May 30, 2017 marks the day that the Ontario Liberals “jumped the political shark” in a contrived attempt to gain some traction with Ontario voters after years of governance that has left Ontario facing a critical shortage of hospital beds — the province has just 2.3 beds per 1000 people, putting Ontario on par with Chile and behind every other Western county — its cities burdened with job killing high energy costs that compare unfavourably to other nearby jurisdictions, and provincial debt that has tripled since the Liberals took office, leaving the province as the most indebted sub-sovereign jurisdiction in the world.
Over the last decade the Ontario Liberals have happily used everybody’s money in the province through debt and deficit spending to spread the risk around, but today that changed with the announcement that the provincial government will increase Ontario’s minimum wage by 22% as of January 1, 2018 (from $11.40 to $14 per hour) and by another dollar on top of that by January 1, 2019, for a total increase over 18 months of more than 31%. This will impact 30% of workers in the province. And that is the key political point.
Ontario Liberal Premier Kathleen Wynne is calculating that taking money from employers and giving it to 30% of workers will generate votes, while avoiding adding to the debt and causing a deficit that one might expect to see through more effective ways to help low wage workers — using earned income tax credits and other means of boosting take home pay for workers labouring at the low-end of the market’s pay scales.
Inherent in this new minimum wage policy is a massive risk, one that is born by the very low wage workers Premier Wynne claims to be supporting with this political Hail Mary pass.
Those who have studied economics and minimum wages understand that moderate minimum wage increases have little or no impact on employment opportunities for low wage workers. But rapid and high wage increases (31% over 18 months qualifies as rapid and high) have a very clear impact, reducing job opportunities for low wage workers who are replaced using new technologies (think automated ordering and check out kiosks) or made redundant by businesses with thin profit margins, increasing the number of people on welfare in the fallout. None of this is new or unpredictable. This very debate has already occurred in the United States where caution has been the better guide to setting wages in an effort to avoid job losses for the most vulnerable workers in the economy.
Ontario leader of the Official Opposition, Patrick Brown, has responded to this well telegraphed move by the Liberals by saying, well, nothing at this point, about how he would protect many low wage workers from finding themselves on the dole in the future. The obvious answer is to reduce the proposed increase to a moderate one that can be absorbed by the economy, a move that would entail both political courage and the genuine ability to effectively argue for a different kind of Ontario than the one that the Ontario Liberals have produced since taking office so many years ago.
What is certain, following the announcement from Premier Wynne, is that the future employment prospects for Ontario’s low wage workers are now in peril, and the only folks who see a way to profit from this reckless gambit are the Provincial Liberals who desperately want to hold onto power regardless of who they step on in the process.