The Law at Work – Ned Nolan and Paul Di Clemente

 

It looks like the minimum wage in Ontario is going up – and not everyone is happy about it.

 

On June 1, 2017, the Ontario government introduced the Fair Workplaces, Better Jobs Act, 2017 (“Bill 148”) which proposes various amendments to the Employment Standards Act (“ESA”) and the Ontario Labour Relations Act among others. At the time of writing, the bill has not yet received royal ascent.

 

While Bill 148 proposes over 150 separate amendments, the most noteworthy – and certainly the most controversial – is the increase to the minimum wage.

 

The minimum wage in Ontario is set out in the formula at s.23.1 of the ESA and is currently $11.40 for most workers. As of October 2015, the rate has been tethered to inflation and increases annually as published by the Ministry of Labour. Currently, a full time worker earning the general minimum wage will earn only about $23,500.00 per year.

 

The proposed changes in Bill 148 would see minimum wage increase to $14.00 on January 1, 2018 and to $15.00 on January 1, 2019. The rate would then continue to rise annually with inflation.

 

Much ado has been made of Bill 148 by segments of the business community and their spokespeople. We’ve heard ideological cries that the sky will fall if we raise the minimum wage, that protecting workers in this way is inherently detrimental to business and the economy. Jobs will be lost! Businesses will shut down!

 

Even some reputable management-side employment law firms have taken it upon themselves to vilify the provincial government over Bill 148, proclaiming that improved legal protection for vulnerable workers in Ontario dare not go so far as to cut into corporate profits or strengthen mechanisms through which their clients might actually face liability.

 

Of course, minimum wage is a floor below which the valuing of a worker’s time and labour may not fall. We have determined as a civilized society that there is a point at which “work” becomes mere exploitation if the worker receives too little in exchange for her efforts.

 

Currently, a greater percentage of Ontarians earn minimum wage than in any other Canadian province – about 11.6%. And 20 years ago that number was only 2.4%. Over the past few decades, the nature of work has changed dramatically with more and more people working precariously. That means more part time work, fewer jobs with pensions and benefits, more temp agencies, and more people considered “working poor.”

 

Could you survive on $23,500.0 per year? Should any working person have to?

 

One common misconception used to justify poverty wages is that most people earning minimum wage are teenagers and students. In fact, only about half of minimum wage earners in Ontario are under the age of 25. And the majority of minimum wage earners in Ontario are women.

 

Another common misconception is that raising the minimum wage is bad for the economy. In response to the backlash around Bill 148, more than 50 prominent Canadian economists penned an open letter to Premier Kathleen Wynne this summer explaining how the “fear mongering” around a higher minimum wage is “out of line with the latest economic research.”

 

Among other explanations offered by the experts, the letter points out that a higher minimum wage has shown to result in higher productivity, more spending, greater wage compression (on the high end), lower employee turnover, and increased domestic economic activity. The letter also notes that those with lower incomes spend significantly more of what they earn than do those with higher incomes. Accordingly, putting more money in the hands of bottom tier wage earners generates an influx of capital into the local economy.

 

Of course it goes without saying that there are also significant intangible social and economic benefits to a more humane minimum wage such as improved worker morale and quality of life, better health and happier families.

 

In response to the fear mongering by profiteers and business lobbyists it is worth asking: Is our economy really so fragile that our local businesses are unable to survive without being permitted to exploit their workers and keep them below the poverty line?

 

Every time a business owner protests the minimum wage hike it is like proclaiming to their community that their enterprise is predicated upon exploitation: “Remove the exploitation, and our profit disappears!”  This should provoke the public to question both the quality of such a precarious business on the one hand, and perhaps, on the other hand, the underlying harshness of an economic model which permits and rewards exploitation in the first place.

 

It remains to be seen what the actual impact of the proposed minimum wage increase will be. Will Ontario buck the trend and see an increase in the unemployment rate? Will we see more wrongful dismissal claims headed to small claims court? Or will business continue as usual but with perhaps a slightly more civilized understanding of where “work” ends and “exploitation” begins? In any event, we can be sure that the sky will still stay up where it is.

 

 

Paul Di Clemente and Ned Nolan are employment lawyers at Nolan, Ciarlo LLP and can be reached at pd@nolanlaw.ca and nn@nolanlaw.ca. For more information on Bill 148, join us at the Hamilton Law Association’s 14th Annual Employment Law Seminar on November 16th , 2017 where Ned will be presenting on the upcoming changes to the ESA in greater detail.

 

 

 

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