Ontario,s Minimum Wage Still Struggling To $10

staff reporters

It's time to take the politics out of setting the minimum wage by striking a commission to review the rate annually and possibly link increases to inflation, says Ontario Progressive Conservative Leader John Tory.

Tory said he opposes the NDP's push to boost the minimum wage to $10 hourly but agreed the current level, rising to $8 next week, is too low.

Finance Minister Greg Sorbara told the Toronto Star that Ontario's "working poor" will get help from the province in the months ahead but shouldn't expect the minimum wage to rise to $10.

Tory called for any changes to the minimum wage to be made after consultations with business and social justice groups

"We clearly need a better process than one where, once in a while when a government feels like it, they decide to adjust the minimum wage," he said.

Asked if minimum wage should be linked to inflation, Tory replied "I'm not closed-minded to that" but stressed that any increases have to be measured against their impact on the broader economy.

NDP Leader Howard Hampton agreed with Tory that minimum wage should be linked to inflation but said his idea of a commission to review the rate annually is "an attempt to avoid the issue" of a $10 minimum wage.

"It's not a living wage, it doesn't need any more bureaucratic processes or study, it needs action," Hampton said.

Both Tory and Sorbara have warned that suddenly increasing the minimum wage to $10 would force some employers to cut staff. The government has predicted, based on recent economic studies, that up to 66,000 jobs could be lost if it were raised to that amount.

The finance ministry says the government has not commissioned or released any studies of its own on the impact of raising the minimum wage. Officials said yesterday they arrived at the job loss figures after reviewing recent Canadian studies in academic journals that found a 10 per cent increase in real wages can result in job losses ranging from 1 per cent to 4 per cent, with a median figure of 2.5 per cent. The finance officials then estimated a jump in the minimum wage to $10 would cause job losses of between 21,000 and 66,000.

A range of economists and social policy experts contacted by the Star yesterday agreed an overnight $2 hike to the minimum wage would shake up the job market in Ontario, but they weren't aware of any studies that back up the government's job-loss projections.

"There's no question there would be some impact on employment levels, particularly with such a big increase," said social policy consultant Richard Shillington, a statistician who worked on a 2006 Toronto task force on income security for low-income adults.

"But a lot of that would be what I call `sticker shock,' among employers," he said, referring to a similar reaction consumers have to sudden price hikes. "The question would be to determine the true impact."

Since economists are split on how the minimum wage affects jobs, Shillington and others say the way to settle the issue would be to strike an independent body to monitor the impact.

The government has released no information to show that last year's 30-cent increase in the minimum wage to $7.75 from $7.45 caused any job losses, Shillington said.

So instead of a modest 25-cent increase to $8 next week, Shillington thinks the government should try a 50-cent hike and use the commission to monitor what happens to jobs.

Douglas Peters, former chief economist for TD Bank, also doubted the province's dire job-loss projections.

"How do you affect the job numbers that accurately? You have to put an awful lot of assumptions into the calculation," Peters said yesterday.

Like Shillington, he also likes the idea of a commission to track the impact of minimum wage hikes and thinks a 50-cent increase this year would be a good start with annual 50-cent increases after that.

The Liberals have already boosted the minimum wage 17 per cent in a series of small raises since taking power in 2003 after the previous Conservative government froze the rate at $6.85 for eight years. There has been no discernible economic fall-out from those increases.

"We are looking at a more comprehensive approach to helping out Ontario's working poor and that includes adjustments to the minimum wage based on a variety of factors, including economic growth and rates of inflation," Sorbara said.

Simply raising the minimum wage on its own will be of "scant help" to the working poor but Sorbara declined to discuss specifics, emphasizing any changes would have to come in a provincial budget this spring.

Sorbara is unlikely to take action until after federal Finance Minister Jim Flaherty introduces his budget on March 20.

Sources say there could be measures in the federal budget to assist low-wage earners, such as an adjustment of the threshold for paying income taxes.

If Ottawa moves in that direction, Queen's Park will almost certainly follow suit.

Proponents of the $10 minimum wage note that just 29 per cent of low-wage jobs are in small business with the rest at fast-food chains, major retailers and other big employers with deeper pockets in an era of growing corporate profits.

Tory's promise for a minimum wage review commission, possibly including welfare rates, came in a speech to the Registered Nurses' Association of Ontario, which supports a $10 minimum wage on the basis that income is a key determinant of good health.

His change in tack from opposing the $10 minimum wage could force Liberals to be more flexible on the issue with a provincial election looming in nine months, said association executive director Doris Grinspun.

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