The Agenda with Steve Paikin (Audio) - How Best to Support Ontario's Minimum Wage Workers

Episode Date: November 14, 2024

Ontario's minimum wage rose to $17.20 from $16.55 on October 1, an increase of almost 4 percent based on the province's consumer price index. But advocates argue that the wage is still too low in places with a higher cost of living. There's even a movement to introduce a living wage, one that is indexed to local costs. Minimum wage workers in Toronto and Hamilton for example would be paid more per hour than those in Sudbury or Thunder Bay. But business owners say that they can't be expected to bear the sole cost of increasing wages. Some say that the government has a bigger role to play in helping low-wage workers improve their skills to graduate better paying jobs. So, what is the best way to support Ontario's low-wage workers?See omnystudio.com/listener for privacy information.

Ontario's minimum wage rose last October by almost 4% based on the province's consumer price index. Advocates argue that it's still too low in places with a higher cost of living. But business owners say that they can't be expected to bear the sole cost of increasing wages. So, what is the best way to support Ontario's low-wage workers? Let's ask. In Lima, Peru, Anil Verma,

Professor Emeritus at the University of Toronto and the Chair of Ontario's 2013 Minimum Wage Advisory Panel. And with us in studio, Paul McGuinness, President of Jockey North America, a packaging manufacturer based in Godridge, Ontario. Maria Rio, Board Member with the Ontario Living Wage Network. And Julie Kwasinski, provincial director for Ontario at the Canadian Federation of Independent Business.

Thank you everyone for joining us in studio and Anil for joining us virtually. Paul, I'm gonna start with you. Just off the shores of Lake Huron is your manufacturing plant. You are manufacturing plastic lids, tubs, buckets, you name it. Tell us, break it down for us,

how much do you pay employees now under a living wage versus what they were making before? Our starting wage now is $21.27 and that's based on role and it goes up from there based on experience. Prior to becoming a living wage employer, we were around the $17, $18 range. So making this commitment was a significant increase. But I think we approached it from a multifaceted idea. And I think it was probably the best decision we made. Tell me in terms of percentage, how many employees would have been infected by that bump?

So we'll say for easy math, 35%. So we're about 115 employees when we did it. We were closer to 105 somewhere in there. And it impacts about 27 to 30 people. All right. Maria, let's do a little math here. How does the Ontario Living Wage Network calculate how much a living wage should be in a particular area?

Because if we look at, say, southwestern Ontario, we're looking at 18, these are 20-23 numbers, $18.65. But if we look at the GTA, we're looking at $25.05. So a big range there. Tell us how the math works. Sure. So to start with that, I want to talk a little bit about the minimum wage. That's set at the provincial level and it's not indexed to any cost of living. The living wage is indexed to a cost of living so we take into consideration your cost of rent, transportation, child care, any applicable taxes or benefits and we come up with an hourly rate that would be kind of the bare minimum to live in an area that you work at. So nothing extravagant, we're not looking at savings or anything like

that. We're not looking at any emergencies, just the bare minimum. All right. Paul, I want to get a better understanding as sort of the reasons why you decided to be an employer that gives a living wage. First and foremost, it's the right thing to do. But we are in a small community, we're in the town of Godrich, Ontario. That is 8,000-ish people. So you see the people you work with every day. You meet their families. You see people that have more than one job just

to make ends meet. And I think in good conscience, we had to do everything we could to help with that. We are a for-profit business, and we can't spend our way out of it. But when we look at it from a business decision point of view, it has helped with recruiting. It has helped with retention. It has helped with image in the community.

We wanted to become an employer of choice. You can't do that while not paying your people properly. I do have to ask as a business, you're obviously looking at the bottom line as well. You can't do that while not paying your people properly. I do have to ask as a business, you're obviously looking at the bottom line as well. What's the impact on on your bottom line? It's significant. It's I mean, this was a between seven and 12 percent increase on our payroll, because when you move the lowest paid employees, everything else moves with it. Right. So we have engineering, we have professionals,

we have finance, we have HR, we're a full functioning business. So that adjusts the entire wage grid. It's a significant thing. And again, you do it for the right reasons. So it has helped us immensely from a business perspective. You're talking about business continuity. You talk about business continuity. You talk about being able to service your customers.

