Short-term pain for long-term gain? Raising Ontario’s minimum wage

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With files from Dawn Huddlestone

While some are applauding increases to minimum wage in Ontario, others are reeling over the changes and trying to figure out how to soften the blow.

According to Debbie Knoblesdorf, owner of West Side Fish and Chips, the increases will cost the business she owns and runs with her mother an additional $35,000 this year and roughly $50,000 next year when the minimum wage goes from $14 to $15 per hour.

What people don’t realize is that this is a win-win for the Wynne government. It had absolutely nothing to do with her caring about the people. It came down to tax dollars in her pocket. As soon as she raises minimum wage everything goes up CPP, EI, income tax – it all goes up, WSIB goes up. Everybody is going to raise their prices and what’s that going to mean? More tax revenue! Debbie Knobelsdorf, owner of West Side Fish and Chips Restaurant

She said the legislated increases have been so drastic in such a short period of time that it leaves very little room for employers to compensate based on merit. “I’ve just given huge raises to people who don’t even deserve the ones they got before, that the government gave them, and students should be seven or eight bucks an hour coming out of high school not thirteen something. There’s no room for incentive raises. You know, ‘you’re doing a good job, here’s 50 cents (more per hour).’ I can’t do that anymore,” she said.

In order to mitigate the impact of an almost 30 per cent increase to wages by the time 2019 rolls around, Knobelsdorf said she’ll be looking at reducing hours of operation and staff complement, as well as reducing her own wages and taking on extra shifts. Before, she tried to keep staff on during slower times, especially during winter months, but she’ll have to rethink that approach. She said she’s been trying not to impact her staff — some of them have been with the business for 30 years — but she sees no alternative.

“I lowered my wage, which is what the government wants owners to do, but we’re not multi-billionaires. My mom, yes, she goes to Florida but that’s because she’s worked her whole freaking life. I don’t go to Florida every year and I’ve been here 38 years, so we’re not rich off this business, it’s just a business we love,” said Knoblesdorf whose restaurant employs about 20 people.

Knoblesdorf said they even hired a consultant in Toronto to help them navigate through the new labour laws and figure out how to mitigate the impacts those changes will have on the business.

“People strike for a three to five per cent raise, usually given over a period of time, and the government thinks it’s okay to simply force us to give a 20 per cent raise, plus all of the other perks they’ve added in.”

Others see the changes differently

Jenny Spring and Oliver Wolfe are the new owners of Family Place Restaurant. They also worked hard running The Spring Farm on Aspdin Road, paying themselves a salary of $14 per hour but working so many hours that it worked out to much less than that. “It’s really hard to survive in Huntsville at ($14 an hour),” said Spring. “We’ve always paid our employees well. Even on the farm we paid them more than minimum wage because we just believe that if you’re going to have good workers, who are working hard for you, then you need to pay them well and it comes back in the business later if you have good employees who stick around for a long time and part of that is paying them well and treating them well.”

Spring’s first job out of university was working for the Canadian Labour Congress. “That’s the government body that lobbies for labour rights for employees. That’s my background and now I’m an employer, and so I see both sides,” said Spring.

I see how you have to treat your employees right and pay them well. It’s challenging, the big hike – it would have been nice if it happened over a longer period of time, slowly. I think that’s what’s going to really hurt small businesses. But overall we are happy to pay our employees well, that’s just something that we want to do. I think people should be paid for the hard work they put in… We haven’t changed any prices, we’ve just raised wages Jenny Spring, owner of Family Place Restaurant

Councillor Bob Stone chairs the Town’s Economic Development Committee, he sits on the board of the Downtown BIA and is the former owner of Christmas Tyme on Huntsville’s Main Street. He said while he’s concerned about the hardship that some small businesses will face, and consequences such as price increases and cut backs on minimum wage hours, in the long run he thinks raising wages will benefit society at large. “Today businesses are hurting… the economy is not that great right now anyway, and now to throw this on their backs – they are just pulling their hair out… Ten years from now, looking back on it, I think the ones that will survive will be better for it and so will the people,” said Stone.

“If previous governments were better, we would have been at this point a long time ago. This huge jump is painful, absolutely. But now, this is what I like about the legislation is that once this is done we don’t have to visit this anymore. No more devastating jumps in minimum wage for small businesses, it’s going to be the cost of living year-upon-year and that’s going to move with the economy, so we never have to have this pain again,” opined Stone.

In terms of some of the other changes in the legislation, like two paid sick days, Stone thinks it will help level the labour field.

