Tuesday, September 24, 2013

Why I'll be voting on the minimum wage in Ontario

Currently, the minimum wage in Ontario is $10.25 per hour.    Presuming a 40 hour week, no sick days and two weeks vacation, that works out to about $20,500 per year.   Not a bad piece of change; but with the lowest marginal income tax rate of 20% and payroll taxes of 7%, that leaves $14965, well below the "low income cutoff" -- a bastardized way of saying poverty line.   And don't forget, a general sales tax rate of 13%, so it goes down to $13,020.

Moreover, the rate has held steady since 2010, during a time when accumulated inflation has increased 6.9% -- and of course that does not include the very volatile energy prices we've experienced as with the rest of the country.   So those on minimum are worse off over time.

There is an argument, a strong one, that at the very least there should be a law requiring the minimum wage increase with the rate of inflation.

But many social activists have said that to put people above the poverty line, the minimum needs to go up to $14.00 per hour.    Now this doesn't have to be all at once; of course that would be a burden on business.   It can be phased in over four years, say 94 cents each.   Once the phase-in is complete, then do annual increases on inflation.

The problem, of course, is that every time there is proposed an increase in the minimum wage, businesses both large and small scream bloody murder; saying they will have to lay off people, it will force them to raise prices to the consumer, and that it acts as a disincentive to hard work.   All three of these are total nonsense.   I'm not aware in the recent past of mass layoffs caused by a raise in the minimum.   If anything, an increase also helps people earning higher wages, more often than not such a raise is applied across the board for both hourly and salaried workers (i.e. a fifty cent increase at minimum is reciprocated for higher wage people).    That it fuels inflation -- probably, but it's not the only reason prices go up, in fact it's only a small part of it.   And rewarding slackers -- seriously?   People these days are more than happy to work for minimum wage, it gives them something to do.   They'd rather pay taxes than collect welfare.

But as to the argument that a higher minimum wage is bad for business, I say bunk.    Here's why I think so:

Those below the low income cut off use a larger portion of their income for basic necessities; food, clothing heat, vehicle fuel.  They don't have the ability to afford not necessarily the finer things in life, but simply the items that actually bolster economic growth.    These are consumer goods such as home electronics, video games, appliances, furniture.    And of course, an annual vacation out of town instead of a "stay-cation".   The more money there is to go around, the more there is to spend.   The more to spend, higher profits lead from that which usually means the ability to hire more workers.

More workers means more income taxes, and the sooner Ontario can get out of "have-not" status and our current forced acceptance of equalization payments from the feds.   Currently, that's just over $3.1 billion, a huge spike from 2010 when it was "just" $347 million.   Equalization may be just a drop in the $117 billion revenue bucket, but it basically runs the agriculture, justice and environment departments.   Not insignificant items at all.

One of the issues with the inevitable election campaign that may happen here as early as this coming spring, a year and a half before it's supposed to be, will be this basic principle.   That no one gets left behind.    While this will not be the only deciding factor in my vote, it is now a huge one.

It's time to have a living wage, not a subsistence one.   I thank God we don't have third world conditions and pray we never will, but even lower income people have the right to have a reasonable level of participation in our society.


Anonymous said...

"Why I'll be voting in Ontario on the minimum age"

Nice typo.

BlastFurnace said...

Point taken, and corrected.

Paul yaretz said...

12:00perhr maybe?