Canada’s minimum wage is finally catching up with the US. Now lets raise it even higher | Joseph Stiglitz

Since reaching parity with the US around a decade ago, Canada’s minimum wage has been slowly but steadily increasing. The federal minimum wage in Canada is not scheduled to go up again until 2023….

Canada's minimum wage is finally catching up with the US. Now lets raise it even higher | Joseph Stiglitz

Since reaching parity with the US around a decade ago, Canada’s minimum wage has been slowly but steadily increasing. The federal minimum wage in Canada is not scheduled to go up again until 2023. One of the most recent increases, last year, was partially pushed through by a provincial government and some municipalities. The result has been that the minimum wage for people in Ontario is higher than the minimum wage in California, and about $17,000 higher than the national minimum wage.

The business community, including Ontario’s premier, Kathleen Wynne, and the provincial minister of economic development, Greg Rickford, are opposed to a complete pay increase, including for future increases, as business leaders argue that this will cause inflation to rise and cause unemployment to rise, while failing to consider the cost to employers.

Current minimum wages in Ontario require businesses with 100 employees or more to pay, respectively, $11.40, $14.40 and $15. However, experts have argued that the rates need to be increased as they were the same prior to the Liberal government’s implementation of the 13% increase in minimum wage and the extended payment of Ontario’s sick leave benefits to workers.

The minimum wage is the lowest of all the Canada-US border states. Photograph: John Kirk-Anderson

Although some Canadians are objecting to this increase, it is an overdue and long overdue increase. It is surprising that no Canadian political party could claim that the gap between minimum wage and median income in Canada was even a little smaller than it was in California. Ontario’s economy has been boosted by its foreign worker program and by international firms moving south of the border into its low-cost jobs markets. Despite a growing population and many new immigrants to the province, the minimum wage has not been raised for decades. Minimum wage is a policy that is well overdue.

As the business community argues that this will cause inflation to rise and cause unemployment to rise, the former B.C premier, Christy Clark, and Alberta’s premier, Rachel Notley, in 2015 committed themselves to raising the minimum wage in their respective provinces.

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Ontario’s total economic and business establishment is larger than California’s, and so the province has a disproportionate influence over Canada’s trend. Unfortunately, as quickly as the province began to see signs of economic progress, its premier and Minister of Economic Development, Greg Rickford, resigned. Ironically, Canada’s right wing also has lost its nerve with respect to labour movement politics.

One positive result of the recent Ontario wage decision will be that unionization in the province is likely to increase. After wages for new workers went up a year ago, Ontario’s economy fared well. The additional labour power from those who receive their income as tips could drive restaurants, bars and shops to give their staff a “living wage”. In the past, minimum wage increases have prompted businesses to offer more benefits to their employees. For example, a rising minimum wage has been connected to more vacation days, more days of paid sick leave, more days of shared parental leave and more parental caregiver benefits.

Over the years, one of the successes of progressive governments in the US is the increase in living standards of US workers. When US unions were organized and more workers had a union card in their pocket, they had a strong ability to negotiate better benefits, fairer wages and a more livable wage. For example, in the 1960s and 70s, Massachusetts required businesses to offer employees four weeks of vacation, paid sick days, paid maternity leave and minimum wage increases for new parents.

Today, unfortunately, the power of unions is something that American labour groups can and should aim to preserve and strengthen. But it is important that they focus on raising the living standards of workers, not the wages of the businesses that employ them. In the long run, higher wages will be good for all of the workers and for the businesses who will provide them.

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