We have great disparity between the haves and have-nots. You’ve got the union employees and the publicly funded employees and you’ve got everybody else. The unions and the government employees have been getting enormous (benefits)…12  sick days and they use them as holidays and make sure they use them all up, every year, and the little guy who is working at Tim Hortons gets nothing. If he doesn’t show up for work, he gets nothing even if he has to go to the doctor or have some surgery. So, does this bring it more in line? Yes. Councillor and former business owner, Bob Stone

“Society is heading towards a basic income for all, I think. It’s even been suggested that maybe that would’ve been the proper step for the province to take at this time but it may be a little premature. Let some others experiment with that to see if it flies,” he said. “I hope small businesses survive and I hope they’re being good to their people.”

Kelly Haywood, Executive Director for the Huntsville/Lake of Bays Chamber of Commerce, said many local business owners are stressed over the changes. Although they knew the changes were coming, many now find themselves trying to figure out how to make the changes work within their business.

“It had to happen, but I think the roll out was very poor and much too quick,” said Haywood. “There are a lot of changes in that bill.” Haywood has been sharing this booklet (pdf) from the Ontario Chamber of Commerce with her organization’s members to help them navigate through the new legislation. You can also find a link to the changes on the government of Ontario website here.

By the numbers, this is how minimum wages have changed in Ontario since 2016:

Category 2016 Oct.1 2017 Jan.1, 2018 Jan.1, 2019
General minimum wage $11.40/h $11.60/h $14.00/h $15.00/h
Students under 18 who work not more than 28 hours per week when school is in session, or work during a school break or summer holidays $10.70/h $10.90/h $13.15/h $14.10/h
Liquor servers $9.90/h $10.10/h $12.20/h $13.05/h
Hunting and Fishing guides working five or more hours a day $113.95 $116.00 $140.00 $150.00
Hunting and Fishing guides working less than five consecutive hours a day $56.95 $58.00 $70.00 $75.00
Homeworkers (employees doing paid work in their own home for an employer) $12.55/h $12.80/h $15.40/h $16.50/h

 

Related story:

Proposed wage increase could have unintended consequences, advises District community services staff

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12 Comments

  1. If governments of the past hadn’t waited for so many years before raising the minimum wage, this wouldn’t have been such a fast and painful increase for employers; I am glad to hear that there will now be a yearly cost of living increase for minimum wage workers; people who earn less are often working just as hard as those who earn more, with power being the determining factor; when those at the lower end of the income scale receive a raise, they usually spend it on real needs, such as clothes for the kids, paint for the house etc. and thus drive the economy and benefit businesses in the long run; every resident that works for a living should, in my opinion, earn enough to pay for the essentials of life.

    • Craig Nakamoto on

      It sounds like many people agree with the raise but disagree with how quickly it was rolled out. That being said, businesses have had plenty of warning to prepare themselves, and if they are struggling to figure it out now – that is their own fault. I agree it was a huge increase, but I also agree that it was long overdue. We can blame the government for that, but really we should blame ourselves. Shouldn’t business owners stay competitive and at least pay a living wage in the first place? Why should we rely on the government to force us to pay a fair wage to our employees? Sadly we do, and I am glad this government has at least made it happen (regardless of their motives).

  2. Interesting opinions on the new minimum wage. The media seems to focus on the amount not the huge raise in cost to small businesses. Yes businesses knew it was coming but we know when severe storms are coming as well, it doesn’t mean that the severity of the impact is fully known until it hits. We can brace ourselves to the best of our abilities and still be swept away. Before now we have seen many profitable businesses such as farms, festivals and sporting events using volunteers as Free labour in order for them to make profit. Huntsville is not immune from this so why doesn’t the government force these businesses to also pay a minimum wage? Government’s have much of the control as Debbie Knobledorf pointed out. If they truly want to help people achieve a higher standard of living Reduce wasteful spending ( their is a lot of it,) cut, then freeze their taxes. If the government (the biggest hand in your pocket) becomes much more efficient we all will need less money, we all will be better off. Governments create problems, then put the task of fixing it on the backs of small businesses and their employees.

    • Craig Nakamoto on

      John, I think you misunderstand the concept of volunteering. The whole point is that you are supporting a cause that you believe in and are doing it with no expectation of financial gain. Many of these causes cannot succeed without volunteers (regardless of whether they are not-for-profit or for-profit). In my experience the volunteers gain even more from their work than many paid employees because 1) they want to be there 2) they believe in what they are doing and 3) they derive a sense of accomplishment that goes far beyond monetary compensation. Something else that everyone seems to be missing is that fact that as an individual, you have some control over your destiny. You can choose to volunteer or not. You can even refuse to work for wages that are not fair. If the best workers demanded more pay, then I think two things would happen. 1) they would get more pay; because finding and keeping good employees is the single most difficult aspect of almost any business and 2) workers that are not as good will start working harder. My two cents on that.