You do that with longer tenure employees. Training is expensive. Recruiting is expensive. Hiring is expensive. So those costs get removed significantly, to completely eliminate it, obviously. So it helps offset the increase. Maria, can you give us a better distinction

between a minimum wage versus a living wage? Sure. So our minimum wage right now in Ontario is set at $1,720. And the living wage rate for 2023 that the Ontario Living Wage Network is $2,505. So the difference is around $13,500 put back into people's pockets.

Yeah, it is a lot of money But the opposite is we're looking at you know people who are getting paid minimum wage who are falling two to three hundred dollars behind each week and having to make really horrible decisions around groceries bill payments Do they have to leave their community do they have to access a food bank? Which you see a lot of people accessing in Ontario right now leave their community, do they have to access a food bank, which we see a lot of people accessing in Ontario right now. So I think it's money well invested.

As Paul said, you get to retain your employees are happier, they're willing to work harder. And I believe in that too. If you invest in people, they invest in you. Now you believe in that, but I'm curious about the 800 companies that are part of OLWN. How do they feel? What is, do they have that general same experience? I think a lot of people certify for different reasons. So it's hard to know exactly what experience they're having.

But I think a lot of it comes to like, OK, it feels like the right thing to do. There's actual tangible benefits for their employees. But then the other thing is we know the cost of living is ridiculous. There's no way that someone making 33,500, which is the minimum wage right now, would be able to live a dignified life in Toronto. So I think that that's an additional pressure point of like, I want my employees to have a good life. I don't need them working three full-time jobs. How are they supposed to do that? And you can't work your way out of poverty. So I think that that's another part.

All right. I am going to point your eyes to the screen. Here is a chart showing Ontario's minimum wage from 1999 to today. Minimum wage was $6.85. Then it's $17.20 now. And if you see just on that right side around 2018, well, that's a big spike there

because minimum wage rose from $11.60 to $14 per hour, about a 21% increase. Anil, I'm going to come to you first. What was the effect of that 2018 boost to minimum wage on Ontario's employment rate? Well, as far as we can tell, it was a good move for Ontario's economy. We did not see any large scale unemployment because of the increase. And many more people were saved from poverty. So it was it was a good increase.

it was a good increase and I have to say that prior to that law we had ad hoc increases in minimum wage. So sometimes the government would find time and inclination to increase it and at other times there were years that would go by without any increase. So that amendment to the law without any increase. So that amendment to the law that came after our report on the advisory panel was a good one. And although as Maria points out that it is not linked to the cost of living, but the increases are now linked to the cost of living. So at least from a base, we are now sort of keeping up. But that is not to say that it is a wage on which you can live on or support a family. J.

BLAIR All right, Julie, I'm going to get your take on that as well. The impact of that 2018 boost, but also critique to that approach as well? J. BLAIR I'm going to raise a couple of points here. We're ignoring totally the economic realities

that are being faced by small businesses. So the living wage network essentially is asking for a 46% increase in the minimum wage for the GTA. And that is just economically unfeasible. Let me tell you, small businesses right now, they are struggling with high debt, they are having labour challenges, extra costs of labour are already hard enough to absorb for a small business versus a large business, and let's not forget some very important information. Don't think of

this in a silo. Every time there's a minimum wage increase, you know what we hear from our members about, our 38,000 members in Ontario? They have to give everybody a wage increase. There's the domino effect because you can't be making more than the employees that you're managing, for example. And also very importantly, very importantly, let's not forget that every time that there's a minimum wage increase, governments cheer, they take credit for it, it's easy to play Santa with somebody else's money, small businesses are paying for it, they're footing the bill entirely, and guess what what government is making money on payroll taxes. Just to give you an example on a $50,000 salary in Ontario, payroll taxes both federally and provincially total over $5,000 and I think the one main

point I want to make here is I agree and CFIB members agree that we should take care of the cost of the living wage issue. But should that be borne entirely by small businesses because small businesses are the biggest employers? And I think that's the point I'm trying to make here. You're asking small businesses not only to do wage increases but also be responsible for cost of living increases. Where are the governments in this?

Where are the governments in terms of lowering costs for people and for businesses? Because, Jayan, you have to do both. Because if you don't lower the cost for businesses too, they are forced to increase their costs, which the low-wage earners then have to pay, so they're no better off. And they're also forced to make some very difficult decisions. And I can tell you one very important thing that we hear from our members. We survey them a lot.

