(By Spencer Leefe, Queen’s University)
Picture yourself in high school working at a part-time minimum wage job. Maybe it’s at a hotel, a grocery store, or a fast food restaurant. Perhaps it sounds terrible, but you make just enough money to have fun with your friends. You live with your parents, so they pay for most of your living expenses. This is exactly who a minimum wage job is for: the high school student looking for some extra money. It’s not supposed to be a wage for your entire life to live on or support a family with. Unfortunately this is not the reality in our heavily regulated province. The minimum wage has become too expensive for many business owners to hire you, so there are not only less jobs, but it is more difficult for the inexperienced to get one. This is called “pricing people out of the job market”.
Look at yourself, a high schooler, now. You are not only out of a job, but you are also not able to build a resume for future jobs. When implementing a minimum wage the intent of many governments around the world has been to price particular demographics out of the job market. This was meant to exclude members of different ethnic groups. You read that right: minorities and immigrants that were willing to work for competitive pay were purposely priced out of the job market because of the artificial wage increases of the early 20th century.
How does this work? Governments and unions knew that immigrants were predominately non-union (similar to non-union high school students today). By pricing them out of the market, union workers would not have to compete with non-unions workers, securing their paychecks. Non-union workers would rather have a job, make money, and improve their skills, than be unemployed. This is not to say that the intention of a higher minimum wage is the same today as it was in the early 20th century, only the result is the same: people lose opportunities that would allow them to make money and build skills.
The result of raising the minimum wage undeniably creates difficulty for small business owners to survive , forcing them to either fire employees, cut employee hours, raise prices, or cut their own pay. As a result of a minimum wage pertaining to $14/h in Ontario, one Sudbury man would earn less than his employees if he were to cut his own salary, as opposed to cutting the salaries of his employees or raising prices.
Think that businesses will not raise wages organically? Think again. The USA recently passed a new tax plan that changed the corporate tax rate from 35% to 21% which enticed businesses to raise wages. What does this mean? It means that businesses will raise wages if they have the available funds or profit with which to raise wages—these workers do not need the government to artificially raise their wages.
So what is the benefit of a raised minimum wage? Of course there is the short term benefit of those who will keep their jobs and receive a higher wage, but inevitably this will not matter because goods and services will increase in price substantially.
How do we fix this? Protesters need to stop pressuring easily-swayed governments to raise the minimum wage and instead should start advocating for a lower minimum wage. We need a “fight for 5” as opposed to a “fight for 15”. An increase of available jobs for the whole population is more effective at fighting poverty, than an increase of wages by mandate.
Remember that high school job I mentioned? Are inexperienced high schoolers really worth $14 an hour? Especially compared to a person that has spent years building their own experience? If the wage was lowered then the inexperienced would be able to get that first job, build a resume, and obtain better waged jobs as they gain experience. To fix poverty in this province, we first need the jobs. Once we get the jobs we get the money. Once we get the money, poverty will be well on its way out of here.
Sources
Bouw, Brenda. “Ontario small-business owners raising prices to cover minimum wage hikes.” The Globe and Mail. 1 December 2017.
Dehaas, James. “Ont. resturant owner says wage hike means he’ll earn less than employees.” CTV News. 1 January 2018.
Savory, Andrew. “Ontario restaurants consider business changes in wake of minimum-wage increase.” The Globe and Mail. 31 December 2017.
Sherk, James. “$15 Minimum Wages Will Substantially Raise Prices.” The Heritage Foundation. 19 January 2017.
Sowell, Thomas. “Why racists love the minimum wage laws.” New York Post. 17 September 2013.
Turner, Matt and Jonathan Garber. “Companies are rushing to announce special bonuses and pay hikes after the GOP tax plan.” Business Insider. 27 December 2017.