Written by: Michael Istiphan
A lot of people had mixed emotions when Ontario announced that the minimum wage would increase to $15 in 18 months. Some were happy with the increase, but others not so much, because of the effects it would have on the economy. For some who may not understand how things work, I’m going to discuss the impact the wage increase will have in the economy, and how it affects the spending power for consumers.
A dramatic increase in the minimum wage from $11.40 to $15.00 will also lead to an increase in the production costs for goods. For example: machine operators at a plant. Companies will have an increase in cost with no other direct changes therefore leading them to either decrease their production or increase their price for goods (assuming the market allows them to do so). Basic economics tells us that this will lead to a decrease in the amount of jobs and an increase in the cost of living. It’s become a common theme for provincial leaders to increase minimum wage to help “stimulate the economy” by putting more money into the hands of employees which would lead them to spending more. Personally, I wouldn’t be surprised to see the increase in the prices of goods before the wage increase comes into full effect.
At the age of 16, I got my first job working at a grocery store near my high school and I remember my starting wage was $9.60 per hour. Over the years, it’s been such an interesting topic to watch at how inflation in the economy has played a huge effect in the cost of goods. For example, many years ago it used to cost between $6-$7 to get a combo from McDonald’s, and today the cost of a combo comes out to around $10. It’ll be interesting to see how companies manage their operating costs and how the increase in minimum wage plays a role for students and adults looking for part-time and full-time work.
From a student’s perspective going into my third year in university, there’s still lots of time to finish my degree before starting to consider applying for full-time positions. It’s become extremely difficult for students to find a job once they’re done school, so it’ll be interesting to see what the job market entails for myself in a few years.