Minimum wage hike won’t help working poor, York Region anti-poverty advocate says

YorkRegion.com
March 20, 2015
By Teresa Latchford

While it might be for different reasons, York Region experts agree a hike in the minimum wage will do little for the working poor.

The province announced this week that, effective Oct. 1, minimum wage will be $11.25 per hour, up from $11. The change would mean an employee working a full-time, 40-hour week - rare in the retail and service industry - would make a little more than $23,000 per year. The hike works out to about $10 more a week or $40 more a month, before taxes.

While the increase will put Ontario behind only the Northwest Territories for the highest minimum wage rate in the country, it’s still far from solving the poverty cycle many families face, York Region Poverty Action For Change Coalition chairperson Tom Pearson said.

“This nominal bump in wages isn’t going to change anyone’s life,” he said. “To make even the tiniest dent, minimum wage would have to be raised significantly to about $15 per hour.”

The move is nominal, he said, since the cost of shelter, goods and basic living is so high compared to a gross weekly minimum wage salary of $450, or about $320 net, he added.

For example, if a couple each earned minimum wage, that gives them about $2,560 a month, after taxes and deductions. Most decent rental houses are about $1,400, leaving $1,160 a month (or $290 a week) for utilities, day care, groceries, clothing, vehicle insurance/fuel costs, bus fare, etc.

Pearson predicts the 25-cent-an-hour raise actually defeats itself, as employers will boost the price of goods to cover the cost of the wage hike.

“There are bigger issues that need to be addressed before boosting minimum wage will make a difference,” Pearson said.

He suggests the province look at loss of full-time employment opportunities and affordable housing as a starting point.

A mandated wage increase can actually be counter-productive, according to Aurora Chamber of Commerce CEO Judy Marshall. Forcing a wage increase can be devastating for small businesses and the owners could decrease staff to make their bottom line, thereby decreasing the number of jobs available.

“I do understand there are people who are living well below the poverty line and could use a wage boost, but those small businesses work hard to earn money,” she added, pointing out an overall provincial strategy with an action plan to mitigate the many factors contributing to poverty would go much further in the long run.

Markham-based Social Services Network executive director Dr. Naila Butt feels the wage increase is a step in the right direction, but agrees there is much more to be done.

From the non-profit perspective, raising wages means organizations in the sector will have to rely more and more on volunteers, which could mean a decrease in services.

“Poverty is a very challenging issue and people are still struggling to make ends meet every day,” she added. “The entire system is very complex and needs to be looked at as a whole to find any kind of solution.”

It would make more sense for a formula to be created, so large employers such as retail chains would be forced to pay staff a wage comparable to its profits, she said. It would also discourage employers from only hiring part-time staff to avoid paying out benefits for dental and health coverage.

“There really isn’t one perfect solution, but more has to be done than a modest wage increase,” she said. “There needs to be a system in place that creates equity.”