In the Article by the Journalist’s Resource entitled, “Raising the federal minimum wage to $15 an hour: What the research says, The JR Guide to the 2020 Democratic Policy Proposal,” the research fails to show the impact on the self-employed and small business owners. A large minimum wage increase causes a shift in the economy for the smaller businesses who may not survive a mandated increase in costs to their bottom line.
The primary policy being discussed is related to setting a minimum wage and its effect on the employment market. The author discusses research around the employment rates compared to the change in minimum wage in nearby markets. The biggest impact for low wage workers seems to be the teenaged worker category. This is not a surprising statistic, but it poses the question, if an employer was to choose between hiring a teenager with no experience, and a skilled worker, they would most likely choose the skilled worker if they were able to pay the same rate of pay. Just because the minimum wage increases, does not necessarily mean the employer has the ability to shift the wages of their entire workforce. The fact is, as the minimum wage increases, so does the cost of operation, and therefore, the cost of whatever service or product will also increase. This increase would also include the cost of living. In other words, the wage becomes relative to the costs in the world we live it.
As a small business owner, the increase in the minimum wage could potentially wipe out the business. In small rural areas where people are struggling to get by paying their employees as it is, those small business would potentially not survive the increase. The larger business who have the resources and ability to flex, will come out on top. As an example, the General Manager, Norah Fountain of the Muskoka Lakes Chamber of Commerce in an article in the MuskokaRegion.com about the need to adjust to the new minimum wage. Please find the link https://www.muskokaregion.com/opinion-story/8047815-help-needed-for-minimum-wage-impact-says-muskoka-chamber-manager/
Although this is only one member of the Ontario Chamber of Commerce, I think it is safe to make the inference there are other jurisdictions within Ontario with the same struggles.
Now, the research in the Journalist’s Resource article noted above, does show that a smaller hike in the minimum wage offers stability while increasing the wage, however, the issue of inflation and passing on the cost to the consumer remains.
Merrefield, Clark (2019, November 14). Raising the federal minimum wage to $15 an hour: What the research says, The JR Guide to the 2020 Democratic Policy Proposals. Journalist’s Resource https://journalistsresource.org/studies/economics/federal-minimum-wage-research/
Fountain, Norah, (2018, January 11). Help needed for minimum wage impact, says Muskoka chamber manager. MuskokaRegion.com https://www.muskokaregion.com/opinion-story/8047815-help-needed-for-minimum-wage-impact-says-muskoka-chamber-manager/
Tiffany Johnston 
Hi Tiffany,
I really enjoyed reading your blog post! You highlight many important concerns regarding raising the minimum wage. As you stated, it is particularly impactful for small business owners as they may struggle to adjust to this mandate. Furthermore, you acknowledge the direct impact that this will have on consumers as prices of commodities will inevitably increase, raising the cost of living. In contrast, what do you think are some of the concerns are for lower-income workers? What are the impacts of not raising the minimum wage for those individuals?
The article you provided as an example suggests many concerns that could be potentially detrimental in the future. That is, not only could this lead to significant job loss and inflation, but also it may motivate employers to incorporate automation as an alternative. Moreover, unemployment due to recent innovations in automation has rapidly become a concern for many. Do you think that raising the minimum wage would accelerate this problem?
Thanks!
Meghan
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Meghan,
Thank you for taking time to read and provide feedback on my blog.
In commenting about lower-income workers, it is a tough topic to argue for or against. Keeping lower wages for those people means poverty, and other socio-economic issues that come along with that, like homelessness, potentially. However, those issues could remain as the lower wage is increased, especially if the increase is not done slowly, allowing the world around us to catch up. The cost of living increases as the wages increase. The cost of commodities increase as the wages increase. The cost of services increases as the wage increases. Costs related to life increase as the wages increase. A good way to deal with this issue may be to aim for a living wage. Although the living wage may be on the lower side, it should be relevant and stable to the current economic outlook.
With respect to your question about automation and how it relates to increasing the minimum wage – automation requires more skilled technicians to operate and maintain. The higher minimum wage for workers will make automation very inviting. The cost of automation could potentially lower the cost in operations less than if there were humans doing the job.
What are your thoughts on automation? I would really be interested in hearing more about your thoughts on this.
Thank you!
Tiffany
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Hi Tiffany,
Thank you for sharing your post with us, it is a very interesting topic! I have a part-time job just in Kingston. At the first glance, raising minimum wage does benefit employees, especially for part-time workers. However, I agree with you that increasing minimum wage would have negative impact on small companies and inflation on normal goods. More importantly, when minimum wage raise, the cost of labour force (input) increased. Thus, companies tend to hire less workers and directly cause the unemployment rate increased. It is absolutely not an ideal situation for workers, especially for unskilled workers.
In the post, you also mentioned that companies would prefer inviting automation as the wage increased. So I believe more unskilled workers would be gradually replaced by skilled workers as the workforce evolved to automation.
Overall speaking, I believe raising the minimum wage is a good thing, because it somehow reduced the property. However, negative influences from this change are unavoidable. And as automation becomes more popular, more unskilled workers would become unemployed. To reduce this circumstance, I believe the best situation is to train those unskilled workers to skilled employees through education (or operational training) .
Regards,
Caidong
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Caidong,
Thank you for taking time to read and post on my Blog.
I completely agree with your comment about training unskilled workers through education and operational training. I think the idea of hiring unskilled workers with the potential for training and skill building is crucial. Development of skills in the workplace, in my opinion, is how companies gain employees who thrive more and become more loyal. There is much to be said about building a workforce where there are realistic opportunities to grow. I know from my own experience, that I tend to work harder when I know the company i am working for believes strongly enough in my skills or potential skills that they invest in my future as much as I invest in theirs. How would you feel about having regular wage increases annually for years of service and merit rather than a hike in the minimum wage? I ask this because I think that people tend to work hard when they have an incentive to do so. Not to say that raising the minimum wage should be out of the question, but do you think there is any value in ensuring annual raises? Having people rewarded on a regular basis for years of service and hard work? Would there be any value in making those sorts of policies mandatory?
Tiffany
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