BY LUCAS HUTTERI
The minimum wage was increased from $11.60 to $14 an hour in Ontario on Jan. 1. Many people, including students, rejoiced. An increased wage means more money for everyone, right? Well, it might not be that simple.
“It’s minimum wage across the board,” said Carl Scammell, former owner of Smokin’ Tony’s Bar-B-Que in Guelph, in an interview with CTV. “The suppliers that get the food; their price went up. Why did their price go up? Because anybody they paid minimum wage, their price went up and they had to try to recoup their cost. And then my supplier had to pay the higher price, therefore they have to pay a high price to put it on the truck and therefore it comes at a higher price to me. I’m the end user; I’m the one that gets stuck with the bill.”
According to Scammell, there were other factors leading to the closure of his restaurant, namely an increase in gas and hydro costs, but the large increase in minimum wage was the tipping point. Scammell was reportedly running at a 3.5 per cent profit, but the increase in minimum wage drove up prices by 35 per cent.
Evidently the rise in minimum wage hasn’t been good for everyone, and students have taken notice.
“I didn’t think that the increase in minimum wage would actually be that helpful since other prices were going to increase, making it still difficult to be a student trying to live and pay for school while having all of the typical expenses that accompany everything,” said Melena Lagana, a second-year student at Conestoga College.
“Also, side note: I worked really hard over the summer to make less than the minimum wage now and it makes it seem less significant now.”
While some students are skeptical of the wage increase, others welcome the extra money with open arms.
“There are opinions on both sides, and there is evidence on both sides and basically is it an empirical question to see what happens,” said Lori Curtis, an economics professor at the University of Waterloo.
“I mean if you increase the minimum wage, you’re increasing the wage above equilibrium wage where supply equals demand, so you’re going to have a supply of workers that outpaces demand for workers. That could be bad, so we’re going to have possibly higher unemployment rates. That’s not good. However, the higher wage rates improve incomes of students or what we call the working poor people that are working at minimum wage trying to search out a living. So for the people who can find jobs it’s better, and for those who can’t find jobs it’s worse.”
For students who already have jobs, expenses should be slightly less of a burden. For those looking for jobs, it might become a little more difficult.
Curtis said if employers are not offering high enough wages, people will not do those jobs. But by increasing the minimum wage it is going to draw more people into the market to fill those jobs.
“Increasing the minimum wage is going to draw more people into the market. Increasing the minimum wage will get more students out looking for jobs and finding jobs. If the market is tight and not many people are looking for jobs, perhaps because the wage is too low, then increasing the minimum wage is going to draw more people out to look for jobs, and then more people find jobs at a decent living wage, although I’m not sure $15 is a living wage. CBC Radio yesterday (Feb. 8) said unemployment rates are 5.4 per cent in Canada which is quite low. That’s as low as it has been in a while.”
Currently it’s difficult to determine exactly how this will affect Canadian students. It’s clear that business owners, particularly small business owners, are beginning to struggle to keep up with the rising wage, with some closing shop.
Higher wages are great, but not if you can’t find a job.