One of my very first posts on this blog was praising the former Liberal Mcguinty Government efforts to increase the minimum wage for Ontario's workers and while I have changed in many respects both in my thinking and my view on capitalism, one of the fundamental views that I still hold is that the poorest of the poor, work the hardest but do not get equal compensation.
Again I ask you put down your shovels and hear me out.
I can honestly understand the views of a business worrying about rising labour costs and the need to tighten the belt to appease profit margins as well as angry shareholders who still remember the sting of the Great Recession and the collapse of Lehman Brothers. The argument on the left is that because people are at the bottom relying on minimum wage employment the state has an obligation to raise the wages of its struggling citizens to better their life.
I am not here to make the argument, if that argument were true then the state should simply demand that all people are paid equally across the board or would mandate that all companies provide a so called "Living Wage". Something that would in theory create a truly just society but we live in reality and the ensuing chaos of having highly paid professionals, having their work diminished to a street sweeper would probably be too much for some.
So what is my argument?
The current economic conditions in Ontario are not truly favorable, we have seen the manufacturing base crawl out of the hole that had been the 2008 recession and the high Lonnie that made them noncompetitive with both the low cost wage of Chinese manufacturing and the highly skilled, high quality of the German manufacturing juggernaut.
The recession was also not kind to small businesses and entrepreneurs who went bankrupt in droves because of the constant credit crunch that denied them the option to expand and retool their business in a difficult economic climate. Traditional lenders across the board from banks to pension funds withdrew money out of the market in fear of losing even more money.
Why am I talking about the decline small business and the economy in 2008 and beyond? Because it provides a framework of the primary issues that are at its core. The last rise in the minimum wage was back in 2010 and the current Ontario government run by Kathleen Wynne has decided not to include an increase in next year budget.
The Great Recession was kinda like cutting your arm or leg, you know its bad and you feel a bit of pain but you only truly understand how much it hurts the day after or even a few days after when you try to do anything strenuous. That is what the Great Recession is and will be for the next decade, it has shaped our society into a deeply paranoid and worrisome lot. Constantly looking at even modest economic growth with cynicism and suspicion. This is the thought process of the market and many Ontarians in general "The economy isn't on track we can't raise the bare minimum we pay our poverty stricken workers or else the economy will collapse."
Canada's economic has been positive for the past nine quarters and it could be argued that Canada's economic growth has at long last reached stable and sustained levels. The question arises what will regular businesses do when the minimum wage is raised.
The Senator from Massachusetts Elizabeth Warren states in the above video of what the real costs of raising the minimum wage from the current federally mandated wage of $7.25 to about $10.10. Would for example raise the price of a #11 from McDonald's from $7.19 to about $7.23 mainly in the increase would be so small because of the companies huge numbers and costing saving measures.
Now one might say that many businesses simply could not do that and in fact the inflationary effect on the economy is even worse because it forces businesses to raises prices ever higher to deal with having to pay their workers more. But as stated by Senator Warren and backed up by Dr. Dube that statistically because so very few people are actually paid minimum wage it cannot affect the economy because the number of people who are paid this amount is so low and that the amount of money they earn, is so low that they cannot change the inflation rate of a modern economy.
That is my main argument on the minimum wage, it will not harm small time businesses who are afraid of having to pay their workers too much. And big business cannot be harmed because of their vast size and the fact that a minor increase in the overall price of an item they sell will offset the small rise in labor costs without increasing the inflation rate because as I've stated before the number of individuals being paid minimum wage is insignificant to the economy.
And let us no forget that by paying these individuals more they're money goes farther it pays more bills, it buys more stuff. In fact a minimum wage increase is very much like a tax rebate in that it goes directly into the economy quickly and helps the economy grow, something I know all my readers want.
The minimum wage increases productivity from happier workers, it increases economic growth which leads to more money in the economy and above all else it increases the stability of a society where a person who isn't all that bright is able to earn a decent wage for hard work so that they can pull themselves up by their own bootstraps.
Tune in next time where I go after the real horror for the lowest paid workers: Part Time Wage, Part Time Hours.
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