  3. Jacquie Howell on

    We will all pay for this increase. Check your grocery bill, your gasoline and any recreational fees/ cost if you can afford to go. I feel very sad for the many seniors in the province who live on fixed incomes. Debbie made a very important comment. It is not just the wage. It is all the other costs. This also impacts most employers who could have been paying $ 15.00 – $20.00 to sr staff. They will expect an equivalent raise. I hope we do not see more vacant stores on Main Street

  4. I take it those who complain WILL pay for wage roll backs and very costly social supports for municipal taxpayers as very costly social supports go up and up into the No Pension Plan Days until the death of workers. Ontario PC Patrick Brown says low wages are needed for profit taking. That means those on OW will be REQURIED to take ANY job. That means we taxpayers will need to subsidize profit for business. Let’s hear an outcry over the vision of a have and have not province.

  5. Karen Wehrstein on

    I agree that a more gradual, smoother approach to increasing the minimum wage would have been better, and I’m glad that’s what’s going to happen going forward.
    .
    I really would have liked to hear the other side of the story on this story, however. How hard would it have been to interview some people working minimum wage, and ask how the change will impact *their* finances, families… lives? Considering that minimum-wage-earners vastly outnumber business owners (whom I have nothing against, just for the record), they should get *at least* equal time in a story like this. Why is there no mention of the benefit to the economy of minimum-wage-earners’ increased spending power? Again… there are a lot of them, both provincially and locally, and their discretionary income has just been jacked up massively, from zero to something in a lot of cases. They will be able to participate in the economy as never before.
    .
    Too often, those who struggle in poverty are invisible to media, despite how numerous they are. It smacks of the attitude that some people are more important than others. Local media, such as Doppler, could do something to alleviate this.

  6. Everything is going up, including the cost of food. All restaurants need to increase their menu costs, even though they are reluctant to.
    People in the service industry get tips to supplement their income, but people I have spoken with say they are not tipping as much.
    Nobody seems to win in this situation.

  7. Ontario’s minimum wage rose to $10.25 on March 31, 2010, and then had minor increases starting 2014. So the increase to $15 on Jan 1 2019 means an average annual increase of 4.45%, over 8.75 years, since 2010 ( or roughly the same as nominal GDP: real + inflation). The increase now seems “sudden” only because it was held back for an extended period.

    The last two decades have seen growing income inequality between rich and poor. With this increase, prices will go up, and yes, a few jobs will be lost. Yes, it WILL be tough on some small businesses if they can’t pass it on via prices. It is a (minor) shift in wealth. And big picture, that seems the right thing to do.

  8. I don’t know, I own most of the place and last year, if I work out the math, I worked for a little less than $6.00 per hour but the government does not seem to care about this.
    Seriously, increased wages are merely a form of inflation. With all inflation prices rise of course, but they rise unequally over the business sectors. Briefly some industries win and some lose but in the end it all evens out and everybody pays a numerically higher number of $$ for the same service.
    Does anyone really “win” this game? Some say only the government because they effectively tax the inflation, thus gaining revenue without actually doing anything at all! Of course when that same government goes to contract out some service like the road clearing to someone like Carillon, the price will be higher as you can be guaranteed Carillion’s successor will charge more so they don’t go bankrupt.

    It is a bit of a game, the winners and losers keep changing places as it plays out and in the end nobody really gains much of anything.

    That extra couple of dollars per hour will disappear into gas fill ups, phone bills, hydro bills, restaurants and entertainment costs pretty quickly. The government of the day is probably hoping that there are more voters who will remember the extra $/hour in the next election than those who will be paying those $$ to staff. Once this election is over the whole exercise can start again. It will never be “done” and nobody will ever be fully satisfied.

  9. I ask a few question will this now mean all the help wanted signs will go away? Will we now be able to as businesses in Muskoka opporate at full throttle when needed? Will unemployment recipients decline? If yes then things are on the right path. The majority of Small business owners are not the wealthy part of the equation but those who work 7 days a week in season and as much in the off season. I find more of my colleagues getting edgy these days not because of the increase in minimum wage but all the other changes and add ons to the ESA and most who work in their business putting even longer hours to stay afloat. If our government truly were looking to help the people and not introduce a huge change going into an election year. Maybe they would want to reinstate trades training assistance for youth and other programs that get people quicker out of the bottom tear entry positions My last thought is all the best to my fellow small business owners and their staff in 2018

  10. Emmersun Austin on

    Time to reconfigure the entire socio-economic system we find ourselves in: guaranteed annual incomes for everyone. In the era of artificial intelligence & trillion dollar economies it’s wise for the humans to transform everything about how they negotiate amongst themselves & the ecosystem.

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