The surprising impacts of Ontarios’ minimum-wage increase

At the beginning of 2018, Ontario’s minimum wage increased from $11.60 to $14 an hour. Four months have passed and the real impacts are starting to surface. It’s the steepest increase Ontario has seen in four decades, with a 21 per cent jump from last year’s minimum wage.

This recent wage hike is Ontario’s most dramatic increase in four decades, jumping from $11.60 to $14, a 21 per cent surge. Data source: The Government of Canada website(Claire Floody)

“This year’s minimum-wage hike was a big jump and on short notice,” says Rafael Gomez, a labour-market expert and University of Toronto professor.

“The government didn’t consult managers because they knew it would cause a lot of anger.”

However, Gomez says it’s too early to tell the real rate of inflation as a result of the minimum-wake hike. “Inflation hasn’t really appeared yet. It’s running at 2 per cent.”

Ontario now has the second-highest minimum wage in the country, closely following Alberta. To better understand who is affected by the hike, here are some statistics to help paint the picture:

Data Source: Government of Canada website (BREE-ANN GITTENS/Toronto Observer)

Business owners, employees and customers have all been impacted by the minimum-wage hike, some much more drastically than others. The Toronto Observer spoke with both employees and employers as they reflect on their experiences.

HOW THE MINIMUM-WAGE RAISE IS IMPACTING EMPLOYEES

The $2.40 minimum-wage increase may seem like a celebratory occasion. However, it has caused problems not only for store owners who can’t afford to pay this much, but for some of their employees, as well.

“Once the increase happened, I immediately saw that I was getting less shifts,” says Dammy Kolade, who works at a fast-food burrito restaurant in downtown Toronto.

Some workers in Ontario took to social media to share similar sentiments:

When it came into effect on Jan. 1, 2018, the wage hike prompted some employers to cut shifts and ultimately pay employees equal or less than what they previously made.

“I was expecting to get paid more, since it [the minimum wage] has gone up,” Kolade says. “But my paycheques have reflected the same, if not less.

“It’s created a tense environment for all of us,” Kolade adds. “And my restaurant location gets a lot of customers, so I can only imagine how smaller businesses are getting by.”

Dammy Kolade works at a Toronto burrito restaurant. With the new minimum wage in effect since January 2018, she tells Toronto Observer reporter Tianna Henry how the changes have impacted food-service industry workers like herself.

In a retail setting, stressful environments benefit no one. It’s a domino effect that can lead to bad customer service and reduced sales.

The U of T’s Gomez has a suggestion for what store owners should do next.

“The key is for managers to talk to their employees,” he says in a telephone interview. “Sometimes they have the best ideas on how to organize work in an efficient way and make it better.”

MADISON JOHNSON

Madison Johnson is a server at a prominent fine-dining restaurant in downtown Toronto. She usually works 40 + hours a week. She, too, has seen the effects of the increased minimum wage within her workplace.

Johnson is paid a server’s wage, which increased from $10.10 to $12.20 on Jan. 1, alongside the minimum wage hike. However, the extra $2 every hour hasn’t seemed to outweigh the growing list of problems it’s also created: her shifts are shorter, (both lunch and dinner shifts start one hour and sometimes even two hours later than before), and she now also has fewer shifts. They are being cut more frequently.

On management’s side of things there have been changes, too. The restaurant is considering eliminating a position. It is one of the jobs where the worker is receiving the new, higher minimum wage. Johnson thinks the goal is to hire someone with a different job title and pay them a server’s wage. She doesn’t think that’s fair.

“They’re not going to be making as much money, but they’re going to be doing the same amount of work,” Johnson says. “The question is then raised, what’s going to happen to compensate for their pay.”

Other things have also come into play, such as stricter regulations on policies that used to be overlooked. In Ontario, companies are legally required by the Ministry of Labour to give employees a 30-minute unpaid break for every five hours they work.  Johnson says management is now making sure this is done  and automatically deducting the time from paycheques, even if the employee is too busy to take their break or chooses not to.

