The Unsound Ontario Minimum Wage Law
Another fact that should be borne in mind, namely, that the shop we bought was literally a sweat-shop, and that sweat-shops are always made up of inefficient workers who cannot get a job in a high-grade shop. Wages in what are known as "inside shops," run by the factories themselves, always start where the sweat-shop wages leave off; thus the wages that were being paid in this shop at the time we took it over, must not be confused with the wages paid in the inside shops of the large clothing manufacturers of Cincinnati.
- The Golden Rule In Business, Authur Nash, 1923.
Minimum wage is the lowest hourly wage payable to most employees that is permitted by law. In Ontario, with some exceptions, a worker must be paid no less than $11.00 per hour (before deductions), if the employee is paid an hourly wage.
Minimum wage legislation goes back to New Zealand when enacted in 1894. In 1896, the Australian state of Victoria followed, then Great Britain in 1909, and in the years after some European countries also enacted minimum wage legislation. Massachusetts became the first jurisdiction in North America to enact some kind of minimum wage law in 1912.
Canada saw "Fair Wage Policy" in 1900, and the Provinces eventually all enacted some minimum wage law, the last being Prince Edward Island in 1959 (women) and 1960 (men). The short lived United Farmers Of Ontario government legislated the Minimum Wage Act of Ontario in 1920.
In Ontario, as in other jurisdictions, only women were paid a minimum wage by law in 1920. The thinking seems to be that women needed the government to protect them from low wages because women were not part of labour unions that granted protection to men. By 1925, things had changed.
[Why could women not form labour unions like men did? Why did the existing labour unions not allow women to join them?]
Men were given a legislated minimum wage in 1925 in Ontario by the Conservative government; however, this minimum wage was apparently higher than the minimum wage for women. The thinking this time appears to be men needed a higher minimum wage than women because men were the primary income providers for households.
[Why was there a legislated minimum wage for men when men have the labour unions to protect them against low wages? Why is the government legislating a lower wage for women in 1925 when in 1920 the government legislated a minimum wage for women to prevent women from being paid a low wage?]
Following decades of changes to minimum wage in Ontario, we are at this point in 2014:
Minimum Wage Background
The following policy objectives are given consideration when adjusting the minimum wage:
Fostering economic viability;
Minimizing potential adverse employment/economic effects of increases;
Encouraging participation in the labour market – workers should be better off working than being on social assistance;
Ensuring that workers' earnings are not diminished by rising inflationary costs;
Increases should be viewed by labour and employer stakeholders as fair.
The first "policy objective" is a vague political ideal that is not a logical reason for minimum wage law.
The second "policy objective" admits increases in minimum wage levels have an adverse effect on employment and the economy.
Why is the level of social assistance not lowered instead of raising the level of minimum wage to make workers better off working?
Minimum wage levels have never been raised with the rate of inflation. The wages of all workers is effected by rising inflationary costs, not just minimum wage earners.
Government increases minimum wage through legislation, usually because of the political involvement of labour unions, and employers have no say in the law. Employers pay the wages of workers, not labour.
If one reads through the statistics provided by the Ontario government, one will see the data shows the majority of minimum wage earners are between 15 and 19 years of age, are the son or daughter in the household, have some high school education, and work less than 35 hours per week. This means most minimum wage earners in Ontario are likely high school students, living at home, working part-time jobs. The majority of minimum wage earners are not workers supporting themselves or their families.
In terms of age, the youth stand out as a group among minimum wage earners. Youth in the 15- 19 years age group are only 4.9% of the total workforce but they form a solid 42.1% of the minimum wage workforce.
The majority of minimum wage earners are dependent working age children (a son or daughter living in a family home), whereas a minority of minimum wage earners are couples.
Incidence of minimum wage work among people with some high school education (i.e., not completed high school) increased significantly from 2006 until 2011. This group was consistently more likely to be employed at the minimum wage than all other groups, for every year during the 1997-2012 period.
Nearly seventy percent of minimum wage earners work part-time, i.e., less than thirty-five hours per week. Only thirty percent of minimum wage earners work full- time hours, i.e., thirty-five hours or more per week. The largest group of minimum wage earners, one in three, works between fifteen and twenty-nine hours per week.
The promotion and support of minimum wage law in Ontario is not based on sound evidence or reasoning. Minimum wage may benefit some of those who are employed, but is a detriment to those who are unemployed. However, none of this matters.
The only question is: it is moral for the government to eliminate freedom of contract, and use force against employers and employees by legislating minimum wage law?
I would like wage law in Ontario to be abolished.
In other days - days very far from being old - the state had no higher nor broader conception of its duty than that of protecting the individual from assault upon himself; inroads upon his property and revenue, of keeping legal peace, of defining limits beyond which the individual should not pass.
- The Golden Rule In Business, Authur Nash, 1923.
© Trevor Dailey
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