Minimum wage is the lowest wage rate that an employer can legally pay its employees and is seen as a core labour standard to which employers must abide by. With the effects of inflation, especially the cost of living consistently increasing across Canada, it is inevitable for the minimum wage in each province to rise.
Minimum wage in Ontario
In November 2021, the Ontario government announced a minimum wage increase from $14.35 per hour to $15.00 per hour, this increase came into effect on January 1, 2022. What is also accompanied by this change in minimum wage is the removal of sub-minimum wage categories such as, liquor servers and bartenders.
Removal of sub-minimum wage categories:
Liquor servers who used to earn a minimum of $12.55 hourly will now match the standardized minimum wage for the rest of the province. The reasoning behind this change in Ontario is the idea that tip pools and the distribution of tips have been of great concern to many. With employees experiencing an unequal, unreasonable redistribution of tips they were unable to claim their earned tips due to the flawed system of tipping pools. Including liquor servers in the general category of minimum wage paying jobs will allow servers to combat the unequal distribution of tips by earning a higher, more suitable wage.
Some other wage changes in Ontario include:
- Student wages increasing to $14.50 from $13.50
- Homeworkers, will earn $16.50 up from $15.80
- New hunting and fishing guidelines: $75 for working less than five consecutive hours in a day and $150.05 for working five or more hours in a day. Up from $71.75 and $143.55.
Inflation is said to remain high into 2022. Considering this, minimum wage must continue to consistently increase to ensure Canadians can support themselves and their families to live fulfilled lives, especially during times of COVID-19 where inflation rates are soaring.
Increasing motivation to work
Obtaining a higher pay is certainly an incentive for individuals to increase their amount of work. When an individual is underpaid, it can create a feeling of not being appreciated, or feeling that their worth is depreciated based on their lower wage. With an increased base salary for all, people will feel more inclined to work, increasing workplace satisfactory amongst employees.
Alleviating poverty and creating equal opportunity
Employees who work minimum wage jobs, should be able to afford basic living essentials and should not have to worry about putting food on the table, supporting their family or making payments on time. By increasing the standard of minimum wage it will give those workers better opportunities relating to increased disposable income and saving money. With the minimum wage increase, it is projected to positively impact those working full-time on a minimum wage salary, increasing their annual earnings by approximately $1,350. This wage increase will affect approximately 760,000 Ontarians who are minimum wage workers. Accompanied by the pursuit of decreasing poverty in Ontario.
Stimulates the economy
The more disposable income individuals acquire, the more likely Canadians will spend, inevitably boosting the economy. It will also encourage Canadians to enter the workforce. The more revenue businesses generate, the better they are able to treat current employees and or hire new ones.
While the increase of minimum wage can be observed to have many positive impacts for a period of time, employers and business owners will need to get used to the change from a financial perspective.
The primary consequence of increasing minimum wage relates to employers as it immediately increases costs for businesses to operate. This would generally be more of a concern for smaller businesses, non-profit organizations, or companies with a tight budget. Businesses in this situation generally have two choices, one is to reduce costs, or two increase their prices. The simplest way from a business standpoint to reduce costs is to reduce labour.
Thus minimum wage increases may mean fewer employees for small businesses. The sectors most affected by minimum wage increases are already operating understaffed. Thus, higher wages may make these underemployed sectors more desirable and encourage those who have lost their jobs due to effects of the pandemic to enter alternative career paths. With the minimum wage increased to $15.00 dollars per hour, more people may consider taking on positions that pay minimum wage.
By increasing minimum wage in Canada, the general goal is to combat many concerns that arise from inflation. With that being said, by paying employees a higher wage in accordance with increasing costs of living, the hope is to alleviate the number of people living in poverty, reducing the number of low paying jobs, increasing the motivation to work, and creating a space for equality, all while stimulating the economy.
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