Of course businesses would act like businesses in wake of minimum wage hikes: Robyn Urback

Share Button

Of course businesses were going to announce a reduction in hours in response to the news of Ontario’s minimum wage hike. Of course prices were going to go up. Of course employers were going to claw back some staff benefits to make up for what will effectively be a 32 per cent wage hike over less than 18 months.

In other words: of course businesses were going to act like businesses.

Predictions of wide-scale job losses aside, it will be a long time yet until we see the true economic impact of Ontario’s — and Alberta’s — decision to raise the minimum wage to $15 per hour (in 2018 in Alberta’s case, and by 2019 in Ontario’s). But one thing is already clear: employers will not just accept these changes and move on, out of some storybook fidelity to goodness and charity.

Many employers — particularly those with mom and pop operations in rural areas — will have to cut staff or raise prices just to keep the lights on. Others — such as, say, a couple of Tim Hortons heirs with a franchise east of Toronto — appear to be exploiting the minimum wage hike to squeeze a little more out of workers and conveniently deflect blame onto the Ontario government. But really, can we blame them? Whether the changes are born from necessity, greed or just smart business practice, the point is: This was entirely predictable.

Businesses exist to make money. Government should function on the expectation that corporations will act in their own economic self-interest. Instead, in the case of Ontario, officials feign shock and outrage when a business tries to maximize profits, and release silly statements like the one Premier Kathleen Wynne did Thursday afternoon, accusing one of the vacationing Tim Hortons heirs of being a “bully” for eliminating paid breaks and other benefits.

Sure, eliminating paid breaks is not very nice. But what, exactly, did the premier think was going to happen? Employers would just absorb the added costs? Dip into their own personal profits? OK, and maybe my prom dress still fits, too?

Every announcement of a minimum wage hike comes with some degree of blowback, though many poverty activists will claim it necessary in order to see to fairer wages for low-income workers (though according to Statistics Canada, the majority of minimum-wage workers live at home with their parents, and do not come from low-income households). The fact is, raising the minimum wage has shown to be, in many cases, a rather ineffective poverty-reduction tool. But it can be a good campaign tool in an election year and indeed, “$15 and Fairness” sounds a lot better on a mailer than “We will explore supplementary income transfers.”

This is not to say governments should never raise the minimum wage. But to do it so dramatically in such a short period of time practically begs for an equally dramatic response from business. Ontario already passed legislation in 2014 to tie minimum wage increases to inflation by hooking it to the province’s consumer price index, on the recommendation of an expert advisory panel. But instead of continuing to phase-in minimum wage increases gradually, as per the original plan, the government has decided to go with the lump-sum approach because … oh, hey, election. Is it time for you already?

Granted, some employers — say, a couple of wealthy Tim Hortons heirs — are quite obviously playing a rather cynical game in claiming they’ve no choice but to cut benefits because of the new minimum wage. But businesses aren’t charities. And smart policy on the part of government means implementing changes with the expectation that businesses will try to preserve profits. To expect anything else would be downright foolish.

Then again, this is the government that announced new rent control measures last year in an already supply-starved market, despite plenty of economic evidence that such measures only further dry up supply.

Was the expectation there that developers would nevertheless decide to build suddenly less-profitable rental housing, again out of a fidelity to goodness and charity? Where was Premier Wynne’s letter calling the owners of RioCan Real Estate and Allied Properties Real Estate “bullies” when they opted against building apartments in favour of condos?

Meh, whatever: “Implemented rent control” sounds good on a campaign mailer, too.

Bottom line is everyone is playing just a little bit dirty here — save for the employees who are caught in the middle of the fight between the province and big business, and the struggling small business owners who are just trying to keep their operations afloat. Some employees will surely benefit from greater take-home pay. But those who lose hours, or benefits or their jobs will certainly not.

So boycott Timmies, fire Wynne, join your preferred anti-capitalism collective and so forth. Just don’t pretend this isn’t all going according to script. This is what happens when smart but tough-to-sell policies (such as indexed wage hikes or targeted tax benefits) take a backseat to easy-to-market solutions: the premier ends up in a trifling public spat with a couple of wealthy heirs, while some front-line workers are made to suffer the consequences.

This column is part of CBC’s Opinion section. For more information about this section, please read this editor’s blog and our FAQ.

Excerpt from: 

Of course businesses would act like businesses in wake of minimum wage hikes: Robyn Urback

Leave a Reply

Your email address will not be published. Required fields are marked *