Minimum wage hike a 'balancing act' for region

The province's plan to increase minimum wage to $15 an hour by 2019 is being viewed as a generally good thing, but needs to be balanced with the potential negative consequences especially for small businesses, critics say.

And some analysts believe the overall financial and social effect of a higher minimum wage will be minimal.

The community services commissioner for the Region of Waterloo, Douglas Bartholomew-Saunders, told CBC Kitchener-Waterloo that anything that increases the income level a low-income household is a good thing.

"But on the other hand there's also the balance of 'is that increase going to negatively impact the employer,' or 'is the increase going to result in higher costs in goods and services' so that everyone bears the burden of the increase," Bartholomew-Saunders said.

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"It's a delicate balancing act that has to be considered moving forward."

Bartholomew-Saunders says the living wage for the region is roughly $16 an hour, so this provincial increase is closer to that target, especially when compared to the current minimum wage of $11.40.

Another challenge, he said, is how the increase will affect people on Ontario Works. It could put some low-income earners over the maximum income for eligibility. Others people may receive a lower subsidy for things like rent or day care.

Community services will be paying close attention how incomes actually change and how clients are directly affected, Bartholomew-Saunders said.

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One concern is that part-time workers might have their hours cut when the mandatory wage increase comes through, ensuring their incomes don't actually go up.

Minimal impact

Miana Plesca  an assistant professor of economics at the University of Guelph, agrees that the increase is mostly a good thing, but doesn't think it will have a huge impact on reducing poverty.

Some workers will see their wages go up, while others may see their hours cut and others may be laid off, Plesca said.

"We won't see big impact on poverty," she said, largely because most minimum wage earners are "very young or very old."

The impact will less likely be felt by a single working mother, Plesca said.

She also points out that many wages in Ontario were already closer to $15 than the current minimum wage, so aside from a few sectors there won't be a big impact.

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The higher minimum wage could be a challenge for some small businesses, she said, but shouldn't hurt larger companies.

And even if the wage boost gets passed onto the consumer, "it's not to the point where it will make a big difference," she said.