Ontario business with few employees may have the

 

 

Ontario will be the second province that
increase the minimum wage to $15 an hour in two next years, $14 an hour on Jan
2018 and $ 15 on Jan 2019. Before the minimum wage increase to $15, however,
there will be an election in June 2018 (Smith.J , Jones.A, 2017). Alberta’s
government fist announced that the $ 15 minume wage will be effective from
beginning of 2018. This increase will have many small and big effects on the
economy and The most impact is on employment sector.

Impact on employment:

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The first impact is rise employment rate in
different sectors, while consumers have more purchasing ability and more money
to spend, produce of products will increase. Restaurants, groceries, clothes
and some different industries will attract new customers while their minimum
wage is increased. Serving new customers, increase the demand for new workers (Rozworski,
2017).

Medium and big firms such as banks, usually
have more employees with higher wage. So, increase the minimum wage has a
little effect on them while the number of employees with minimum wage are not
big.  Paul Sonn senior counsel with the
National Employment Law Project, a worker advocacy organization based in New
York said: “For the average firm in the economy it’s not that big a cost,
because most industries only have a relatively small portion of
low-wage labour” (Crawley, 2017).

On the other hand, small business with few
employees may have the most negative effects. This small businesses make low
profit margins and may have to short the work hours or cut the number of
employees, or increase the service price (Sakir, 2017).

Another negative effect of increasing minimum
wage is that companies may replace workers with automation like restaurants use
self-serving kiosks or some retailers use kiosks in check outs.  In some businesses machines are the biggest rivals
of labours with declining prices of computers (Sakir, 2017).
For instance Metro one of the biggest companies of Canada estimates that the
wage increase will cost about $50 million next year and this company is
considering its study of automation. The young and teen are the biggest number
of workers with minimum wage because they are low-skilled workers. If increase
the minimum wage impacts on cutting jobs, young workers will lead to continue
education to find job as high-skilled workers.

(Derek Burleton, Michael Dolega, Dina Ignjatovic,
2017).

Photo:
https://www.labour.gov.on.ca/english/es/pubs/mwap/section_02.php Jan 20,2014

 

Impact
on GDP

Total income of workers will
raise by increasing minimum wage after adjusting for inflation rate. However, increase
in minimum wage may increase the labor cost and product prices but if
low-income workers keeps their jobs, their ability to consume will rise and higher
minimum wage will result in workers spend more in household products and
Increase economic activity (fao-on.org, 2017).

When  Lower-income
families see a sustened increase in their income, they start spending more on
consumption more foods, health care and education. Some of them start moving to
better housing and pay more for rental. Low-income families usually spend
almost all of their income (Yalnizyan, 2017).

The following study from Labour.orge.ca shows
that increase in minimum wage from 2003 to 2012, results in an increase in GDP.

Trends in Minimum Wage, Median Wage, CPI and GDP for Ontario: 2003-2012

 

Min Wage (Nominal)
($/hr)

Min Wage (Real)
($/hr)

Median Wage (Nominal)
($/hr)

Min/Median Wage
ratio

CPI

GDP(Real)
(million$)

2003

6.85

5.99

16.85

40.7

114.37

401,735.1

2004

7.15

6.14

17.11

41.8

116.48

411,867.9

2005

7.45

6.26

17.95

41.5

119.04

422,958.1

2006

7.75

6.40

18.00

43.1

121.16

432,151.3

2007

8.00

6.48

18.67

42.8

123.39

439,785.6

2008

8.75

6.94

19.23

45.5

126.17

437,962.0

2009

9.50

7.50

20.00

47.5

126.61

423,756.4

2010

10.25

7.90

20.00

51.3

129.73

437,300.9

2011

10.25

7.66

20.24

50.6

133.74

446,264.6

2012

10.25

7.56

21.00

48.8

135.63

https://www.labour.gov.on.ca/english/es/pubs/mwap/section_02.php#chart_09b

 

 

Conclusion:

Increasing minimum wage seems to be a big
challenge for businesses, specially small businesses. While some economists argue that increasing
minimum wage is good for Canadian economy, others believe that this huge
percent of differenece will cause inflation, increase unemployment and labour
costs (Rozworski, 2017). 
However, if employees with minimum wage can save their jobs they can
spend more on household the Real GDP will increase and it has a positive impact
on economy. However some employees will loose their jobs because of the
increase in minimum wage, many other workers will meet the higher wage and they
can improve their living. Increasing minimum wage, results in raise of demand
for goods. Increasing the need for goods, will rise the need for workers in
businesses and in long term will help to reduce the unemployment rate.

So boost the minimum wage and you boost the economy from
the bottom up (Yalnizyan, 2017)

 

References

Crawley, M. (2017, Jun 3). How Ontario’s economy
will react to $15 minimum wage. Retrieved Dec 5, 2017, from www.cbc.ca.
Derek Burleton, Michael Dolega, Dina Ignjatovic.
(2017, Sep 26). Ontario’s Proposed Minimum Wage Hike. Retrieved Dec 5,
2017, from https://economics.td.com.
fao-on.org. (2017, Sep 17). Assessing the
Economic Impact of Ontario’s Proposed Minimum Wage Increase. Retrieved
Dec 5, 2017, from www.fao-on.org.
Rozworski, M. (2017, Jun 29). Economists support
$15 minimum wage in Ontario. Retrieved Dec 5, 2017, from
http://www.progressive-economics.ca.
Sakir, S. (2017, Jun 6). The Possible Consequences
Of A $15 Minimum Wage In Ontario. Retrieved Dec 5, 2017, from
www.huffingtonpost.ca.
Smith.J , Jones.A. (2017, Sep 9). Ontario to
raise minimum wage to $15 an hour by 2019, ensure equal pay for part-time
workers. Retrieved Dec 5, 2017, from www.theprovince.com.
Yalnizyan, A. (2017, Jun 2). Why a $15 minimum
wage is good for business. Retrieved Dec 5, 2017, from
http://www.macleans.ca.
 

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