Not only does the minimum wage increase affect large corporations, small and local businesses in Ontario will also be impacted by this change. When it pertains to determining which small businesses are affected by the recent spike, it mainly depends on the industry that these businesses belong to. Industries such as retail, restaurants, and hospitality tend to pay their workers minimum wage (QuickBooks Canada Team, 2018). On the other hand, to be competitive, Businesses in many other industries such as healthcare, marketing, manufacturing, tech, and numerous others already offer their workers more than the minimum wage (QuickBooks Canada Team, 2018). Thus, for these particular industries, the spike wouldn't impact the cost and profitability …show more content…
significantly. Subsequently, the increase in the minimum wage will impact local businesses in Ontario in three essential aspects. These aspects are how they perform their business operations, their employees, and the prices of their goods and services. The recent minimum wage spike in Ontario altered how small and local businesses do their business operations. Many small businesses had to modify their business models in order for them to afford and adapt to the increase in minimum wage(QuickBooks Canada Team, 2018). For some businesses, the process of change was simple, where reducing their profit targets and taking extra payroll costs from their profits was an option. On the contrary, not all businesses can handle reducing their profits; as tight profit margins were already an issue for them(QuickBooks Canada Team, 2018). Therefore, these businesses needed to generate money from other places. The rise in the minimum wage in the past has led multiple studies to be done on the effects of that particular event.
Moreover, John Schmitt from the Centre for Economic and Policy Research in Washington, D.C. created a comprehensive report based on those studies. The report discussed how small businesses may have to raise prices or increase sales targets as part of their plan. Most importantly, the report also mentioned how boosting productivity and reducing turnover were the most popular ways small businesses used to deal with increases in minimum wage (Schmitt, 2009, p. 23). Consequently, small and local businesses in Ontario will most likely implement these two strategies when it comes to their business …show more content…
operations. Employees are another aspect for small businesses that are impacted by an increase in minimum wage.
Generally, employers decide the amount of money they offer to their workers based on skill and the work done. Then again, employers also try to select rates that boost the chances of retaining their employees. Usually, jobs that involve more training and staffing costs tend to pay more than others. For these businesses, they need to focus on retention to ensure that they don't lose too much money in staffing, training, and recruiting costs. Moreover, the most noticeable change from the spike would be for employees who earn minimum wage having a boost in spending power (Bouw, 2018). Small businesses that offer minimum wage may have to increase employees' wages as an attempt to prevent the loss of their workers to other available opportunities. Being that, this reflects the change in the perspectives of employees on what is considered to be a lucrative and attractive offer in terms of what is proposed. For instance, offering $15 as a wage may be considered competitive in 2017. That is due to Ontario's minimum wage being less than $12 that year. However, in 2019 when the minimum wage increases to $15, that rate is no longer that lucrative nor attractive. Therefore, small businesses have to adjust and reconsider how they measure job value. Otherwise, as has been stated above, they may face additional training and hiring costs(QuickBooks Canada Team,
2018). Another way small businesses may have to deal with the shift in minimum wage is by eliminating jobs. According to Ontario's Financial Accountability Office," the province may lose 50,000 jobs due to the change"(QuickBooks Canada Team, 2018). In addition, TD Bank estimates that 90,000 jobs will be lost by 2020 in one of their latest reports (The Canadian Press, 2017). That is due to business owners being forced to cut hours or reduce staff to compensate for the increased labor expenses (Bouw, 2018). Thus, a spike in minimum wage could potentially lead to some employees ending up unemployed. An increase in minimum wages can result in workers being more productive. Helmi Ansari, the Chief Executive Officer of a small business with locations in Guelph and Cambridge states that if his workers don't make enough money to survive, they end up spending their days "Thinking about how they're going to pay the bills and put food on the table" (QuickBooks Canada Team, 2018). Having higher wages would relieve employees from a huge stress that would be preventing them from being more productive in the workplace. By the same token, a worker's morale could be heavily impacted by the rise of minimum wage. It is important to state that all employees in a small business are affected by an increase in minimum wage, regardless if some of them already earn wages above it. Experienced Employees, who earn above the minimum wage may find the situation to be unfair (Root , 2017). Toronto restaurant owner Monte Wan understands why these workers would feel this way. "They worked hard to get where they are. It's like their hard work didn't pay off"(Bouw, 2018). Employers of small businesses usually try to please their experienced workers by offering them a small bump up in pay. Bottom line, a drop in workers' morale in a small business is caused when minimum wage employees receive an increase in pay and others do not.
