Tory's minimum wage commission likely a good idea

It's too soon to tell, but chances are that one of the big-ticket issues in October's provincial election will be the province's minimum wage law, and more particularly the demands we're hearing from some politicians, labour leaders and the province's biggest newspaper that it should go up 25% from its new level of $8 an hour.

At present, both Premier Dalton McGuinty and Conservative leader John Tory have rejected so massive an increase, but Tory went so far as to concede that some adjustment is necessary and a better process is needed to determine future increases.

"The status quo is not viable," he told members of the Registered Nurses' Association of Ontario. The nurses are backing a New Democratic Party proposal to boost the minimum wage to $10 an hour, a proposal that has been heartily endorsed by The Toronto Star.

Tory remains opposed to that big an increase, expressing concern that such a rapid boost would force employers to cut staff. He has instead proposed a commission that would consult broadly with business and social justice groups annually and decide whether the minimum wage, which only rose 25 cents from $7.75 an hour, should be changed to reflect economic conditions.

NDP Leader Howard Hampton, who says the working poor need help from a higher minimum wage now, quickly called Tory's suggestion "an attempt to avoid the issue."

Meanwhile, Finance Minister Greg Sorbara has suggested that in the neighbourhood of 66,000 jobs would be lost if Ontario immediately raised the minimum wage to $10 an hour.

In an editorial, the Star said the minister "was clearly using scare tactics ... in his attempt to defend his government's policy of allowing only tiny increases in the base pay."

Sorbara was quoted as saying such a large jump in the minimum wage "would have a significant negative impact on employment. The prospect of 66,000 jobs could be at risk."

The Star says their arguments "are based on questionable assumptions," adding: "At the same time, they avoid the real issue of whether full-time workers should be living in poverty in a province as rich as Ontario."

The Star editorial said Sorbara appeared to be basing his 66,000 figure on some undisclosed academic studies.

"But neither Sorbara nor his finance department cite other studies which show that increases in minimum wages have almost no effect on job levels," the editorial said, asserting that studies by Princeton economists David Card and Alan Krueger found little or no impact on employment due to increases in the U.S. minimum wage (which happens to be well below Ontario's).

The Star noted that studies in Britain have come to the same conclusion, "as has a study on the effects of the almost $3 gap in the minimum wages of two bordering U.S. states, Washington and Idaho. While the latter kept its minimum wage at $5.15, the former raised its in steps to $7.93, the highest in the nation. And the result? No noticeable differences in employment growth or overall performance ..."

"And they should also ponder the notion that a fundamental flaw in their argument is that most minimum-wage jobs are in sectors where it is difficult, if not impossible, to cut many jobs. Most minimum-wage workers are employed by large service sector firms. The crucial word here is 'service.'

"In reality, a firm in the service industry that provides lousy service will lose business to competitors who keep their customers happy," the editorial contended, adding: "Hotels are not going to satisfy their guests by cutting back on staff and providing dirty rooms." It also asserted that grocery stores would lose business to competitors "if they cut back on cashiers, and make customers wait in even longer lines." Nor could fast-food outlets survive long if they didn't have enough staff to serve customers quickly.

As we see it, a $10 minimum wage would have virtually no impact in the supermarket sector, where most of the stores have long been unionized and the non-union stores have to provide similar wages as a means of keeping the unions out.

On the other hand, we're inclined to agree with Tory and Sorbara that an immediate increase to $10 could have a major negative impact in some labour-intensive areas such as agriculture and textile manufacturing.

Perhaps Tory has come up with a suggestion that's well worth considering.