Sunday January 07, 2018

Is a higher minimum wage the best way to help low-income workers?

The children of the Tim Hortons coffee chain founders cut paid breaks and staff benefits for employees after a minimum wage hike in Ontario. On Jan. 1, 2018, Kathleen Wynne's Liberal government implemented new rules mandating a minimum wage of $14 an hour. That's a $2.40 raise from last year's level.

The children of the Tim Hortons coffee chain founders cut paid breaks and staff benefits for employees after a minimum wage hike in Ontario. On Jan. 1, 2018, Kathleen Wynne's Liberal government implemented new rules mandating a minimum wage of $14 an hour. That's a $2.40 raise from last year's level. (Evan Mitsui/CBC)

Listen to Full Episode 1:53:04

Sunday on Cross Country Checkup: Minimum wage

How to help people at the bottom of the pay scale, who work hard for a living, but don't make enough to pay their bills? The solution seems simple enough—raise the minimum wage. Well, that's what has been happening regularly and slowly in most provinces for decades, but it still hasn't resulted in what people would call a living wage.

Recently, Alberta and then Ontario decided to take a bolder step and raise their minimums dramatically to $15 an hour phased in over a couple of years. Many cheered, saying it's about time that the lowest paid workers get the support they desperately need.

Ontario's latest hike from $11.60 to $14 took effect this past week. It's the largest increase in recent Canadian history. But it hasn't taken long for some unintended consequences to start appearing. Businesses tried to find ways to compensate for the large jump in their wage costs. Some Tim Hortons franchises opted to cut paid breaks and benefits for their employees. Other businesses looked at scaling back on the number of employees and in some cases, the amount of work they would do. Ontario Premier Kathleen Wynne came out fighting, saying rich business owners were acting like bullies. But many of those small business owners, some of them mom-and-pop operations, say the large increase in costs leaves them no alternative, but to cut back somewhere.

Alberta's next jump from $13.60 to $15 is scheduled for this coming October.

Economists are divided on the issue, with some saying there are better ways to help low-income workers—a guaranteed annual income or through a more carefully designed tax structure for small businesses. Others say a higher minimum wage is the simplest way to quickly put money in the pockets of those who need it most and the overall economy will benefit too, when those people spend that extra money...as they surely will.

Our question: "Is a higher minimum wage the best way to help low income workers?" 

Guests

Corinne Pohlmann, senior vice-president of national affairs, Canadian Federation of Independent Business.  

Trevor Tombe, Associate professor of Economics at the University of Calgary. 

Kevin Howe, farmer in Aylmer, Ontario

Kaylie Tiessen, economist and policy analyst working in the research department at Unifor, Canada's largest private sector union, and research associate The Canadian Centre for Policy Alternatives

What we're reading

CBC.ca

Maclean's

Globe and Mail

National Post

Bank of Canada

stories from this episode