June Poll: Raise the Minimum Wage? No Simple Answers

It seemed like such a simple question: Do you think Canadian provinces should raise the minimum wage to $15? But our June poll sparked a lively debate and more votes and comments than most. Over 500 of you weighed in and were closely divided on the topic, with 42% saying yes and 58% saying no.

The comments we received were not only numerous and sometimes lengthy, they were well considered, revealing that this is a much more complex issue than it might first appear. Following are just some of the wide-ranging responses we received for June’s poll question.

Sandra is clearly on the yes side; she believes a higher minimum wage is a motivator for employees: I have read the comments contained in this [poll] and here are my thoughts: It is folly to think that minimum wage set will have anything but positive effects.

• I have worked with small businesses for 30 years. I can tell you that they are in business for more reasons than one (that of affordable wages). We work with small business to ensure that they have budgeted properly, capitalized properly and cash flow effectively. We ought to be able to assist them in working through a raise in minimum wage.
• The “working poor” are not the people I want to hire. I already have increased my minimum wage to $15 an hour before it is legislated. I want people to work for me who are motivated and can live on their earnings. Having people who are working two jobs to pay their rent and living expenses is no longer tenable just from an energy level. Have you ever stopped to think what toll that takes on the job they can perform for you?
• I counsel every client I work with to pay their employees a “living wage.” Be a part of the change.

Several others simply think it’s the right thing to do:

• How can anyone live on $15 an hour? Let alone less than that! –Donna
• Why not? Cost of living does not go down…More money, more spending, economy grows. Productivity will be enhanced by employees when pay is higher. –Julieta
• Try living on minimum wage. Thank God my kids are grown up because I could not afford to feed them. People are homeless (or close to) and starving out there. We need to take care of our vulnerable people right here in Canada. Shame on anyone who says different. –Gale

Michael agrees with the increase in principle, but with some caveats: I agree that the minimum wage should be $15, but this must be implemented over a period of time. Fairness dictates that while society needs people to be paid at least a higher minimum wage, the effect of a one-time increase to $15 is huge on business and the labour market. It is a minimum 32% increase in labour cost. Not sustainable for some businesses if they cannot pass on these costs to consumers. Rolling out to 2019 is still a huge hit to small business, over 16% labour cost increase per year, without laying off people. 

In fact, many respondents agreed with Michael that the increase is a good thing, but should be phased in over time:

• Yes, but over a calculated time to minimize economic hyperinflation. –Mike
• I think minimum wage should be raised to $15 per hour. However, it will be unwise to do so immediately because many people who are working at small business could lose their job. It should be given time for the business community to prepare. The province could introduce laws that will allow working people to receive a pay increase that matches inflation rate no matter where they work. –Francis
• Such a large increase is inflationary. Many small businesses will struggle with affording the wages and increased payroll taxes. Jobs will disappear and businesses will close. –Pat
• People in every wage scale deserve fair pay for their work. Raising the minimum wage will hurt those who make more than minimum wage, especially those just over the minimum. Raising the minimum wage will drive inflation up. The increased wage costs will have to come from somewhere and that would be the consumer. People who are over $15 per hour won’t get the matching increase which will drive their standard of living down dramatically. So, are we willing to hurt people to help other people? –Ron

Some even suggested a two-tier minimum wage to account for varying levels of skill, experience, and age:

• Why can we not have a minimum wage that is progressive by age? A 14-year-old with their first job does not need to make a living wage. I would like to have a summer student come in to gain work experience, but at $15/hour it doesn’t make sense. –Jodi
• Adults yes…but we need lower amounts for kids and teens as they are not paying for their board. And it would encourage them to get jobs for experience as the employer would be willing to train them at the lower price. Some jobs are purely not adult in nature, and we should encourage the diversity in employment. –Clare
• There are people working at my factory that earn $15 per hour in the warehouse. They are skilled workers who can drive various vehicles and operate computer systems. In other words, they have the skills necessary to deliver $15/hr worth of productivity. I have two teenagers at home. They have no skills. If the minimum wage is increased to $15/hr, then their first jobs will require $15/hr worth of productivity from them—but they can’t possibly deliver this because they’re currently unskilled, thus they will be forced out of the labour market. Society understands this because most countries with minimum wage laws have exceptions for people with Downs Syndrome for this very reason (we don’t want to shut them out of the labour market, and we compassionately know they get dignity from work but cannot attain to the productivity requirements of the minimum wage). Such an increase would be devastating to employment of young people, effectively making most of their wages $0/hr, a sad consequence. Wages are just prices. Increase the price of apples to $5.00/lb through government law and you’ll stop most apples from being purchased. We understand this also because we disincentivize purchasing of alcohol and tobacco by raising the price through legislation. Instead of apples, other food would be bought. Instead of unskilled people being hired, employers will buy robots. Please be compassionate on our youth and don’t shut them out of the labour market. –Jeff

In a similar way, Daniel considers a higher minimum wage from the point of view of job performance:

• The question of minimum wage is not quite the real issue. I agree that all employees should be able to earn a good wage. However, I much prefer the concept of employees being paid based on performance, rather than the number of hours they are on the time clock. Those who are unproductive, and waste 50% of the time they are at work, may need to learn some hard lessons before they can be worth $15/hr.

Many respondents emphatically said no to the increase because of the negative impact they see it having on business, especially small business, and on the economy in general:

• If the minimum wage goes up, so will everything else like rent and groceries as producers and seller will know that consumers will be better able to absorb cost increases. Also, employees who receive a higher wage in a skilled trade or occupation will want a significant, proportional increase in wages as well in order to maintain a fair wage gap representative of their skills, experience and education. –Evelyn
• The short answer is simple: Small business owners cannot afford a 34% increase in payroll so they will layoff, close their doors etc. Now there are more people out of work. The longer answer is obvious: The price of everything will go up. The average person will jump to a 29% tax bracket, surpass the threshold for existing government benefits and ultimately have less disposable income for the basics, never mind luxuries. The only people gaining from the proposal is the government coffers. –Shelly

And then there were those who saw even more complexity in the issue, commenting on the potential far-reaching effects to public policy and to our broader society:

• I have read all the comments and have noticed that no one has considered the effect this will have on people on a fixed income, such as our pensioned seniors. The dramatic rise in wages will drive prices of everything higher. This will negate most of the effect of the minimum wage increase for those that receive it, but for a person on a fixed pension that is already suffering it will be a disaster. If this is to be fair to all those who are at the low end of the income scale, the minimum OAC and CPP benefits should be increased in the same proportion. Having worked in the bankruptcy business for many years, I know that this is a disaster waiting to happen. –Ken
• If the government wants to help the lower income earners without hurting the middle class or small businesses, they should increase the personal exemption. They will have more disposable income without hurting other sectors of the economy. –Mary Lynn

And lastly, to Don, who answers the poll question with a question of his own:

• To the people who believe this would drive small businesses under, why not do a search on the numerous studies and actual implementations, such as Seattle, Washington, which have been done over the last 10 years? –Don

Thanks to all who participated in the June poll. Stay in touch and engaged by letting us know your thoughts on July’s poll question, which is now posted. The question is: In your view, does CRA do enough to ensure Canadians understand income tax and GST/HST implications of flipping personal residences? (for example, taxable dispositions require repayment of new housing rebates).

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