Ontario – A Curious Thing Happened When Ontario Hiked Minimum Wages by Over 20%

A Curious Thing Happened When Ontario Hiked Minimum Wages By Over 20%

Minimum wage hikes, and the inevitable job losses that result from them, are a consistent topic of conversation for us…here are just a couple of recent examples:

Of course, no amount of empirical evidence (or common sense for that matter) will ever be sufficient to convince left-leaning politicians that basic economic concepts governing the relationship between supply and demand also apply to the market for labor.  No, in the mind of politicians, every business ever created is an evil corporation owned exclusively by “millionaire, billionaire, private jet owners” who earn infinite profits and will casually accept whatever minimum wage hikes or tax increases are thrown at them…

That said, here in the real world, competition prevents corporations from earning excess profits (at least for an extended period of time anyway) and businesses respond to higher labor costs through capital investments designed to reduce labor (think ordering kiosks at McDonald’s) and/or other cost cutting initiatives.

In fact, for the latest example of the unintended consequences of higher minimum wages, one has to look no further than a pair of Tim Horton’s franchises in Ontario, Canada.  Faced with a 21% hike in minimum wages starting January 1st, with hourly rates going to $14 from $11.60, owners of the two restaurants said they had no choice but to cut employee benefits and eliminate paid breaks to offset their higher costs.   – ZeroHedge

read full article here

What is happening in Ontario is being closely watched by everyone including the US.  Raising minimum wages by 21% has more to do with the upcoming provincial election than providing a living wage for unskilled labour.  Can’t spread the wage increase over four or five years with an election only 8 month away.

Cut staff, cut staff hours, cut staff benefits, raise prices or automate…or a combination of all or some. Those are the choices.  There are no others.  Not from a business point of view.   Small businesses don’t have a lot of wiggle room when it comes to cost cutting.  They will pay the biggest price for this wage hike.

Then there is the inevitable wage increases of everyone else.  A rising tide lifts all boats.  There are a lot of boats making over $15 /hour.  They will want a tide of their own.

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