Job losses piling up; business owners point to minimum wage hikes

Canada just suffered the worst job losses in nine years. And everybody is playing the blame game.

Ontario was hit with the biggest decline in jobs – almost 51,000 part-time positions.

Of course, you know what big business and their bankers are going to say about that.

“The concentration of the job loss in Ontario and the focus upon lost part-time jobs in that province will no doubt feed debate on whether large minimum wage hikes took a toll on employment,” Scotiabank’s Derek Holt wrote in a note to clients.

“But proving causality may remain contentious.”

Of course, it was the minimum wage hike from $11.60 to $14 an hour Jan. 1 that caused all this, right? After all, the province shed 50,900 jobs from December 2017, according to Statistics Canada. It gained 8,500 full-time positions but lost about 59,300 part-time jobs.

So was it the minimum wage hike that caused this bad news?

The 59,000 figure is a “whopping” one, said Matthieu Arseneau, senior economist at National Bank Financial Markets, in a note.

It “may be a sign of adjustments made by corporations coping with a minimum wage surge,” he said, noting young people ages 15 to 24 lost 24,000 part-time positions.

And that’s exactly what Ontario’s business leaders are blaming the job losses on — the minimum wage hike.

And they say those losses could really pile up when the minimum wage rises another dollar to $15 in January, 2019.

“Industry in our province is feeling the impact of the rising minimum wage, and significant labour reforms, increasing U.S. and global competition, NAFTA renegotiations, consistent over-regulation, rising input costs and challenges in accessing talent,” said Rocco Rossi, president and CEO of the Ontario Chamber of Commerce, at Queen’s Park on Wednesday.

“Together, these factors are compromising Ontario’s path to continued economic prosperity.”

Progressive Conservative Finance Critic Lisa MacLeod isn’t blaming all the job losses on the minimum wage hikes, though.

“There’s been a basket of issues,” said MacLeod in the Toronto Star report.

“…A lack of confidence in reinvesting … the rapid, recent increase in the minimum wage” and “hydro costs still remain of concern to Ontario businesses, and that really hampers whether they want to expand or even stay open, in many cases.”

A report in the Financial Post points to a Bank of Canada projection that says 60,000 jobs could disappear by 2019 because of the minimum wage hikes. But labour income could be higher because of the wage hikes.

So who’s right? Should Canada and Ontario, in particular, be supporting small business more or should they continue propping up the poorest of employees in the country. Business owners in Ontario aren’t absorbing the wage hikes themselves. They are cutting back staff.

Shannon Leslie Stewart won’t be hiring a student this summer to work in her consignment store, Covet Community Closet in Stratford, Ont. Stewart is also putting off plans to offer employee benefits and has changed her salary structure to include commission, instead of paying above minimum wage as she has in the past.

“Not hiring a student was a hard decision for me to make,” says Stewart. “I love having young students and giving them their first job experience … It might be a good social investment, but I have to think with a business mind.”

Stewart is among thousands of business owners in Ontario making changes to adjust to the higher minimum wage. She says she isn’t opposed to paying employees more, but the rapid increase has left her struggling to cover the costs.

Worker advocates argue the increase was necessary to keep up with slow wage growth for low-paid workers and believe the extra income will be spent, helping boost the economy. Some have raised concerns about businesses such as Tim Hortons franchises that have reduced employee benefits and cut back paid breaks to help offset the wage spike.

The labour market has turned ugly.

Businesses are determined to maintain profit margins and struggling low-paid workers are getting caught in the crossfire.

Deena Ladd, co-ordinator at the Workers’ Action Centre in Toronto, told the Globe and Mail business owners should welcome higher wages and maintain benefits to attract and retain good employees.

“You need to be sharing the profits that you make with the people who work for you and make sure that when they go home at night they are able to pay their bills,” Ladd says. “This is how our economy prospers – when everyone does well and not just the [business] owners.”

Ladd worries some business owners are blaming a higher minimum wage on higher costs when there are other factors such as inflation, higher commercial rents and fuel prices.

“That’s the whole point; wages haven’t increased at the same rate,” she says.

She cautions companies about slashing employee benefits, citing the recent controversy around Tim Hortons. “We are customers. We can also march to the business that supports decent wages and working conditions,” she says.

Daniel Bitonti, spokesperson for Steven Del Duca, Minister of Economic Development and Growth, told The Star the province has cut red tape for businesses and chopped electricity bills by about 25 per cent, also trimming companies’ tax rate from 4.5 to 3.5 per cent.

“In this time of significant transformation — as Ontario businesses respond to emerging customer demands and technological changes — we will continue to stand with our businesses as they adapt,” he said.

Significant transformation? This is a train wreck! Rising minimum wages, skyrocketing hydro rates and many other challenges have businesses backed into a corner. And consumer confidence is taking a hit, too.

The Canadian Real Estate Association posted this on their website:

“According to the Conference Board of Canada, consumer confidence in Ontario was down in January 2018.

“Sentiment about the job market was down in January compared to the previous month. The vast majority of people still expect employment levels to hold steady, although this level declined in favour of those expecting deterioration in the labour market over the next six months.

“A vast majority of Ontarians expect their budgets to hold steady over the next six months. The number of consumers who felt their budgets would be worse off in six months was up slightly in January as those expecting an improvement ticked downward.

“The percentage of consumers who thought it was a good time to make a big-ticket purchase declined in January. Those expressing pessimism numbered greater as the percentage that expressed uncertainty also trended downward.”

A CBC report pegged job losses at 88,000 in January, pushing the national employment rate to 5.9 per cent.

In Ontario, with its minimum wage hike in January, employment fell during the month, due to losses in part-time work. The unemployment rate in the province was little changed at 5.5 per cent as fewer people participated in the job market.

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Jeff Wilkinson

About the Author: Jeff Wilkinson

Jeff Wilkinson  is a Senior Politics Reporter at Debate Report covering provincial and national politics, . Before joining  Debate Report, Jeff worked on several provincial campaigns including Jack Layton. Jeff has worked as a freelance journalist in Toronto, having been published by over 20 outlets including CBC, the Center for Media and VICE.com.

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