Cartoon by Bennett from the Christian Science Monitor
It has been 4 years since Ontario has raised minimum wage, boosting wages to working poor people. It was long awaited in 2010 when it was raised to $10.25/hour and came as a major relief to many Ontarians. However, it has been frozen ever since. Meanwhile inflation has been on the rise, making the gap between the rich and poor wider and wider.
In February 2013, Kathleen Wynne took over office as Premier and promised to battle social inequality. She promised to step in and help out the high unemployment rates and inequality in wages. It seemed that she was going to continue her predecessor’s “war on poverty.” However, she has since been relatively quiet on the issue of minimum wage and giving a boost to many struggling low-wage workers.
That was until last week when Ontarians were in for a bit of a surprise after Premier Wynne announced a raise on minimum wage to $11/hour effective June 1, 2014.
In Canada, earning minimum wage means working for around 10 dollars an hour, from the lowest wage in Alberta at $ 9.95, to $11 an hour in Nunavut. $10.25 in Ontario.
While it’s difficult to know the true numbers, a recent report by Statistics Canada reports that close to five million workers (14.9% of population) are considered working poor (below the poverty line) with the majority not in receipt of Ontario Works benefits. With 800,000 people earning minimum wage, this raised the percentage to just fewer than 6% in Canada.
8.1% of that is in Ontario.
This means that there are around half a million people who are recorded to be making minimum wage in Ontario, with that number constantly increasing with a record number of full-time work being replaced by part-time and contract work.
Historically speaking, young workers made up the majority of minimum wage workers, but 40% of these workers are now 25 years old and older, with women aged 25-54 occupying a large portion of these percentages. The rate of minimum-wage work was six times higher among part-time workers than full-time workers (19% versus 3%). In fact, almost 60% of minimum-wage workers held part-time jobs, compared with less than 20% for all employees.
These statistics have been worrying many economists and activists as the divide between the rich and poor keeps widening.
Labour activists have been pushing for an increase for a while now suggesting that the province needed to raise the rate to meet with the raised inflation. Their recommendation was $14/hour, a figure that many businesses refused abruptly.
Having a four-year freeze on minimum wage is both socially unacceptable and terrible for an economy that needs consumer spending in order to thrive. Ironically, a vast majority of these part-time minimum wage workers are working within the retail and service industries.
As outlined in one of my previous editorials, The Struggle Of A Millennial, an estimated 534,000 Ontarians work 35 hours or more each week in the fast-growing retail and service industries, earning the provincial minimum wage of $10.25/hour. This means many earn under $20,000/year. And with the official poverty line now at $23,000 a year, it means a lot of people are working very hard just to remain in poverty. This included a fair number of millennials, many of who are also college/university graduates.
With an increase to $11/hour, it will raise that figure to $20,020/year. Meaning people will continue to struggle, they will continue to have multiple jobs, and they will continue to live to work. It means that living in Toronto with a family will be near impossible. It means that there will be no savings. No paying off student loans or interest. It means that more will rely on credit. It means many won’t be eligible for credit or a mortgage. Many Ontarians will live as second-class citizens.
It seems the Liberal Party of Ontario had abandoned their promise to fight inequality. Activists and economists urged that the government needed to raise the minimum wage 2.5 times faster than the rate of inflation. As part of its “war on poverty,” the previous Liberal government under Dalton McGuinty raised the provincial minimum wage by 50 per cent between 2004, when it was $6.85 an hour and 2010 when it topped out at $10.25.
If they were to continue this “war on poverty” it would mean an immediate jump to about $11.65 an hour, raising it to $21,203/year.
The government may think they avoided a catastrophe by raising the minimum wage, but they merely delayed it.
