Ontario’s Advisory Panel on the Minimum Wage has released its report today. The report limited its recommendations to mechanisms to increase the minimum wage, and did not make any recommendations on whether the current minimum wage is the right starting point. It made the following substantive recommendations: the minimum wage should be increased annually by the CPI inflation rate, and, minimum wage level and revision process should be reviewed every 5 years.
If the government accepts the recommendations of the panel, it will be good news. Regular and predictable increases in the minimum wage will be good for workers and employers. Wages will no longer be eroded by inflation and, increases will not be left to the uncertainty of political decisions. But while this is good news, it is not good enough. Premier Wynne and her government need to step up, set a target for the minimum wage level and set out a timetable to get there. Doing so will reduce inequality, make progress on the agenda for decent work in Ontario, and reduce poverty.
Minimum wage work is not distributed equally across the working population. Women, racialized Ontarians and new immigrants are over-represented. The share of racialized employees working for minimum wage is 47 percent higher than for the total population (13.2% vs 9%). Almost 1 in 5 recent immigrants – 19.1 percent – are working at minimum wage.
Our analysis showed that almost 40 percent of employees working for minimum wage – 183,000 Ontarians – were over the age of 24 years in 2011, and the share of adults working for minimum wage more than doubled between 2003 and 2011. However, the pace of increase was even faster for racialized and immigrant workers over 24 years old. So while young people make up a significant portion of those who are working for minimum wage, it isn’t just teenagers who are working McJobs so they can buy an iPhone. Some of those teens are making crucial contributions to their families’ incomes. But of more significance are the Ontarians who are over 24 working for minimum wage who have families, expenses, and debts.
There has been growing and deserved attention to the impact of low wages on health. Dr. Gary Bloch described the impact of working full time on minimum wage in an op-ed this morning: chronic health problems, without the cash to pay for prescription drugs or complementary therapies to address those problems, and running out of food at the end of the month are typical examples of the impact of living on a minimum wage of $10.25 an hour.
Our analysis using Statistics Canada data found that that those who are working but still live in poverty have worse health than those who are working and are not poor. In 2009, in Ontario, 49 percent of the working poor rated their health as excellent or very good as compared to 66 percent of those who had sufficient incomes. The health of those who have sufficient income has remained fairly stable between 1996 and 2009. However, the health of the working poor has deteriorated. The share with excellent or very good health has dropped from 68 to 49 percent in Ontario, with those reporting fair or poor health increasing from 8 to 19 percent.
The Panel’s report reviews the research on whether increasing the minimum wage results in job losses, and concludes that there is no consensus in the existing empirical literature. Given that lack of evidence, it is important to step back and remember the role of employment standards legislation. It is to set a floor for what we collectively decide is acceptable. We shouldn’t find acceptable that someone working full time needs to rely on food banks, or has to choose between paying the rent and paying for food, or is not be able to take the day off if they are unwell.
The Panel also reviewed the evidence on the impact of minimum wages on poverty. It noted that many poor families rely on social assistance and work only a few hours a week; others work at jobs that pay above the minimum wage. Many young workers who earn minimum wage live in families that are not poor. Theses facts support the arguments that other policies, like increasing social assistance rates, would bring more people out of poverty. However, increasing the minimum wage remains an avenue to reduce poverty. And, in an environment that is hostile to higher taxes at every level of government, it is the one that is most likely to be implemented.
Indexing the minimum wage to inflation is an important first step. Now that it has received advice; the Wynne government needs to step up to the plate with a concrete plan to move the minimum wage up above the poverty line for those who are working full-time and full year, and to cement those gains by indexing that higher wage to inflation.