Implementing Minimum Wage Over Five Years Will Reduce the Number of Jobs at Risk by 74%: Economic Analysis
Final analysis of Bill 148 reveals $12 billion economic problem that the Ontario Government must resolve
Peterborough, ON, Wednesday, September 27, 2017 - Today, the Peterborough Chamber, in collaboration with the Ontario Chamber of Commerce (OCC) and the Keep Ontario Working (KOW) Coalition released two major reports that broadly capture the challenges associated with Bill 148 and the concerns of the employer community.
The first report is the final economic impact analysis of Bill 148 by the Canadian Centre for Economic Analysis’ (CANCEA), which was peer-reviewed by Professor Morley Gunderson of the University of Toronto.
CANCEA’s analysis reveals that if Government were to do nothing other than implement the minimum wage increase over five years instead of in the next 15 months, jobs at risk would decrease by 74 per cent in the first two years.
The analysis also indicates that while the proposed changes will see $11 billion in wage stimulus flow into the economy in the next two years, a remaining $12 billion problem exists which will lead to jobs lost, added costs, and general damage to the Ontario economy.
“Today’s final report by CANCEA is clear, while the Government is correct to say that there will be a stimulus from Bill 148, it does not cover the $23 billion cost challenge for business in the first two years – a substantial amount that poses great risk to our economy and cannot be resolved through offsets alone,” said Karl Baldauf, Vice President of Policy and Government Relations at the Ontario Chamber of Commerce. “More must be done. The Ontario Government must resolve the economic challenges presented in Bill 148 through a combination of slowing down the implementation period, amending the legislation, and offsets. Business and Government must work together to avoid unintended consequences and protect our most vulnerable.”
The Keep Ontario Working Coalition and CANCEA released interim findings of this Analysis in August, ahead of final amendments being submitted for first reading of the legislation. To date, CANCEA’s work remains the only peer-reviewed economic analysis of Bill 148. In having been reviewed by Morley Gunderson, the work has benefited from one of the leading economists in Canada, who the Ontario Government has turned to on multiple occasions, such as during the Changing Workplaces Review which became the foundation for Bill 148.
“Our risk assessment of the Act is that there is more risk than reward for Ontarians despite the stated goal of the legislation in helping Ontario’s more vulnerable and the Ontario economy,” Paul Smetanin, President of CANCEA. “Given the risk of consolidating income and wealth inequality, putting about 185,000 people out of work, and the risks of small/medium businesses being exposed to their larger competitors, the unintended consequences are significant.”
In addition, the Keep Ontario Working coalition released a second report, The Flip Side of “Fair”, which showcases testimonials from employers and outline how they will be impacted by the legislation. The report gives a voice to those businesses who have felt excluded from the committee process and policy discussion around this legislation. The testimonials all share a common theme, that the minimum wage increase and labour reforms will have serious consequences for their business and their communities.
“I am an owner of three automotive oil change service stations, which I purchased for a significant amount. I employ 29 employees at my three stores. All are hardworking and live in the communities we serve.
We were on track to grow locations and further invest but for many reasons this new proposed legislation has put a stop to our plans. At our average wage, our labour percentage to sales is 32 percent. With the proposed changes, we would see this rise to 40 percent of sales. This is just not feasible to absorb. That leaves us with no option but to raise prices to adjust to the increase. The 16% increase in just basic wages means our prices will need to increase by at least 22% to manage this proposal properly.
My wife and I purchased the business on a set of income statements that had labour at a certain percent. Now that labour will jump, my business valuation will be reduced by 4 times that amount. Overnight, the government has de-valued my business. Bill 148 will impact financing thresholds and deter new entrepreneurs from purchasing existing businesses.”
- Owner, three local oil change stations
The KOW Coalition will continue to advocate that the government:
CANCEA FINAL REPORT
The Flip Side of “Fair”
For more on Peterborough Chamber advocacy on Bill 148
The Keep Ontario Working Coalition (KOW) is a broad-spectrum group of business sector representatives concerned with sound public policy to help produce jobs and grow Ontario. For more information please visit www.keepontarioworking.ca.
Association of Canadian Search, Employment and Staffing Services (ACSESS)
Canadian Franchise Association (CFA)
Canadian Federation of Independent Grocers
Food & Consumer Products of Canada (FCPC)
Food and Beverage Ontario (FBO)
National Association of Canada Consulting Businesses (NACCB Canada)
Ontario Restaurant, Hotel and Motel Association (ORHMA)
Ontario Chamber of Commerce (OCC)
Ontario Federation of Agriculture (OFA)
Ontario Forest Industries Association (OFIA)
Ontario Home Builders’ Association (OHBA)
Ontario Real Estate Association (OREA)
Retail Council of Canada (RCC)
Tourism Industry Association of Ontario (TIAO)
Sandra Dueck, Policy Analyst/Communications Specialist
Peterborough Chamber of Commerce
In a world of back to school and back to your regular work schedule after the summer of 2017, Members of Provincial Parliament return to the legislature to begin work on the fall session. It’s a session that will be under the watchful eye of the business community as Bill 148, Fair Workplaces, Better Jobs Act moves through the legislative process.
Over the past number of months the business community has pushed back on the government’s proposed legislation around minimum wage, scheduling, vacation and sick pay, and rules around forming unions, calling the sweeping changes “too much, too soon.” In isolation, these changes could be manageable, but for many small businesses, even those paying above the minimum wage currently, the combination of new requirements could be too much to overcome.
As we get closer to the end of the year, businesses are still left not knowing if these changes will go through on January 1st as designed or if the call to slow down the process will be heeded.
In mid-August the Ontario Chamber of Commerce and the Keep Ontario Working coalition released an
economic analysis on the proposed changes.
“The results of the economic analysis reinforce the concerns of fewer hours, fewer jobs that were presented at a roundtable we held with local businesses and Jeff Leal, the Minister Responsible for Small Business in mid-June,” says Stuart Harrison, President & CEO, Peterborough Chamber of Commerce. ”Bill 148 is too much, too soon and the uncertainty it presents to business has the potential to have significant impact.”
In their comments to the Peterborough Chamber, several businesses have said their expansion plans are on hold as they come to terms with how the multitude of changes in Bill 148 will affect their business in a very quick time frame. While other businesses have indicated the changes will force them to reconsider how they run their operations, the number of students they will be able to hire, or work within budgets.
So to recap what are some of the changes that will have the most impact?
Commentary on Bill 148 continues to be very important and we ask our member businesses if you haven’t already, tell us and your elected leaders how these changes will impact your business.
Email the Chamber:
Write your MPP and cc the Premier:
Honourable Jeff Leal, Minister
Responsible for Small Business
Honourable Kathleen Wynne,
Premier of Ontario