Will Ontario’s minimum wage increase move the needle on poverty?

The extended vote to increase Ontario’s minimum wage, put forth by Premier Doug Ford, turned at least two NDP votes into a three-way government coalition, meaning Ontario will have a Liberal minority after the…

Will Ontario’s minimum wage increase move the needle on poverty?

The extended vote to increase Ontario’s minimum wage, put forth by Premier Doug Ford, turned at least two NDP votes into a three-way government coalition, meaning Ontario will have a Liberal minority after the Progressive Conservatives agreed to a four-year wage increase.

Ontario’s minimum wage must now increase to $15 an hour in 2019. Ontario’s 2022 target will be $16 an hour, and then, two years later, to $17 in 2024.

But will an extra $15 an hour just make a dent in poverty?

The Ontario Poverty Reduction Strategy 2017 report found that, rather than producing any substantial reductions in poverty, the minimum wage boost at that point would have a “difference of three per cent.” The 2018 report finds a different situation. It says the increase from $14 to $15 in 2019 “will generate about a $570 million increase in government revenues.” The extra $11 an hour in 2022, however, will prevent the introduction of income assistance by $200 million.

What are the better options?

This year’s budget, tabled by Liberal Finance Minister Charles Sousa, proposed to index the minimum wage to the inflation rate, so that it would be raised by $2.8 billion in 2019. This would almost make up for a full year of wage increases above the $14 indexed wage.

In a recent editorial, The Globe and Mail called this a “smart idea.” Its editors maintain that while some minimum wage workers do earn the minimum wage, there are many more who do not.

“Ontario’s minimum wage is no longer a poor-to-middle class wage scale, or even a middle-class wage scale. It’s now a low-wage scale that’s tilted in favour of low-income workers.”

Raising the minimum wage might be a good idea for some of those workers, but should not be the only option for addressing increasing poverty in Ontario. A so-called “living wage” may be the best one, because it is the one that actually helps address the root cause of poverty, the “de-skilling of people and the low earnings” of workers, according to Tanya van Biesen, the provincially nominated NDP candidate for the riding of Durham.

The minimum wage, because it can be sticky (people cannot move when they earn more, or there is a shortage of workers), is, “kind of like an incentive for people to keep working for below the minimum wage,” she explains.

Here’s what a living wage should be for Ontario

So, a living wage should be worth more than the minimum wage, especially since the current minimum wage is $15.81. The living wage for Toronto, for example, is $30.48 per hour.

“We need to start talking about a living wage because we have a set of Ontarians who aren’t getting that living wage, and I believe it is one that is in demand across the province,” van Biesen says.

While the minimum wage increase is coming at a time when fewer people are employed, van Biesen says the minimum wage “doesn’t solve the problem.” Rather, it “mutes the impact on low-wage earners.”

Her candidate hopes the government will choose a smaller wage hike in the future. Currently, 5.5 per cent of workers in Ontario, or 3.3 million people, earn less than $15 per hour.

(Someone who makes the minimum wage is not earning the minimum wage; they are paid between $11.05 and $15.61 an hour depending on their employment).

Wouldn’t the government’s cost analysis be better served setting a standard that brings in the most money while keeping the most people above the poverty line?

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