On July 19th, the Standing Committee on Finance and Economic Affairs convened a public hearing in Niagara Falls to gather community input on Bill 148, the Fair Workplaces, Better Jobs Act (2017). The GNCC represented the interests of Niagara’s employers.
The Act includes a large number of changes to Ontario’s labour law, but most importantly, raises the minimum wage to $15/hr over 18 months, starting with an increase to $14/hr on January 1st, 2018. The GNCC noted that the pace of this change was unprecedented, and while Seattle, New York, and California have opted to phase a similar increase in over four to six years, Ontario will complete the bulk of the increase within only seven months.
In her presentation, President and CEO Mishka Balsom pointed out that although the bulk of the labour law reforms were made after a two-year-long review – theChanging Workplaces Review, commissioned by Minister Kevin Flynn – the minimum wage increase was announced suddenly and with no prior research or consultation.
Even worse, the announcement was made not long after both Premier Wynne and Minister Flynn had made promises on record that they would not be changing the minimum wage regime. The Changing Workplaces Review specifically did not address the issue of minimum wage.
The GNCC pointed out that there is a grave risk of unforeseen and negative consequences with legislation that is not researched and fully understood prior to passage. During its own membership outreach, the GNCC learned of many businesses in Niagara collectively employing thousands of people that would be forced to close due to the minimum wage hike. Even the increased consumer spending that might result from higher wages would not help these particular firms as they almost exclusively do business with clients outside Ontario.
One local service-sector employer with hundreds of full-time staff described the legislation as “devastating,” the Committee was told. They highly doubted they would be able to keep their Niagara site open. Their clients and competition are all U.S.-based, and will not only be unaffected by Ontario’s legislation, but are in a far more competitive wage environment.
Many other employers reported that changes to student minimum wage would remove any incentive for them to hire students. This would leave many students unable to find any work experience before graduating, causing hardships in starting their careers, not to mention the financial difficulties they would encounter when unable to find summer jobs.
The Ontario economy may be performing well, but profit margins for businesses in some industries are not nearly as large as many might think. In Ontario’s hotel industry, the pre-tax profit margin is only 9.5%. Retailers in Ontario make 4.9%, and full-service restaurants 2.1%. All of these industries will have no choice but to raise prices, lay off workers, or both, and the GNCC noted that retail and accommodation/food service are the two largest industries in Niagara, collectively employing 60,000 people.
The Government of Ontario’s own 2014 report on minimum wage concluded that minimum wage hikes caused negative employment effects, and that those were particularly concentrated among full-time permanent employees, women, immigrants, young people, and recent entrants to the labour market. It also found that larger increases caused proportionately larger negative effects. The GNCC is gravely concerned that Bill 148 does not even acknowledge the government’s own findings, let alone address them.
The GNCC recommended that the government should phase in the changes to give employers a chance to adjust, and to look at offsetting measures to compensate them.
For example, a Government of Ontario promise to lower corporate tax rates in 2009 was not kept and has not been mentioned in a budget since it was halted. The Government of Alberta proposed a range of measures to compensate for its $15/hr minimum.
The Government of Ontario, offering nothing to employers that would help them meet these enormous and rapid changes, risks thousands of Ontario jobs. The GNCC asked the Committee to give consideration to Ontario employers and to make a plan for the thousands of working Ontarians who may be about to lose their jobs, see their earnings decrease, or pay higher prices as a result of this legislation.
For more information, please contact:
Mishka Balsom, President & CEO
Mishka@gncc.ca or 905-684-2361