Last week, Ontario increased its minimum wage from $11.60 to $14, and it is set to increase it to $15 next January. On the surface, this sounds like a great thing to do. My concern is it won’t solve the problem everyone thinks it will solve.
When I was a teenager getting my first job at Mr. Mikes, I got $3 an hour. Sounds like child exploitation now, but back then a dollar was worth a lot more than it is today. Gas was 40 cents a litre, beer was $10 a case (I think…) and I could ski at Cypress Bowl for $15 a day. Other than that, I have no idea what things cost. Teenager, remember?
Over time, prices increased, and so has the minimum wage. As I gained more experience and education, fortunately my wage went above the minimum, but I will never forget those first few jobs that I had and how hard I worked. Those experiences made me realize how much I didn’t want that for my future.
Fast forward to today, and the drive to make the minimum wage a “living” wage, or at least closer to it. I don’t believe that will happen. We will be in the same place in a couple of years saying the minimum is too low and needs to be increased. The reason? Inflation. Most minimum wage jobs are in daily human needs — grocery stores, gas stations, restaurants and coffee shops, to name a few. So when the wages the employers pay go up, so will their prices.
But what happens when inflation gets too high in Canada? Interest rates rise. Anyone with a mortgage, a line of credit or bank loan is now looking at increased costs. And who is less prepared for that? The person making a lower wage. Oops, looks like the person who needs help is getting hurt the most.
My biggest concern is we aren’t solving the problem, we are using a solution that we think will solve the problem. The real problem is we have too many people not able to make ends meet. If we solve it by forcing an increase to their wage, we don’t help them, we actually hurt them more.
I didn’t like my minimum wage jobs, so I was motivated to do better, and I’m fortunate I did. But what if I was satisfied with the minimum? Would I be as motivated to improve my skills? Or would I stick with the low-skilled job where I could make ends meet?
We are compensated for the value we add to society. If you can do something other people can’t do, you’ll be compensated more. If anyone can do your job, you won’t make as much. If you don’t add more value, you won’t make as much. Doing something that adds more value will lift you out of poverty. A higher minimum wage will keep you there.
The entry level job is important to give people, especially teenagers, the chance to get work experience. The Bank of Canada estimates that 60,000 jobs will disappear. That’s a tragedy for kids, and for our future. Where are they supposed to get that work experience?
This is another case of a popular solution that won’t solve the real problem. It just makes people feel better.
Brad Sherwin, MBA is a long-time resident of South Delta, and has over 25 years’ experience in marketing, public relations and business strategy. He teaches marketing at Douglas College and is president of the board of directors at Deltassist.