They tell us that if government freed up money by lowering the small business tax rate, the threshold to access it, returning more workplace safety and insurance board surplus funds, lowering WSIB premium rates, they would take that extra money and pay their employees more. They say that time and time again. Thank you. All right, Marie, I'm gonna get you to respond to that and then we'll move on. Yeah, I think you said some things that I agree with, some things that I don't, so then we will. They actually have more than 500 employees themselves. So it's not an outsized impact on small businesses, but it is asking everyone to kind of step up, including the government, which is my thing. I don't want to just pass the buck on the government or landlords or grocery stores.

I think everyone has a role to play. And I know that it's not the easiest financial decision to say, well, if I can get it for cheaper, why wouldn't I? But I do believe it's not the easiest financial decision to say like, well, if I can get it for cheaper, why wouldn't I? But I do believe it is the right one. But if I could interject here, like this number, 20 2505, it's subjective. It's arbitrary. I went on your website.

It says that part of what you include is a modest vacation. So what is the definition of vacation? Who calculates the number? Because my modest vacation is under 20 bucks, going to visit my sister and bury on the go train. This is all arbitrary, subjective. It's written on the back of a napkin. The wages, whatever we do with them,

should be tied to economic indicators. You saw from the chart there, minimum wages have outpaced inflation. Productivity is stagnant in Canada. And what employers are looking at doing is saying to themselves, hey, you know what, I'm going to automate these jobs. And let's not kid ourselves who we're talking about here. Most minimum wage earners are students

who live at home with their parents, or people that are moving into transitional jobs. We shouldn't be over-inflating the number of people we're talking about here. who live at home with their parents or people that are moving into transitional jobs. We shouldn't be over inflating the number of people we're talking about here. All right, Anil, I want to get you in here. Walk us through the relationship between a rapidly rising minimum wage and unemployment. Well, this is a slightly controversial, but we know from previous rounds of minimum wage increases that when the increases are modest by which I mean in keeping with inflation

and other related costs, it does not have a great unemployment effect. In fact, some studies in the US have shown that it can have a positive effect on employment. So as long as we stay within bounds, it does not result in a great deal of unemployment. But it is, it can be a poverty trap for some people. And as was just pointed out correctly, that not all minimum wage workers are the same. Some have families, some live at home. Some are young people who are going through the minimum wage job as a stepping stone to other jobs in their careers. But there is a group, I would say maybe a third of minimum wage workers, who are older, they

don't have the skills, and they don't have the ability to move out of it, and they are kind of trapped in it, and it is this group that needs the help most. All right, I want to point your eyes again to another chart. This is a chart illustrating the pace of change in both the average hourly wage rate and the consumer price index over almost 10 years. In September 2024, the average wage was up 5.7% versus a 1.9% increase in CPI.

Anil, you were talking a little bit about this. What happens to the employment outlook when the average wage begins to outstrip the pace of inflation as we see in that chart? Well, the average wage is kind of tricky because technology has made many of our high-tech jobs very valuable. So the wage spread between minimum wage and the people who are earning the top dollar especially college educated people has really spread so it has pulled

up the average wage in the economy. This is not, this does not reflect what another measure that would be a median wage, which is more reflective of the distribution of wages. All right, Paul, as a business owner, how do you view average wages rising faster than the pace of inflation? I think as a business owner you have to decide where you want to sit on the wage grid in your recruitment area. So what's happening nationally or even what's happening outside of your county or your area is somewhat irrelevant. If I'm trying to recruit an employee with skill set X I have to pay what the area in

that pays. We happen to like I said we live in a small town it's 8,000 people but we happen to have a mine and a nuclear plant so I would say the average wage in our area is quite high. The nuclear plant is a bit of a drive but it still recruits from my area so that directly impacts my my ability to hire and recruit that has nothing to do with minimum wage that's just the local economy so you have to decide where you want to be do you want to be the highest paying employer in the area to recruit to recruit those people or do you want to train internally it's a very complex thing so it's it's subtle And I think, again, minimum wage is not

an area I want to play in because I want to have the ability to be selective in my hiring. All right, Julie, I'm curious, in terms of your membership, what effect did linking minimum wage to CPI reveal in terms of their thoughts? Well, at least it was a stable, predictable way to set the minimum wage. So you know at the end of March, early April what the increase will be. It takes effect October 1st.

