Over 100 years ago, auto maker Henry Ford more than doubled the wages he paid his assembly-line workers. At the time, Ford was quoted in newspapers saying: “If I don’t pay them well, they won’t be able to buy a car.”
Flash forward to the announcement by Premier Kathleen Wynne that Ontario will move in the next 18 months to a $15 minimum wage. That is a $3.60 increase over the current $11.40 wage. For those working in the service industry, this will be a significant increase in earnings. Still that increase may come with a cost.
The last time there was a significant jump in the minimum wage was less than 10 years ago under Premier Dalton McGuinty.
The business community and chambers of commerce warned of possible layoffs and forecast reduced hours for workers at the time. When the dust settled, the job losses were minimal.
More businesses closed due to the high cost of electricity, or the recession at the time, than because of an increase in the minimum wage.
In 2017, will there be a cost to the economy with an increased minimum wage? Maybe. Alternatively, what is the cost if there is not a jump in the minimum wage?
In the last 30 years, Canada has evolved into a more service-based economy. The high-paying manufacturing jobs don’t seem to be there. Filling the void has been the service economy. Minimum wage has gone from being a starter wage to the only wage, in many cases.
Canada’s inflation rate sits at 1.6 per cent. But how real is this? The costs of feeding a family, buying a house, filling up the gas tank aren’t just 1.6 per cent higher. There are more lower wage jobs.
Prices are going up. Since no other solution is being presented, what other solution is possible other than a higher minimum wage?
Will businesses have to adapt to this new higher minimum wage? Likely. Will we see more kiosk-like ordering at fast food establishments? Maybe. And will more people now be able to afford to frequent those establishments? Definitely.
There are a lot of unknowns associated with the increase in the minimum wage. But a lack of alternatives or ideas out there begs the question: what else could be done?
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