Minimum Wage

Ontario has just increased its minimum wage to $14, with a further increase to $15 per hour planned for January 1, 2019. This is good news, not only for those who will see their incomes rise immediately, but for everyone in the economy.

When workers earn less, we have a hard time paying our bills. This can eventually lead to huge problems for families who go into debt, often to short-term payday lenders, and increased stress. Low wages create higher need for government-funded programs like food banks, walk-in clinics and emergency rooms, etc. Extended periods of low wages lead to poor health outcomes, especially where children are involved. This becomes a “vicious cycle” of poverty that can span generations.

When workers earn more, however, the economy as a whole embarks on a “virtuous cycle.” Workers can afford to pay the rent as well as buy food for their families. This leads to better health for everyone, which, in turn, takes the strain off our medical system.

Because over half of GDP growth is rooted in consumer spending, it means a lot when workers have a few extra dollars to spend. Lower-wage earners already spend a larger proportion of their income than their wealthy counterparts, so the extra money they’ve earned tends to go right back into the economy. This, in turn, creates more jobs, which leads to more consumer spending, and so on…

On top of this, businesses benefit as well. When workers don’t have to worry about whether to pay the rent or buy food this month, they can focus on their jobs. This means a boost to productivity. If workers don’t have to look for a higher-paying job somewhere else, they become more committed to their current employers, and if they can afford childcare, they don’t have to book off from work in order to tend to a sick child. This reduces employee turnover, which in turn reduces the employer’s labour costs.

Sadly, most employers these days don’t see the value of paying their employees more, because all they see is the initial cost. They don’t want to share their success with the workers who put them in that position in the first place, even though in time they would do better as well. This is why a minimum wage is necessary, despite the right-wing arguments you may be hearing in the news or from your family.

Don’t be fooled: higher minimum wages help our entire economy, while also being the right thing to do. Every job should be a good job!

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