But the question is, seeing these different charts where CPI is clearly outpacing the minimum wage, we have to think about how to do this. We can't sustain this into the future because as the wage keeps getting higher and higher, it gets to the point where the actual wage doesn't equate to the productivity and the actual job that's being done. So then that forces business owners to make decisions where maybe they decide they want to automate. And automation can mean different things.

For a small business, they're not in a situation like Loblaw's where they can afford the giant machines to eliminate some positions, but even automation creates jobs, but you have to have skills for those jobs. But for a small business, automation might mean automating your payroll, where your payroll department is now two people instead of four people. But I think at least there's stability and predictability, but the question is how long

can we continue on this path? And really whatever we end up doing wherever we go I think there are some key principles that need to be followed. Affordability, stability and predictability for businesses they're the people who are paying for it. More involvement with government to get people's costs down on the cost of living side and business affordability costs because the cost of doing business keeps going up even though businesses are struggling. All right. So it's got to be stable, predictable, affordable for businesses and let take out the

political interference so that governments can't come in and arbitrarily raise it for political reasons. Thank you. Maria, I'm curious, are there some unintended consequences when mandating potentially a living wage based on regional cost of living, having workers in communities? I can see, you know, people looking at a map of Ontario and looking at sort of regions that are paying more and maybe perhaps there's an influx of workers into one area. Are there unintended consequences of having something like that? I'm not 100% sure.

I wouldn't assume so, simply because why would you willingly move to somewhere that has a higher cost of living? That's what a higher living wage rate indicates. But I just would love to touch back on something Julie said earlier. And I understand what you're saying. It is a little bit subjective, which a lot of the ways of measuring poverty right now are. And for the 75% of people who are making

minimum wage, they are over the age of 20 years old, so they're not usually children with additional social supports. But if you don't like the living wage rate or anyone, I think that there's another way that we can think about it, and this is a way that I personally have really started thinking about it as well, is indexing next to the Canada's official poverty line, which still leaves us $5,000 behind. So like Canada's official poverty line right now says that to live in Toronto you need $27,000 of disposable income, which like roughly that's $37,500 free tax, which means that $33,500, which is the current minimum wage that we just updated

to is still $5,000 below Canada's official poverty line. So by asking people to work minimum wage jobs and not increasing it and not saying that should be exclusively on small business owners, we are putting people directly into poverty. And as Anil was saying, that's a pretty inescapable trap. I think we need to address, it's really important here. people directly into poverty and as Anil was saying that's a pretty unescapable trap. I think we need to address, it's really important here, I lobby the provincial government every day on various issues and I always ask myself can this be done? Feasibility? It can't. Think about it. Who sets the minimum wage? The province. So they would have to set it regionally. There are over 440 municipalities in this province. Where would the boundaries be?

It's organized by single tier districts, counties, regions. Do you think they could agree on the boundaries? And what if the minimum wage is one, or the living wage is one amount on one side of the street and the different side on the other? And I respectfully would say that you already living wage is one amount on one side of the street and a different side on the other and I respectfully would say that you already have an issue with people flocking to Toronto because of jobs. I could see smaller towns losing people to big cities that have the higher living wage and also losing their tax base. Because when people move, taxpayers move,

they lose their tax base. So a lot to unpack there, but thank you. Well, got to kneel to unpack a little bit of that. Yeah. I'd like to support that point about the heterogeneity within the group of people that we are addressing, the low-wage workforce. You know they are not all the same and therefore we need different solutions for different groups.

