets” she has promised to ease the impact on companies, he said.

“It’s the largest change we’ve seen in minimum wage in 45 years,” said Paul Smetanin, a chartered accountant and president of the Canadian Centre for Economic Analysis.

“It would be remiss to think such an amount would go unnoticed.”

He warned that municipalities will have to increase their payrolls by $500 million to account for the impacts of the workplace reforms, which include penalties for not giving employees enough notice of scheduling changes.

“The minimum wage part is just the tip of the iceberg,” Association of Municipalities of Ontario president Lynn Dollin said Monday in Ottawa, adding the scheduling provisions “would increase emergency services costs dramatically.”

The coalition called on the government to rethink the minimum-wage increase and phase it in over a longer period of time, but did not lay out a recommended schedule.

Baldauf is calling for other changes in Bill 148, which includes other workplace reforms.

Wynne has said the workplace reforms, which include making three weeks’ vacation mandatory after five years in a job, are necessary to share the gains of Ontario’s improved economy in the last few years.

The Ontario Federation of Labour said the coalition’s new study “considers only the higher costs of the minimum wage, not the benefits” such as reduced demand for social services and increased financial stability for low-income households.

“Today’s announcement should be taken for what it’s worth, a simple attempt by the employer and business lobby to whip up a frenzy about imagined hardships,” OFL president Chris Buckley said.

The Progressive Conservatives maintained the new study bolsters concerns that the minimum wage changes “are being rolled out too fast, too soon” and reiterated a call for Wynne’s government to do its own cost-benefit analysis.

“It’s clear the Wynne Liberals are avoiding doing this cost-benefit analysis, because they don’t want to see the results,” said Tory MPP John Yakabuski (Renfrew-Nipissing-Pembroke).

“We can’t force through changes like this without knowing the impacts on jobs and job-creators.”