There's been a lot of sound and fury -- particularly from Tim Horton's franchisees -- about Ontario's recent minimum wage hike. But, Alan Freeman writes, the raise makes perfect sense:
If you go past the hysterical outpourings from the likes of the Canadian Federation of Independent Business — which specializes in crying wolf every time there’s a talk of improving the Canada Pension Plan or making any small improvement in the lives of employees — the overall impacts of the minimum wage hike for the economy are quite small.
The increase in the minimum wage to $14 an hour from $11.60 is about 21 per cent. That’s about the same percentage increase as Walmart is voluntarily giving its employees in the U.S. (22 per cent). US$11 is worth about Cdn$13.80. In that context, the Ontario wage hike doesn’t seem unreasonable.
The jobless rate in Ontario is currently 5.5 per cent — about as close to full employment as you can get, making this the best time to implement a big minimum wage hike. You might think that employers desperate for labour would do whatever they could to keep the good ones from bolting.
The usual complaint is that legislating minimum wages kills jobs. But that complaint needs to be put in context:
According to the Bank of Canada, about 8 per cent of Canadian employees work for minimum wage and minimum wage rates affect about 15 per cent of all employees with the lowest wages. The bank says the increased wages planned in Ontario and elsewhere could mean that 60,000 fewer jobs are created this year than otherwise — although that’s just a guess.
That may sound like a lot of jobs but it’s a blip in an economy that employs 18.6 million people — a figure that an economist at Scotiabank says is “likely within the margin of error.” It’s worth noting that the Canadian economy created 79,000 jobs in December alone.
The disciples of Milton Friedman are apoplectic. But, finally, labour is getting a little bit of what it is owed.
Image: The National Post
12 comments:
Putting things into that kind of perspective is much-needed, Owen, although the usual suspects will, of course, have no truck with it.
.. I worked my way across Canada many times..
baling hay, driving combines, ploughing fields
milking cows, planting corn, catching chickens
hell, spreading manure in February, minus 20
I dare not tell you the average 'hourly' rate
It was pre-dawn to midnight if need be..
7 days a week.. but all one could eat
I always had amazing food
and damn, but did I work up an appetite!
It is interesting that in places like Seatle and elsewhere that increased minimum wage their economies are all running better now than before. The only businesses lost were the least profitable and those poorly run that would have died anyway.
The most important thing now is for some smart political party to make reform of franchise laws a big priority. Most franchises are run with roughly 50% of gross sales going to the head office full of pencil pushing, semi computer types contributing nothing to the company while the franchise owners struggle to make a profit and pay all the bills out of the remaining half. a simple change to the laws with the corporation getting half of NET sales would put more money in the franchisees pocket with a more fair sharing of risk. off the top of my head the freedom to source local products and setting wages and prices for their product based on local conditions should also be legislated. This includes every corporate chain including companies like Loblaws and Canadian tire.
As a former business owner and knowing many other business owners including franchisees I have a little knowledge on this topic. It is also why I prefer to shop at independent businesses where they realize that the customer is still king.
Increasingly, Lorne, we're losing sight of the big picture.
Anyone who has worked on a farm -- starting with milking the cows at five o'clock in the morning -- knows what putting in a full day's work means, salamander.
Ray Kroch and Dave Thomas made a fortune pushing hamburgers, bill. The guys at the business end of things have leaner and tougher times.
slavery is slavery no matter how much you paint it as living
I remember that we used to have a dozen or more great fish & chip shops within a few blocks before H Salt moved in back in the late 60s or early 70s. By the time that all the H Salt shops had closed down a few years later, all the guys whose business they had taken were long gone. In some other city, you'd probably be able to describe a similar process for hamburger joints and coffee & doughnut shops. I won't get into what's happened to the quality of edibles at Horton's.
When I consider the question with the benefit of the input provided by bill, it seems to me that Dan Kelly's purpose has been to provide corporate ownership with the opportunity to hide behind the skirts of real small business owners who, in the process of creating wealth for themselves, actually create some for others.
True, Steve. And greed is greed.
Good point, John. Franchisees are not really Mom and Pop operations.
I also lament the death of the mom and pop shop. IMHO only A&W has lately become capable of creating edible food. I dont smoke. However the worst smokes Malbro, the worst food MCUkes, and the worst beer, Bud. What does that tell you?
Your comment reminds me of the summer I worked cooking burgers, fries and onion rings in an A + W kitchen, Steve.
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