If you were to mention a potential minimum wage increase today, more often than not, you would find yourself in a passionate debate about why this needs to be done or why it’s impossible.
The debate has recently surfaced in the heart of Peterborough, where, according to a study released by the Canadian Mortgage and Housing Corporation (CMHC) in 2011, we have the lowest average hourly wage among 34 major centres in Canada.
We have also had one of the highest unemployment rate for several months, and have the highest housing costs relative to income in the country.
Paul Brown, the coordinator for Labour Programs and Services at the United Way of Peterborough & District, is currently heading up the Peterborough movement. You might have seen him out front of the Tim Hortons on Lansdowne Street on September 14. He was joined by a group of protesters who were telling you exactly who it is who lobbies to the government to keep minimum wage at its current $10.25.
It was no coincidence that the group chose Tim Hortons as the place to stage their protest, citing that the coffee chain has lobbied incredibly hard against the idea of a minimum wage increase, even though their profit in the fourth quarter last year was $402 million.
Tim Hortons still serves as a popular destination for students to work part-time and Brown explains why it is particularly important for students that the minimum wage is increased.
“There’s so many of our students that are taking on massive amounts of debt to pay for an education. Then, once they’re graduating, their only immediate options are these low-wage, precarious jobs where they may not even be able to practice a career in their chosen field. Then, with the debt they’re straddled with upon graduation, they try to scrape by on making $10.25 an hour and are expected to pay off student loans at the same time, which is just ridiculous.”
Increasingly, more and more people within Ontario are getting stuck with these low-wage jobs. Over 500,000 Ontarians are currently working over 35 hours a week at $10.25 an hour. Being that this amount adds up to significantly under $23,000 a year, it means that a large portion of Ontarians are working full-time hours, and aren’t even getting above the poverty index.
This is where we get to the number 14. Deena Ladd, Coordinator of the Workers’ Action Centre, explained the significance of increasing minimum wage to $14 per hour.
“A year and a half ago, we started discussions with our membership. Our membership is made up of a lot of workers working low-wage jobs, around the minimum wage, and [we discussed] what would be a reasonable [wage increase]. What would be something we could push for, and why? Why would it be that number and what would it look like?”
“We came up with some fairly standard principles around not living in poverty if you’re working full-time. Also, based on the fact that most people aren’t working a full 40-hour week, we thought it was ridiculous to set the average hours at 40. The average amount of hours people are working is around 33, so we pegged it at 35.”
So, Ladd said, $14 per hour at 35 hours a week would equate to an annual income that is 10 percent above the poverty line. From there, it would be indexed every year to make sure it keeps up with inflation.
The number 14 has become the rallying call for those involved with this movement.
“We’ve decided to do the days of 14 action. We’re doing actions on the 14th of each month around different themes. August 14 was a big community outreach about how the cost of living has been increasing since 2010, while the minimum wage has remained frozen,” Ladd said.
In the three years the minimum wage has been frozen, the cost of living has increased in Ontario by 6.2 percent. This has driven those working minimum wage jobs to fall 19 percent below the poverty line.
More recently, as already mentioned above, September saw a theme based around the idea of who’s lobbying to keep minimum wage frozen. As Brown acknowledges, the support within Peterborough has been growing significantly.
“The feedback we got from the general public was overwhelmingly supportive. There were, however, some concerns about [focusing on] true small businesses and not the multi-national corporations because we deliberately targeted Tim Hortons that day. Some people asked, ‘What about the true mom-and-pop businesses?’ ”
So, what about the true mom-and-pop stores? Well, the truth is less than one-third of minimum-wage workers are employed in small businesses that have 20 or less employees. This is compared to the 54 percent of minimum-wage workers who are employed by large businesses (having more than 100 employees), and who continue to see large profit increases in spite of the fact that those working for them often struggle just to get by.
This doesn’t really comfort those small businesses who would be directly affected by a large increase to minimum wage, though.
“We’re certainly mindful of that, but we think there are other things the government could be doing to assist those small businesses. Relief in small business income taxes, convenience stores getting revenue sharing from lottery tickets, those sort of things,” said Brown.
“If you look federally, the corporate tax rate dropped 50 percent over 12 years. Provincially, we’ve got a government that’s been tripping over its own feet to offer starts trying to help out George Street.”
Ladd also weighed in on the idea that small businesses would suffer. “That’s a common misconception, that small businesses are going to suffer. Small businesses are already suffering because a lot of consumer purchasing power in local communities has declined. Someone who is making $10.25 an hour [will] say they’re lucky enough to get 40 hours a week. Their take-home, after-tax earnings at the end of the month would be around $1,100. After paying for their apartment, utilities, transportation, and basic food costs, there’s nothing left. Nothing left to buy any products or consumer services from local businesses.
“That’s why we think the Chamber of Commerce has come out and said they support regular increases to the minimum wage,” said Ladd. “That’s an acknowledgement because they know consumers don’t have the money in their pockets to buy products. If the minimum wage went up to $14 per hour, the monthly earnings would be boosted up to $1,500 a month. This means someone would be able to take their family out for dinner once in a while. It’s going to boost consumer spending.”
“54 percent of the GDP is based on consumer spending,” noted Ladd.
“This is why a lot of economists have come out and said this is actually a really good thing for businesses and it will actually boost the economy in more ways than not.”
But what about immediate effects? Wouldn’t this immediately mean a lot of companies would have to lay people off? Well, the immediate answer in the corporate sector is “no.”
In the sales and services sector, where minimum-wage jobs are dominating the field, profit is based on consumption, not production.
Large corporations like McDonald’s and Tim Hortons are dependent upon access to the market. Should minimum wage increase to $14 an hour, it would surely affect their bottom-line profit. However, they need these stores to operate efficiently in order to make any profit at all. Therefore, they would need to keep the stores open and people employed. A little less profit is better than no profit at all.
In the small business sector, it’s a little more complicated. Most economists agree, though, when consumers have more money, job creation increases. More money will circulate within local communities because local people don’t stash their money in off-shore bank accounts.
Wherever there is more consumer spending, there is job creation.
However, it is clear there are still some questions circulating around this movement, and it is mostly the largest corporations that do not want to see the minimum wage increased.
Take note that a company like Toys ‘R’ Us, one of the most vocal advocates against a minimum wage increase, made $239 million in profit in the fourth quarter last year. McDonald’s, another company in huge opposition to the raise, made $5.4 billion. These companies primarily employ people who can barely afford to feed their families, which leads to an increasing dependence on food banks.
This summer, the provincial government acknowledged the discrepancy between the minimum wage and the increasing cost of living. Perhaps due to pressure from groups such as Workers’ Action Centre, they also appointed an advisory panel to give advice on the minimum wage.
Many organizations are going to these panel meetings and making sure the panel hears that many different groups support this idea. Ladd sees this as a very positive step, but recognizes there is still work to be done.
“This review is happening at the provincial level, and our communities need to get involved. They need to start talking about what it is they need in their communities for jobs and wages,” she said.
“One of the things we’re clear about is the panel is only there to make recommendations. It will still be up to the Premier’s office to decide on what the mechanisms will be to increase the minimum wage. It’s incredibly important communities know their MPP is actually going to be part of making the decision. Therefore, your MPP and the Premier’s office need to hear from workers directly.”
Those who are looking to get involved can find more information at www.raisetheminimumwage.ca, and can connect with the Workers’ Action Centre through Facebook or Twitter. Paul Brown can be contacted in Peterborough at email@example.com.
Finally, you can be sure to find them out there on October 14, and the 14th of each following month, until more steps have been taken towards a minimum wage increase which matches the cost of living.