Ontario's communist leader has done it again

An op/ed from the CBC:


Of course businesses were going to announce a reduction in hours in response to the news of Ontario's minimum wage hike. Of course prices were going to go up. Of course employers were going to claw back some staff benefits to make up for what will effectively be a 32 per cent wage hike over less than 18 months.

In other words: of course businesses were going to act like businesses.

Predictions of wide-scale job losses aside, it will be a long time yet until we see the true economic impact of Ontario's — and Alberta's — decision to raise the minimum wage to $15 per hour (in 2018 in Alberta's case, and by 2019 in Ontario's). But one thing is already clear: employers will not just accept these changes and move on, out of some storybook fidelity to goodness and charity.

Many employers — particularly those with mom and pop operations in rural areas — will have to cut staff or raise prices just to keep the lights on. Others — such as, say, a couple of Tim Hortons heirs with a franchise east of Toronto — appear to be exploiting the minimum wage hike to squeeze a little more out of workers and conveniently deflect blame onto the Ontario government. But really, can we blame them? Whether the changes are born from necessity, greed or just smart business practice, the point is: This was entirely predictable.

Businesses exist to make money. Government should function on the expectation that corporations will act in their own economic self-interest. Instead, in the case of Ontario, officials feign shock and outrage when a business tries to maximize profits, and release silly statements like the one Premier Kathleen Wynne did Thursday afternoon, accusing one of the vacationing Tim Hortons heirs of being a "bully" for eliminating paid breaks and other benefits.

Sure, eliminating paid breaks is not very nice. But what, exactly, did the premier think was going to happen? Employers would just absorb the added costs? Dip into their own personal profits? OK, and maybe my prom dress still fits, too?

Every announcement of a minimum wage hike comes with some degree of blowback, though many poverty activists will claim it necessary in order to see to fairer wages for low-income workers (though according to Statistics Canada, the majority of minimum-wage workers live at home with their parents, and do not come from low-income households). The fact is, raising the minimum wage has shown to be, in many cases, a rather ineffective poverty-reduction tool. But it can be a good campaign tool in an election year and indeed, "$15 and Fairness" sounds a lot better on a mailer than "We will explore supplementary income transfers."

This is not to say governments should never raise the minimum wage. But to do it so dramatically in such a short period of time practically begs for an equally dramatic response from business. Ontario already passed legislation in 2014 to tie minimum wage increases to inflation by hooking it to the province's consumer price index, on the recommendation of an expert advisory panel. But instead of continuing to phase-in minimum wage increases gradually, as per the original plan, the government has decided to go with the lump-sum approach because ... oh, hey, election. Is it time for you already?

Granted, some employers — say, a couple of wealthy Tim Hortons heirs — are quite obviously playing a rather cynical game in claiming they've no choice but to cut benefits because of the new minimum wage. But businesses aren't charities. And smart policy on the part of government means implementing changes with the expectation that businesses will try to preserve profits. To expect anything else would be downright foolish.

Then again, this is the government that announced new rent control measures last year in an already supply-starved market, despite plenty of economic evidence that such measures only further dry up supply.

Was the expectation there that developers would nevertheless decide to build suddenly less-profitable rental housing, again out of a fidelity to goodness and charity? Where was Premier Wynne's letter calling the owners of RioCan Real Estate and Allied Properties Real Estate "bullies" when they opted against building apartments in favour of condos?

Meh, whatever: "Implemented rent control" sounds good on a campaign mailer, too.

Bottom line is everyone is playing just a little bit dirty here — save for the employees who are caught in the middle of the fight between the province and big business, and the struggling small business owners who are just trying to keep their operations afloat. Some employees will surely benefit from greater take-home pay. But those who lose hours, or benefits or their jobs will certainly not.

So boycott Timmies, fire Wynne, join your preferred anti-capitalism collective and so forth. Just don't pretend this isn't all going according to script. This is what happens when smart but tough-to-sell policies (such as indexed wage hikes or targeted tax benefits) take a backseat to easy-to-market solutions: the premier ends up in a trifling public spat with a couple of wealthy heirs, while some front-line workers are made to suffer the consequences.