They aren't rolling in extra money. In fact, many service-industry workers in Ontario are finding less money in their pockets, due to shorter and fewer shifts, as restaurant owners compensate for the Ontario government's new minimum wage. The Toronto Observer's Claire Floody spoke with Madison Johnson about her experience working in a swanky Toronto restaurant.

Yet, Johnson has sympathy for her employers. She sees them struggling to pay employees and having to resort to cutting hours and raising menu prices. She says it’s a tough situation for all involved.

“Various menu items, I think all of them really, have increased in price. Just because we have to. We can’t afford to pay employees,” Johnson says.

In theory, Johnson loves the idea of a higher minimum wage, but after this hasty execution she’s left wondering, who is this really helping?

SOPHIE CHONG

Cineplex is the leading film exhibitor in Canada. There are 163 Cineplex theatres across the country and 77 million guests are served annually, according to the movie chain’s website. Cineplex has approximately 13,000 employees, and 87 per cent of the employees are paid minimum wage.

Sophie Chong is a student at Ryerson University. She has been working at Cineplex as a part-time employee for one year. She is now receiving the minimum wage of $14.

Chong works one shift a week.  She spends her salary on groceries and school-related materials.

Chong’s reaction to the minimum-wage increase is positive.

“Being a student, I was pretty happy because, you know, which student doesn’t want more money, right?”

The majority of employees at the Cineplex location where Chong works are high school students. Chong has not heard any complaints from them.

However, she also believes the higher minimum wage has affected employees’ working hours. Cineplex has decreased the hours so employees do not receive breaks during their shifts, and also increased the working hours of some employees so one fewer person will come to work.

Customers are also being affected at the concession section, Chong says.

“With the minimum wage increasing, prices of things will increase, as well.”

Cineplex declined to comment, referring The Toronto Observer to the company’s quarterly report.

About the potential minimum wage rising to $15 in 2019, Chong thinks it may happen, because people are demanding more money. However, in her opinion, Cineplex will not drastically change the way they operate because they have already adapted to the increase this year.

Ontario's New Minimum Wage Affects Small Businesses

ADHANASIOS LIAKOS 

Adhanasios Liakos is the owner of a successful take-out restaurant in Toronto’s Greektown near Pape and Danforth Aves. In 2014, Liakos launched Souv Like, an authentic Greek fast food restaurant named after souvlaki.

The restaurant offers gyros, fries, Greek salad, and tzatziki. It’s open six days a week,  until 1 a.m. on weeknights and 4 a.m. on Saturdays.

“It’s tough in a small business, because you have to raise the prices,” Liakos says, referring to the increase in the minimum wage. “And customers are going to be mad.”

Minimum-wage workers who put in a 40-hour work week will receive more money than before. The Ontario weekly minimum wage paycheque was $464. Now it’s $560.

“It’s fair, I’m not against it,” Liakos says. “People have to survive, too.”

A customer leaving Souv Like. (BREE-ANN GITTENS/Toronto Observer)

The drawbacks of Ontario’s new minimum wage include forcing small business owners to work longer hours themselves, and cut employees.  Liakos works from the morning to the middle of the night, every single day.

“It’s not that busy, so I can’t take on more people,” Liakos says. “When I had employees, I would have to pay more than $14 an hour. For me, it’s the same thing.”

Cutting back on staff and working longer hours himself -- that is how the owner of Souv Like is being impacted by the $14 minimum-wage law in effect in Ontario. He spoke with The Toronto Observer's Bree-Ann Gittens.

The future of small businesses is changing since the new minimum wage started. Many of them are cutting the use of employees.

“The payroll is going to be bigger and most can’t afford it, but most of them can,” Liakos says. “Only chains are going to be able to survive.”

MARION MCCOMB

Marion McComb and her husband Bob are the proud owners of Combview Farms and have been for the last 25 years. It’s a dairy farm located in Castleton, an hour and a half east of Toronto. The McComb family has owned the farm for nearly five generations, as Marion and Bob’s son, Matt, prepares to take over.

It takes a lot of hard work to maintain a 290-hectare farm. They milk 48 Holstein cows, twice a day, and ship the milk every other day.  Besides Marion, her husband and Matt, they have one full-time employee year-round, and they usually have a part-time student. For specific tasks, such as moving the hay into the barns, they hire a couple more students, during the summer.

