Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Organizational Responses Canadian Centre for Policy […]
    Canadian Centre for Policy Alternatives
  • Boots Riley in Winnipeg May 11 February 22, 2019
    Founder of the political Hip-Hop group The Coup, Boots Riley is a musician, rapper, writer and activist, whose feature film directorial and screenwriting debut — 2018’s celebrated Sorry to Bother You — received the award for Best First Feature at the 2019 Independent Spirit Awards (amongst several other accolades and recognitions). "[A] reflection of the […]
    Canadian Centre for Policy Alternatives
  • CCPA-BC welcomes Emira Mears as new Associate Director February 11, 2019
    This week the Canadian Centre for Policy Alternatives – BC Office is pleased to welcome Emira Mears to our staff team as our newly appointed Associate Director. Emira is an accomplished communications professional, digital strategist and entrepreneur. Through her former company Raised Eyebrow, she has had the opportunity to work with many organizations in the […]
    Canadian Centre for Policy Alternatives
  • Study explores media coverage of pipeline controversies December 14, 2018
    Supporters of fossil fuel infrastructure projects position themselves as friends of working people, framing climate action as antithetical to the more immediately pressing need to protect oil and gas workers’ livelihoods. And as the latest report from the CCPA-BC and Corporate Mapping Project confirms, this framing has become dominant across the media landscape. Focusing on pipeline […]
    Canadian Centre for Policy Alternatives
  • Study highlights ‘uncomfortable truth’ about racism in the job market December 12, 2018
    "Racialized workers in Ontario are significantly more likely to be concentrated in low-wage jobs and face persistent unemployment and earnings gaps compared to white employees — pointing to the “uncomfortable truth” about racism in the job market, according to a new study." Read the Toronto Star's coverage of our updated colour-coded labour market report, released […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers

Meta

Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

Raising Ontario’s Minimum Wage

On Friday, the United Steelworkers made the following submission to Ontario’s Minimum Wage Advisory Panel.

The United Steelworkers union endorses the Ontario Federation of Labour’s (OFL) call for a minimum wage of $14 per hour, to ensure that Ontarians who work full-time earn appreciably more than the poverty line. As the OFL submission states:

Minimum wage legislation is an important social policy because it establishes a wage floor. Everyone deserves the opportunity to earn a decent wage, whether it’s a single mother raising a family or a student saving for college. An adequate minimum wage can help to ensure that workers with little bargaining power in the labour market are paid a livable wage. The minimum wage is about lifting working people out of poverty, but it’s also about fairness and the value of work. Even for individuals not living below the poverty line, a decent wage can provide opportunities and allow them to contribute more to their families and local economies.

Establishing a higher wage floor can also help to address inequality. The earnings of Ontarians have become polarized. Those at the top are earning more, while those in the middle and at the bottom are facing stagnating wages. Putting more income into the hands of those earning the least can help address this inequality. Establishing an adequate minimum wage is one way to do this. In addition to the facts and arguments presented by the OFL, we ask the panel to consider the following material on who would benefit from a higher minimum wage, whether it would reduce employment, and how it should be indexed.

Who Would Benefit from a Higher Minimum Wage?

The vast majority of union members earn substantially more than minimum wage, but the United Steelworkers union is very diverse and we strive to organize the lowest-paid workers who are most in need of collective representation. In particular, we are the largest union of security guards in Canada.

Two months ago, we won a first contract for security screeners at the Norman Rogers Airport in Kingston. Prior to Steelworker representation, the starting wage for people performing this essential service was below $14 per hour. Our collective agreement increased it to $16 per hour.

The Ontario government should improve labour legislation to make collective bargaining available to more workers. For example, certification based on a majority of employees signing up to join a union is currently restricted to the construction sector but should be extended to all Ontario workplaces. We must also legislate a decent minimum wage for all employees, especially those who currently lack union representation.

After the OFL made its submission, the Wellesley Institute released a report entitled “Who Is Working For Minimum Wage In Ontario?” It confirms that recent immigrants, visible minorities and women are more likely to work for minimum wage, which means that a higher minimum wage would help achieve greater equity for these groups.

The Wellesley Institute also found that people older than 24 accounted for 40% of those earning Ontario’s minimum wage and 60% of those earning more than minimum wage but less than $14 per hour. These figures debunk the stereotype that only teenagers living with their parents get paid minimum wage. A higher minimum wage would help hundreds of thousands of adults who can barely make ends meet.

Would a Higher Minimum Wage Reduce Employment?

The main objection to increasing the minimum wage is that employers would supposedly hire fewer workers. In reality, labour costs are usually only a fraction of an enterprise’s total costs. By increasing consumer spending, a higher minimum wage also raises business revenues.

Minimum-wage work is concentrated in areas like fast food, retail and security, which have very little latitude to substitute capital for labour. Because these industries serve local markets, they cannot shift jobs to lower-wage jurisdictions.

Fast food, retail and security typically employ people for variable shifts and hours. If these employers want less labour, they cut back hours rather than laying off workers. As long as the percentage increase in the minimum wage exceeds the possible percentage reduction in paid hours, employees would earn more income.

Opponents of a higher minimum wage cannot simply suggest that it might slightly reduce demand for labour at the margin. They would have to prove that paid hours would fall by a larger percentage than the wage increase.

In fact, the evidence indicates that minimum-wage increases do not decrease employment. Economics professors from the Universities of Massachusetts (Amherst), North Carolina (Chapel Hill) and California (Berkeley) recently compared adjacent U.S. counties along the borders of states with different minimum wages.

Their conclusion was published in the November 2010 edition of The Review of Economics and Statistics: “For cross-state contiguous counties, we find strong earnings effects and no employment effects of minimum wage increases.” In other words, boosting the minimum wage succeeded in raising pay without reducing employment, even when neighbouring jurisdictions maintained a lower minimum.

How Should the Minimum Wage be Indexed?

After being increased to an appropriate level, Ontario’s minimum wage should be indexed to keep pace with other wages and prices that rise over time. The Ministry of Labour’s consultation paper asks whether the minimum wage should be indexed to inflation or average weekly earnings.

Alberta indexes its minimum wage to the average of inflation and average weekly earnings. Saskatchewan is proposing to index its minimum wage to the average of inflation and the average hourly wage.

The minimum wage should increase by at least as much as inflation to avoid falling behind the rising cost of living. It should increase by at least as much as the average wage to prevent income inequality from worsening.

The United Steelworkers union proposes the following indexing formula for Ontario: the minimum wage should be raised at least once per year by the rate of inflation or by the average wage increase, whichever is greater. Given the minimum wage’s social and economic benefits, it is reasonable for indexation to err on the side of increasing it more rather than less.

Enjoy and share:

Write a comment





Related articles