Him having this experience made him bring up a point saying, that every business with minimum wage employees has to respond to this one way or another and i quote, “ Those who say raising the minimum wage will have no effect on employment are dreaming.” For example, if the minimum wage is raised to $15, for most businesses like Brodsky’s, that will be the entry level pay which will cause them to cut certain things out whether its employees, supplies, etc. to stay in business. Thus, making it obvious that raising the minimum wage will cost jobs one way or another. But on the other hand, why have a business if they can’t keep up with the demands of the employees? Why should a person pursue a business if they can’t pay their workers the money they deserve, considering the majority make a living off of the job. Do people ever think about just simply making changes to the business, whether it’s adding a new feature or upgrading the overall quality of it. For example, something like a restaurant can add in special day of the week where they serve a particular dish just on that day, which will bring in more profit because of supply and demand. Another example, for business more like a store, the owner or employer can expand their range product sold in the store; if they sell hats, shoes, and clothes, maybe then they could range out and add in book bags for the school time or even accessories. There is always alternatives to bringing in more profit when needed, instead of just cutting
Mascella, A., S. Teja and B. S. Thompson. "Minimum Wage Increases as an Anti-Poverty Policy in Ontario." Canadian Public Policy 35.3 (2009): 373-379. Print.
Partridge, Mark D. and Jamie S. Partridge. "Do Minimum Wage Hikes Reduce Employment? State-Level Evidence from the Low-Wage Retail Sector." Journal of Labor Research Summer 1999: 393. EBSCOhost MasterFILE Premier. 22 April 2001 .
Many people can think back and remember what it was like to put in an application for that first job and be presented with a position. Taking that position represents adulthood and is a very exciting time for a young person. All first jobs usually start with a minimum wage. Minimum wage is the minimum an employer has to pay an unskilled worker based on the regulations set forth by the Fair Labor Standards Act (FLSA) that was originally established in 1938. As people think back about their first jobs they can also remember what the minimum wage was when they took that position. Minimum wage is only increased based on the cost of living from the prior year. If the previous year shows an increase then the minimum wage will increase in the coming new year. Sinegal (2009) stated "The increase in the minimum wage is long overdue. Paying your employees well is not only the right thing to do but it makes for good business". Based on the cost of living we show for the year of 2009 minimum wage will not increase for 2010. Minimum wage is currently at $7.25 per hour. Most people who start at this rate are young people who are in high school or college and are working a few hours to help pay for school. After they graduate they can apply for better jobs and move on. People who live in areas without growth, single mothers trying to raise their children, and uneducated people are working more than one minimum wage job to make enough money to pay their financial obligations. While the cost of living did not increase, minimum wage is low because no increase is planned for 2010 a...
Small businesses operate with little capital and net profit margin. Opponents argue the increase of the minimum wage affect the small business owners the most because they have a hard time paying employees. The oppositions believe increasing the minimum wage creates a market distortion (“Federal Minimum Wage”). It means the government intervention in raising the minimum wage causes a higher price floor that defines as the minimum price for the employees’ service. Because of a higher price floor, it reduces the employment opportunities and business profit. For instance, according to Mark Wilson’s “The Negative Effects of Minimum Wage Laws”, he writes about a study conducted by Barry Hirsch and his co-authors about the methods of how employers adjust to a newly imposed minimum wage. In their study, employers cushion the impact of the minimum wage increase by “requiring better attendance, insisting that job duties are completed faster, imposing additional task on workers, minimizing hours worked with better scheduling, and terminating poor performers quickly.” In addition, businesses try to push the rising cost to consumers, which result in increased competition from imported goods. This makes them less competitive. The negative side of increasing the minimum wage affects employers, employees, and customers since study suggest every dollar bump to minimum wage workers come from the business owners’ or clients’ pockets; in addition, employers impose more job responsibilities to
The federally mandated minimum wage has been a divisive political issue in American politics since it first came into effect in 1938 under the Presidency of Franklin D. Roosevelt. FDR advocated for the minimum wage with the argument that “all but the hopelessly reactionary will agree that to conserve our primary resources of manpower, government must have some control over maximum hours, minimum wages, the evil of child labor, and the exploitation of unorganized labor” (Greene 2013). This idea led to the passage of the first minimum wage law in American history, twenty five cents an hour (Greene 2013). Prior to the passage of this law, several state minimum wage laws had been struck down as an unconstitutional prohibition of workers’ rights to set the price for their own labor. However, in 1941, the Supreme Court case U.S v Darby Lumber Co upheld the federal minimum wage, overturning the precedent it had set for state level minimum wages. The Court dismissed the argument that Darby Lumber did not engage in interstate commerce based on the commerce clause and stated that Congress had the constitutional right to regulate interstate commerce, along with intrastate commerce that directly affected interstate commerce (U.S v Darby Lumber Co.1941). Justice Stone, writing for the majority stated that Congress
What is it like to live on minimum wage in America? It has never been fun, but it is
The NALS indicated a very strong relationship between low skilled workers and low wages. These statistics show that achieving a moderate to high level of functional literacy is crucial for an individual to escape low wage jobs. Approximately 65% of workers who took the NALS scored at level 3, the middle category, or higher. Of this 65%, only 3.5% of men and 6.5% of women earn low wages or live with a low income family (Lerman).
