Minimum wage hike prompts Ontario businesses to raise prices, consider staff cuts
Canadian Press
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Published:
December 31, 2017
Updated:
December 31, 2017 11:33 AM EST
Kevin Flynn, Minister of Labour talks at the Somerset West Community Health Centre, Nov. 08, 2017.Photo by Jean Levac
TORONTO — Ontario’s new $14 per hour minimum wage does not take effect until Jan. 1, but Chris Stevens has already taken steps to ensure his restaurant can afford the added expense.
The co-owner of Kaboom Chicken in Toronto’s Leslieville neighbourhood has raised menu prices in anticipation of the wage hike. He and his business partner also plan to reduce their staff’s hours in the new year and take on more of the work themselves in order to save money.
New Year’s Day marks the first of two scheduled hikes, with the second to take place on Jan. 1, 2019, when the minimum wage will go up to $15. After that, it will be adjusted to keep pace with inflation.
The Ontario government says the change will bring greater purchasing power for working families and a stronger economy overall, but many small business owners across the province are wondering how they will maintain profits in the face of increasing payroll costs.
“It’s hard to see a way that you can lose that much of your revenue in a short period of time without having to revamp a lot of things — either letting staff go, doing a lot of the work yourself, raising prices,” Stevens said.
“We believe the minimum wage should go up and people should make a living wage, however I think (the hike) puts the onus on small businesses,” he added.
Dan Rishworth’s Toronto bicycle shop, Enduro Sport, employs seven permanent, full-time staff members and hires several young people as seasonal workers each summer when business picks up. The minimum wage increase could result in the store hiring fewer summer workers from now on, Rishworth said.
“I think at this point we’re not going to hire six summer people any longer, we’re going to hire only three or four,” he said.
The increase in payroll will also result in upper-level staff receiving fewer or smaller raises, Rishworth added.
“And I’m anticipating that (more senior) staff who are already getting $15 an hour are going to expect to get $17 or $18 or more because minimum wage is approaching $15,” he said.
The Financial Accountability Office of Ontario — an independent watchdog agency that reports to the provincial legislature — has estimated that the minimum wage hikes could result in a loss of 50,000 jobs as employers struggle to keep up with staffing costs.
“Some businesses will attempt to reduce expenses by substituting minimum wage employees for higher paid, more productive workers or by increasing automation,” the agency said in a report released in September. “This would lead to some job losses for minimum-wage workers.
But the higher minimum wage would also increase consumer spending, “stimulate economic activity and lead to job creation (that could) offset some of the loss in employment,” it said.
Ontario Minister of Labour Kevin Flynn said last week that he doesn’t believe the “doom and gloom” predictions about rising minimum wage hurting businesses or leading to unemployment.
“We’ve raised minimum wage 70 per cent since 2003 and we’ve seen increased employment right through that period,” Flynn said at a news conference.
“I think we’ve proven we can work with small business. We are lowering the tax rate, we’re lowering the burden on small business so we’re asking them to play a part here,” he added, referencing the Liberal government’s elimination of the capital tax for businesses, and reduced income tax rates for small businesses.
“This money is going to go right back into Main Street, it’s going to go right back into the mom and pop businesses that … are concerned,” the minister added. “(But) it’s going to take an adjustment…It’s going to take a change.”
In June, over 50 economists at universities across Canada co-wrote an open letter supporting Ontario’s $15 minimum wage plan, in part, they said, because higher wages make for a stronger economy.
“As those with lower incomes spend more of what they earn than do those with higher incomes, raising the minimum wage could play a role in economic revival,” the economists wrote.
“For years, we have heard that raising the minimum wage will kill jobs, raise prices and cause businesses to flee Ontario. This is fear-mongering that is out of line with the latest economic research.”
But some small-business owners are skeptical they’ll see a financial benefit.
Stevens said there is no guarantee the higher minimum wage will lead to more money being spent, particularly at restaurants and bars.
“What are you giving them more money for? Is it so that they can go to restaurants and spend money and have a nightlife, or to put food on the table and pay the rent?” he said.
Minimum wage hike prompts Ontario businesses to raise prices, consider staff cuts | Toronto Sun
Bank of Canada report estimates 60,000 fewer jobs by 2019 due to minimum wage increases
Canadian Press
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Published:
January 3, 2018
Updated:
January 3, 2018 11:26 AM EST
A woman walks past the Bank of Canada Wednesday September 6, 2017 in Ottawa.Adrian Wyld / THE CANADIAN PRESS
OTTAWA — The Bank of Canada estimates there will be about 60,000 fewer jobs by 2019 due to the increases in minimum wages across the country, but that labour income will be higher due to the increases.
In examining the impact of the wage increases, the report estimated that the consumer price index could be boosted by about 0.1 percentage points on average and real gross domestic product could be cut by 0.1% by early 2019.
The number of jobs lost was based on a 0.3% decline in the number of hours worked, while aggregate real wages were estimated to increase 0.7%.
Read the full report here:
View this document on Scribd
The research paper by the staff at the central bank noted that if the average working hours declined following the increase in the minimum wage, the number of jobs lost would also be lower.
The Bank of Canada estimated that about 8% of all employees work at minimum wage, a proportion that increases to 11% if a threshold of 5% above minimum wage is used.
Ontario raised its minimum wage to $14 per hour on Jan. 1 from $11.60 and plans to increase it to $15 in 2019, while Alberta is expected to raise its minimum wage to $15 later this year.
http://bankofcanada.ca/wp-content/uploads/2017/12/san2017-26.pdf
Bank of Canada report estimates 60,000 fewer jobs by 2019 due to minimum wage increases | Toronto Sun
Tim Hortons franchise owned by kids of founders to cut paid breaks, benefits over Ont. minimum wage hike: Report
Postmedia News
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Published:
January 3, 2018
Updated:
January 3, 2018 2:23 PM EST
(Postmedia Network File Photo)
The coffee at a Cobourg, Ont., Tim Hortons has gone bitter after owners sent staff a letter saying the franchise is cutting paid breaks, health benefits and other incentives in light of the provincial minimum wage hike, according to a report by CBC News.
Ron Joyce Jr. and Jeri-Lynn Horton-Joyce, the son and daughter of founders Ron Joyce and Tim Horton, own the franchise, located 115 km east of Toronto.
The document, a copy of which was obtained by Postmedia Network, details various changes to its policies “due to the increase of wages to $14.00 minimum wage on January 1, 2018, then $15.00 per hour on January 1, 2019, as well as the lack of assistance and financial help from our Head Office and from the Government.”
“Breaks will no longer be paid,” it states and goes on to give examples of how each shift will be calculated. “A 9 hour shift will be paid for 8 hours and 20 minutes. 8 hour shift will be paid for 7 hours and 30 minutes…” and so on.
The document also details reductions to its health and dental benefits plans. Workers with five years or more experience will now have to pay up to 50% of their benefits. They used to be 100% covered, an employee told CBC News.
A worker that has been there between 6 months and five years will now have to reportedly pay up to 75% of the benefit costs.
The Tim Hortons franchise has also eliminated a couple of other perks regarding employees working on their birthday and getting a day off with pay after six months of employment. All of these changes took effect Jan. 1.
The form cordially ends “Sincerely, Jeri, Ron and Lisa” and tells workers to sign and date it to indicate they understand the new policy.
Tim Hortons heirs cut paid breaks and worker benefits after minimum wage hike, employees say - Business - CBC News
Tim Hortons franchise owned by kids of founders to cut paid breaks, benefits over Ont. minimum wage hike: Report | Toronto Sun