Three generations of McComb dairy farmers. (From left to right) Matt McComb (fifth generation), Marvin McComb (third generation) & Bob McComb (fourth generation). (Provided by Marion McComb)

However, Marion is finding it increasingly hard to get employees who are willing to work the long, gruelling hours that are required, not to mention the hard labour involved. All of their employees get paid by the hour, at a rate above the minimum wage. Their full-time employee is provided with health insurance.

Before the minimum-wage hike, the McCombs were paying their employees slightly above minimum wage. Instead of leaving everyone at the new provincial minimum of $14 an hour, they adjusted all of the wages accordingly to reflect the increase.

The full-time worker earning $13.40 an hour now makes $15.80. One of the student employees was making $11.70 an hour and is now at $14.15.

It’s very important to the farmers to maintain fair business practices, despite the added pressure on small business owners to make ends meet.

“We try to provide [their worker] with some meat as another benefit,” McComb says. “Probably about half a cow that we would have butchered for her.”

In the past, they provided meals and board as incentive for employees. They even helped their worker finance her mortgage and purchase a house not too far from the farm.

As the McCombs struggle with the extra expenses, including more taxes on payroll and the higher prices for products they rely on, they have cut back in other areas, while trying not to negatively impact their employees’ lives.

There are a lot of added costs as a result of the hike that people might not expect. All employers have to pay Ontario’s Workplace Safety and  Insurance Board for each of their employees. Since it is paid on a percentage of each employee’s earnings, that, too, has increased.

To prepare for the next minimum wage hike on Jan. 1, 2019, Combview is investing in an exciting new venture.

Marion calls it “the future of dairy farming.”

Combview is trading in its warm-bodied human workers for shiny new metal ones. Come this spring, robots will milk the cows. Or that’s the plan. However, the bank has denied their most recent application for a loan. The bankers told Marion that the dairy industry is a risky investment. She remains hopeful that the project will yet get underway.

Aerial shot of Combview Farms Ltd. taken in 2011. If everything goes according to plan, the newly equipped “robot barn” is scheduled to be completed this spring and will be to the right of the manure pit. (Provided by Marion McComb)

The new minimum-wage increase is putting extreme stress on small business owners. Small businesses are the first to be affected; unlike corporations, they do not have the finances to fall back on. Small business owners are having to make tough choices in order to afford the extra $2.40 now added to their employees’ paycheques.

Ontario’s minimum wage comes with many pros and cons. If you agree with any of the pros and cons listed, write a comment below.

(BREE-ANN GITTENS/Toronto Observer)

Now, where do customers fall into the mix? Many of the employees and employers profiled spoke of increased prices, but have customers seen it, too? We took a poll on both Facebook and Twitter:

(Claire Floody/Toronto Observer)

On Twitter, we presented the poll to a collective following of roughly 900 people.  Out of the 10 votes we received, 70 per cent said they have seen prices rise as a result of the minimum-wage increase.

On Facebook, we placed the poll in Bunz Helping Zone, an online community of almost 21,000 people, designed as “a space meant for the asking and offering of help,” according to its Facebook description. Out of the 146 votes we received, 41 per cent said they have seen prices rise.

WHAT’S NEXT?

Rafael Gomez from the University of Toronto is already looking ahead to the January 2019 date, when the $15 minimum wage is scheduled to kick in.

“Next January, owners should be more prepared. The last hike hurt businesses because of the lack of consultation,” Gomez says.

There will be tangible negative effects from the next increase, he predicts.

“Eventually some people will lose employment opportunities. A slowing labour market. Cuts in jobs will happen sooner because of the increase,” Gomez says.

On the other hand, Gomez expects that more jobs could be created.

“It can also increase employment. Jobs that pay too low have a high turnover. When you invest in training and people leave and bring their knowledge elsewhere, you lose money. Once you pay more you have less of a chance of workers leaving the company. This helps the quality of work and efficiency.”

Gomez cautions workers not to get too upset when the post-Christmas lull happens in the winter of 2019.  He warns people not to blame the subsequent lack of shifts after the busy holiday shopping season on the next  minimum-wage hike.