As of Oct. 1, the minimum wage in Ontario has been raised 10 cents to $14.35 per hour.
This is up from the 25-cent increase on Oct. 1, 2020 and the previous $2.40 increase on Jan. 1, 2018.
While three minimum wage increases in the last few years may look good on paper, the recent 10-cent increase is hardly enough for Ontarians to be excited about. For those minimum-wage workers in Ontario who clock 40 hours per week, the raise amounts to an extra $4 each week before taxes. This difference is even more negligible for those working part time.
The move comes as a result of the Making Ontario Open for Business Act passed in 2018, which mandated the minimum wage be frozen at $14 per hour until 2020. After this, wages would begin to increase annually at a rate consistent with inflation.
Although Ontario’s minimum wage is increasing with inflation, the prices of goods and services aren’t anything close to charitable.
For example, since the beginning of the pandemic, grocery prices in Canada have been steadily rising. This year alone, Sylvain Charlebois — a professor at Dalhousie University in Halifax, N.S. — said the price of pork has increased by five per cent, and the price of beef has increased by almost 10 per cent. Charlebois predicted a lower food inventory for the fall which, in turn, would drive prices even higher.
Although prices for food items like chicken, produce and pasta have dropped, not all Ontarians have access to big-box stores where these items are sold at cheaper prices. For those living in rural and remote communities, having small, local grocery stores — where food prices tend to be higher overall — as the sole option for shopping makes the rising grocery prices hit even harder.
The extra 10 cents per hour won’t ensure minimum-wage workers come out on top. Instead, it only ensures they lose slightly less.
But minimum-wage workers shouldn’t be the only ones unsatisfied with this increase.
Small business owners may experience significant financial setbacks as a result of the increase. For example, a small business owner with just five employees working an eight-hour shift each day will now be required to pay an extra $16 per month in employee wages. This amounts to an extra $192 per year, which — for businesses that have suffered tremendous losses during the pandemic, including a potential decrease in customers due to Ontario’s vaccine passport mandate for select businesses — can be a big chunk of change. In response, small business owners may be forced to lay off employees or reduce hours, hurting minimum-wage workers and the community even more.
So, if a slight raise in minimum wage is both useless to workers and harmful to businesses, we need a viable third alternative.
Enter universal basic income (UBI).
With UBI, every citizen would receive a guaranteed minimum amount of money regardless of factors like employment or financial need. This means workers would be able to afford the rising costs of goods and services without relying on paltry minimum-wage increases or working multiple jobs. It would also help ensure workers aren’t put in serious financial trouble if they are laid off from their jobs.
Further, UBI could mean businesses have a better shot at gaining and retaining employees — it would ensure workers can actually afford to have their sole employment income be from minimum-wage work. This might entice workers to undertake minimum wage jobs, many of which have been notoriously difficult to fill during the pandemic.
In fact, a recent ongoing experiment in Stockton, Calif. has demonstrated the potential benefits of a universal basic income. Over two years, some individuals living in low-income neighbourhoods were given $500 per month to spend however they pleased with no stipulations. The results were positive — the guaranteed income helped to reduce financial insecurity, and much of the money went back into the economy through the purchasing of basic necessities. Participants were allowed a sense of financial freedom they wouldn’t otherwise have had access to.
Further, contrary to the opinions of opponents of UBI, the study found the guaranteed income did not deter participants from continuing to work or seek employment — the portion of participants with full-time employment actually increased 12 per cent. Unsurprisingly, a two-year experiment in Finland produced similar results. Although not as strong, the Finnish study concluded that, at the very least, UBI did not harm employment rates.
In Canada, a similar, albeit short-lived, project was launched in Ontario in 2017. Various cities and surrounding areas were targeted to assess the efficacy of UBI in both rural and urban areas. However, the project was scrapped in 2018, two years before its proposed end date. As a result, the province missed out on potentially insightful data regarding the effects of UBI for Canadians in the long term.
Although the Ontario government might scoff at the thought of UBI, a 10-cent increase to minimum wage isn’t much better. What’s clear is slight raises in minimum wage harm both workers and employers, creating an economy that’s difficult to survive in. Unless Canada can find a better way to mitigate these harms, considering UBI should not be off the table. For workers getting nickel and dimed by the provincial government with meagre minimum-wage increases, UBI could make a well-heeled difference in their wallets.