Can P.E.I. expect same reaction as Ontario to minimum wage increase?

The increase of the minimum wage in Ontario from $11.60 to $14 an hour has created a debate across the country.

Much of the debate has centred around the decision of some business owners to claw back benefits to cover the cost of the wage increase.

CBC's Island Morning invited Erin McGrath-Gaudet of the Canadian Federation of Independent Business and Ann Wheatley of the P.E.I. Working Group for a Liveable Income to discuss how the issue affects Prince Edward Island.

P.E.I.'s minimum wage will move from $11.25 to $11.55 in April.

This is an edited version of that discussion.

What has been your reaction to what you've been hearing since they made that change in Ontario?

Erin McGrath-Gaudet

I'd like to say that I'm surprised but I'm really not.

Something's got to give at some point. Typically [business owners will] go to profits as the first pot of money that they'll use to fund something like this. Some businesses may be in a position to increase prices to make up the difference, but then that third rail is to try to find ways to cut back.

It's not that you see mass layoffs of people the second minimum wage goes up. It's operating around those margins. You'll often see, instead of the shift where we had three people, maybe we'll only have two people. You'll often see business owners doing more work themselves.

Ann Wheatley

I was not far off Kathleen Wynne's reaction. I think it was a bullying tactic on the part of those particular employers. I do hope that, as Erin says, it was not a typical reaction, although we've learned since that a number of other employers have done the same.

At $14 an hour you're still living pretty darn close to the poverty line in Ontario. This is about improving the conditions that people are living in.

Although I sympathize with, in particular, small business owners who have to find ways to adapt to this change, there's no other way of doing it. We need to be paying people more. People need to be paid fairly for the hard work that they do, the hours that they put in. It's a human-rights issue.

What would happen if a similar thing were to happen on Prince Edward Island?

Erin McGrath-Gaudet

You'd probably see a fairly similar response as what we're seeing in Ontario.

It tends to impact people who are young, because minimum wage typically is for people who are starting out in their first job. As people get more education, as people get more experience, they tend to move out of those categories.

Given what we can reasonably expect from a minimum wage hike that would be that significant for P.E.I., you would see fairly similar responses. I don't think it's done out of malice. It's just a matter of if I'm going to keep my business open, and there are limits to how much money I can make, in terms of either dipping into my profits or increasing prices, then how do I make up that difference?

Who's filling those minimum wage jobs on P.E.I.?

Ann Wheatley

Even in Ontario, I think a lot of the workers who are making minimum wage are not in that younger age group. I think nationally 64 per cent of minimum wage earners are actually not in the younger group. In P.E.I., also, we have the highest rate of people who are making less than $15 an hour, so the impact of raising the minimum wage here would be a really positive one.

Giving employers a chance to figure out how they're going to deal with it is really important, but at the end of the day this is about justice. This is about equality.

We have a huge income inequality problem, and I think we need to be looking at how we can change the system to support all people to be paid fairly.

How much of this story was dictated by who the people were as opposed to what they were doing?

Erin McGrath-Gaudet

Anybody that understands the basics of PR would look at this story and say they couldn't have picked a better/worse example to follow … Even not being able to reach them for comment because they were at their winter home in Florida. All of those pieces made it a juicy story.

You need to understand the context. When you look at some larger businesses they do have the means to adapt in a way that small businesses don't. Small businesses do tend to be more labour intensive, and even in terms of being able to make investments, looking at things like self-serve checkouts or having an app to do things as opposed to relying on people. Larger businesses do tend to have more of an ability to respond in ways that would save money."

Ann Wheatley

Getting back to the scenario in Prince Edward Island, a lot of our economy is driven by minimum wage workers: in tourism, in fish processing, in agriculture. We have the lowest wages in the country, so the impact of raising the minimum wage closer to a living wage would be really positive.

Raising minimum wage for low-income workers, when their wages are increased, they tend to spend money more locally in this economy and support our local business.

Erin McGrath-Gaudet

The challenge is you've got to get over that hump. Even if you take all those rules to be true, somebody has to foot the bill in the first place, and it's, 'Where does that money come from?' Even if everything else happens exactly the way we want it to and it trickles through the economy and it comes back to local businesses.

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