Equally, a higher minimum wage attracts new players in the competition, making the hiring process hard and unguaranteed. On the demand side of the market, if the minimum wage exceeds the normal market wage, considering the law of supply and demand, some workers will lose their jobs or have their hours cut (The minimum wage delusion/Forbes Magazine). The evidence from past directs that increase in the minimum wage has led to a small percent of decrease in employment of low-skilled workers slowly rising unemployment (Mises
They have long argued that requiring employers to pay workers more will force many of them to either cut back on hours, put off hiring, or lay off employees in order to keep their labor costs down. “Raising the minimum wage will kill jobs and stifle economic output,” NFIB Manager of Legislative Affairs Ashley Fingarson said earlier this week, as the organization sent a letter to the Senate urging lawmakers to vote against a bill that would raise the minimum hourly rate from $7.25 an hour to $10.10 an hour. (The Washington Post) Many businesses will be hurt by the increase in wage rate due to lack of expenses of paying employees more, causing businesses to lose money and even go out of
To begin, the ideas of small businesses and unemployment rates walk hand especially for the owners themselves when deciding to hire or fire their workers. Many economists believe that increasing the minimum wage will be able to reduce the percentage of unemployment rates slightly, which here in America is a big deal. One researcher, Paul Krugman a Keynesian economist states, "There just isnt any evidence that raising the minimum wage....would reduce employment. And this is actually the solid result, because there have been a lot of studies." Krugman displa...
Many areas could be affected by a change in minimum wage, but potentially the most drastic change would be to unemployment. Advocates of a higher minimum wage insist that a raise would significantly decrease the unemployment rate in the United States and improve the quality of living. However, there are conflicting opinions on this. Higher minimum wage would mean higher labor costs for business owners, thus making it more difficult for employers to maintain the amount of workers they have, let alone add new employees. Raising the minimum wage does not increase the value of the worker's labor; it increases the cost of the worker's labor. As a general rule the more something costs, the less of it people will buy. This is true of not only consumer goods but also of workers in the labor market.Many jobs come from large corporations but they also come from small businesses.There are 23 million small businesses in America, accounting for 54% of sales and 55% of jobs. Raising the minimum wage means that all of these corporations and businesses will have to dig deeper in...
Many critics claim that that raising minimum wage increases unemployment, especially for unskilled workers, and harms small businesses, including grocery stores and restaurants. The argument declares that companies such as these rely mostly on unskilled workers for labor, and if the minimum wage increases, then their profits and, therefore, hiring would decline, creating a...
For the past three decades minimum wage has been seen to rise several times. Only helping some but more than anything harming most. So who are the ones feeling the effects? Certainly not the wealthy, it never is them, mainly it would be the working poor, unskilled and teenagers. Raising minimum wage would cripple the public even more than what it would actually help.
In a published interview with Saiful Islam Khan, MD at Essential Clothing Ltd, it was heard that if the minimum wage increases to BDT 10 thousand then one-third of the factories might shut down because it would be tough for them to survive specially for the small and medium sized companies. On the other hand, it was also heard that the companies or factories can still absorb additional 20% increase of the minimum wage rate without causing the disruption in such factories. he article 123 of the Labour Act states that workers should receive their monthly wages by the end of 7th day. However, it is still seen that workers are not paid accordingly. This is the main reason for which the workers try to form a trade union in order to fight such exploitations.