Displaying their ignorance of economics, the Ontario government arbitrarily raised the minimum wage to $14/hour, up from $11.60 previously. That is nearly a $2.50/hour raise per employee. Over an 8-hour shift, each employee is earning about an extra $20. Which means that the business is paying an extra $20 for each employee. Imagine a business is open for 16 hours a day, essentially two 8-hour shifts, and needs 5 employees to cover each shift. That is an extra $100 in labor costs per shift, or an extra $200 per day in labor costs. Over 365 days, that is 365*200 = $73,000. That is not an insignificant chunk of change for a small business. As I’ve asked previously, is the Ontario government going to mandate people do more shopping to cover the cost to the employers? Of course not.
So what is the real effect of this arbitrary labor increase? Less jobs, less hours per week, etc. The labor demand curve is at the tops of this post – every economics 101 student learns it. As the cost of labor goes up, the demand for labor goes down. Regardless of what the government says.
Check out this quote from Ontario “premier” Kathleen Wynne after a couple of business owners had the temerity to point out the obvious about the increase minimum wage:
“To be blunt, I think it’s the act of a bully,” said Wynn in an interview with CBC News.
“And if Mr. Joyce wants to pick a fight, pick that fight with me and not the people who are working at the service window of the store.”
Can you believe that hubris? The HEAD OF THE GOVERNMENT is accusing someone else of being a bully. Amazing.
Economics, economics, economics. It matters folks.
Employees at nearly a dozen Tim Hortons outlets across Ontario tell CBC News they are facing the loss of paid breaks, benefits, and perks by franchise owners citing Ontario’s minimum wage increase.
The cuts go beyond the iconic coffee chain, with minimum wage workers at other businesses being told they’re also going to take a hit as a result of the hike.
Sources tell CBC News Tims franchise owners are taking similar action in Leamington and Port Hope and at multiple locations in the Cobourg area.
One family that owns six franchises in Durham Region, east of Toronto, is cutting paid breaks at its locations because of what it calls a “massive” increase in labour costs. Ontario’s minimum wage rose to $14 an hour from $11.60 on Jan. 1, and it will go to $15 next year.
…Tim Hortons franchises are not the only businesses responding to the minimum wage increase by cutting in other areas.
In a thread posted on Twitter , columnist and freelance writer Andray Domise posted a copy of a document — which he shared with CBC News — outlining increases to the tip-out at Sunset Grill, a popular Ontario chain of breakfast restaurants, in the wake of the wage hike.
Servers at restaurants are often required to pay some of their tips out to other workers who don’t receive gratuities.
Sunset Grill is raising the amount servers have to pay “to ensure the continuation of successful operations following the increases of minimum wage rates.”
“Coinciding with that 20 per cent increase in minimum wage they get hit with a 25 per cent increase in their tipping clawbacks,” Domise said.
More at the link.