 

There is one thing that people with $10 skills who are demanding to make $15 don't realize.
Eventually they will be out of a job and won't be able to find one.

Employers forced to pay more will expect to get more from their employees.
They will raise the requirements of the job expecting more productivity.
The people with $10 skills will be replaced with people with $15 skills.
Business will continue with less, more productive, employees.

 

If our supreme lesbian,,,,,,,,,er leader, grants a 32% wage increase to the floor sweeper, does everybody get a 32% increase?

Can I please have a 32% increase?

Hell no, only the worker bees get that. There isn't a company in the world that could afford it.

So, why waste your time and money getting an education when you can drop out of high school, make $15.00 an hour and live in a government subsidized apartment.

Communism. It worked so well in Russia.

 

So. Not so much. If they are firing it is one of two things. One. This actually takes them into the red. That one I understand. Two. It takes the owner under "Preferred payout and ROI". Owners who do this in a small business do tend to fail or at least have high turnover. Because it becomes obvious the boss is only concerned with getting what he demands out of it.

But yes. The comment on higher pay=higher expectations is true on its face. I pay WELL in my bars. But? I also expect amazing work for the premium I am paying (about 40% over other bars). But with that I also have about 5% of the theft other bars have. I can instate rules like "If I find theft that I can trace to shift 2 Wed? Everyone from that shift is suspended till we clear it up.". Know how fast the other people turn that person in. Usually before I even find it myself? Self policing because it effects them. And I mean theft as in more than a 5% variance when I audit the bottles the next morning as well. I have what was rung. What was in the bottle when I opened and the next morning. How many bottles of that are gone. I get "overpouring" statements from other employees. All comped drinks need nothing more than me or Red (Wife) or a manager approval.

But at the same time, I do not need to fire people or raise prices to pay that. Because I do not do business from a "WELL I NEED............ first. Then we can talk compensation after I get my required PAYOUT." And please, do not try the "Well most owners do not take a paycheck!". Unless you are living in the office, not eating, and walk everywhere? Your rent/mortgage, food and vehicle (assuming there is not an employed spouse/other) is the same as one. Because.......... that is what people spend paychecks on. The fact you do not write a check saying "Specifically named paycheck".............. (continued below in an effort to not write 10 paragraph single posts)

 

Now. Lets get into a bigger issue. So. My other business, the law firm, tells us what happens when wages rise too fast. Please follow.

So, Mr Fast food worker doubles from 7.25 to 15. The effect is not REAL on the price of the meal because new payroll does not equal that added to the price. It does in the end add to it, but not as much as people claim. So. Quick and dirty on this. 8 people sell 100 "items" an hour. If you add 77.50 to payroll over 100 items, to keep same profit? You need to raise it 77 CENTS not 7.75. Now follow below.

15 for base work, assume for ease no extra expectations, that was addressed above as correct. But. Now the AM on shift making 12 will want 5 over the workers. So we are @ 82.50 an hour or 83 cents as we do not use fractional pennies. Now assume the manager is making 15 now. 90 extra per hour or 90 cents an item.

Now it gets big and the calculations a little to complex to do dirty so I will stay general from here on. So now a Fast Food manager makes 22.50? My para who makes that NOW to start will want 30. I have to raise my rate (see why I cant go dirty, we are in production numbers not a per item and I pay Paras hourly so they get OT. I know I rock. ) I charge the FF owner now. So does his Accountant and Auditor. Because their grunts make 15 or more now (usually around 22+ around these parts). So lets guess that adds an extra 10k a month in service charges. 14 hours a day, 7 a week, 30 average days to one. Still only adds a few pennies.

But this is what is called the cascade effect. it is not just the employees of that location. It is all their support as well.

That said. This tends to only happen when you smash it up "RIGHT NOW RIGHT NOW". Most states did a smart thing. They are gradually, over a period of a few years, raising it from X to Y.

Now, a national raise to 15 has a flaw. Here it is, and this is my final point. 15 in NY is not 15 in KS. In KS you can live on 31k. Even at 15 in NY it is hard. A dollar is not an identical dollar in different parts of a state, let alone nationally.