So what is the heterogeneity? Number one for living wage is the household. You know are you a one person household or do you have dependents? How many wage earners are in the household, etc. And this is a problem, I think, for further expansion of the living wage idea, which is in principle is a good idea. The other heterogeneity is geography. That is, Toronto is different from Northern Ontario and so on so forth. Now in the US one thing that large cities have done is that they have adopted a living wage for their own metropolitan area. This has happened in New York or San Francisco, Los Angeles and so forth. In Canada our cities do not have this power and hence

we don't have the ability to unpack the living wage or minimum wage even minimum wage by geographical area. So I think if we could move in this direction that would be one great improvement over the status quo. The second one is sorry go ahead. I'm not sure if you're aware that the City of Vancouver had a living wage and they cancelled it in January of 2023. So the City of Vancouver did have it and they went to something else called a fair wage

but they cancelled it in January 2023. Just thought I'd point that out. Yeah, but as you know that in Ontario, in fact, the reverse is happening. That is, the provincial government is centralizing even more powers and away from the cities. So this is a problem that you need to solve at the provincial level, maybe by dividing the province into a number of zones and addressing those. The other solution I think that has not received enough attention in our policy circles is that we need to think of low-wage jobs as a holding place for young people, people without labor market experience and those who are using it to develop their career and to be upwardly mobile out of those jobs.

And we need to make skills and learning and training available to these workers so that they can work for a few years and then they can move up and out. This happens, I would argue, with at least half the minimum wage workers who are not in it if you look at them five years down the road. But as long as these opportunities are not available, people who take these jobs they are trapped and then they need more of a living wage which is spreading as a concept. But I don't see that many employers as Julie points out, would simply move their wage up because they want to be on this list of good employers. All right. I want to talk a little bit about some solutions here. Paul, you're a business owner.

Let's scrap minimum wage. Let's talk about other things that can be done. What else can government do to support both business and workers that doesn't rely on an increase on minimum wage? We talk about upskilling. I mean, there have been programs for, incentive programs and rebates for employers to hire, to upskill, to train. That stuff is wonderful. Remove some of the bureaucracy around it would be great. We often end up using third parties to fill out forms for you because everyone's busy and the smaller the business is, you don't have a person dedicated to grant writing and

applications and things. So the money's there, make it more accessible, make it something that is actually achievable for for if you're a small business you don't have time to do this stuff control inflation of course you know we've seen we've all been to a grocery store we've all seen what people pay for rent and for housing you know one no employer can bear that burden but I just think remove the bureaucracy and there's lots we can do to help people out. Like you said, the money's there. How we administer it and how we distribute it, I think that requires input from everybody. And I don't think it should just be loud as voice.

All right. Julie, policies and ideas that your membership would support, that would help workers, and that's not tied to wages. I think I mentioned some of them earlier, but they're certainly worth repeating. The most important point is it is completely unfair to ask businesses to shoulder the burden of cost of living increases alone. That's the first important point.

That's a lot to put on a small business's shoulder when they're struggling. I think if you lower costs for businesses, and again, small business tax rate, highest in Canada with Quebec, lower it from the current 3.2%, increase the threshold to access it from 500,000 to 700,000,

give back some more WSIB surplus rebate funds, lower WSIB premiums, and our survey numbers show that if you free up this money, business owners would use it to increase wages. It's in the top two every time. All right, and Neil, I'm curious, what would the benefit to the economy be if, you know, we talked about upscaling here, workers had the legislated right to improve their skill sets? There should be legislated opportunities for them to improve rather than forcing them. You know, we don't want to force people to do

what they're not capable of. But in a lot of research that we have done, what we find is when you talk to minimum wage workers or low wage workers, they all aspire to something better down the road. No one takes a minimum wage job and aspires to spend the rest of their lives or rest of their careers on the minimum wage. And when we don't have opportunities, when we relegate them to the minimum wage job forever, that is a trap and that is cruel and unfair to them. Maria, you're going to get the last word here in terms of, you know, solutions to getting us to a living wage, upscaling, and sort of the conversations we had here. What are your thoughts? I think the living wage is something that a lot of organizations have already adopted for a lot of reasons. So I'd like to also jump in and additional solutions that we can look at. One of them, I think, would be indexing the cost of rent

to the local wages that are available. So if most people are getting paid X amount, maybe we can index the cost of rent. The other one would be mandating a grocery code of conduct. So it's not just a voluntary thing that the grocers had to, well, sorry, agree to agree to. But they actually had to be mandated to keep grocery costs low because those are the two biggest costs right now, it's rent and food. So I think that would make a big difference.

Alright, well we are going to leave it there. I want to thank you all. And Neil, thank you so much. Maria, Julie, Paul, thank you so much for that. Important conversation, one that I'm sure we'll have. Alright. Thank you.