Is A $15 Minimum Wage Good For Business?
Strategies to entirely sweep labor reforms were put forward by the Ontario government. Appallingly, the most contentious of plans was the notion of raising minimum wage to $15 an hour by January 2019.
An argument ensued, premised on the fact that following the plan could put an end to many jobs of which more are overwhelmingly needed, especially for the youths. Whilst the counterargument was that the plan will boost the demand for the creativity of jobs.
# Enables growth drive
A 57% of the Canadian GDP is being accounted for by household purchases, which is an increase in shares of economic activities ever since 2008. The reason behind this was that, business investment, exports and shortages still have not made much impact.
House prices have been on an upsurge particularly in large cities were majority of the population lives. This is overriding more nonrefundable income and hampering the monthly budget necessary to make purchases from domestic and international producers.
When expensive households experience wage gains, a good chunk of it goes to savings and a good part of it leaking out of the economy. In contrast when households with low salary experience an increase in incomes, they spend everything at one fell swoop. Additionally, all the spending stays within the local economy.
# Productivity Inspired
Unexpectedly 30% of Ontario’s labor market, which is the largest in the country, has employees working at low wages, earning less than $15 an hour in 2016. Although some workers may possibly lose their jobs after the increase in minimum wages, bulk will receive a pay hike and eventually get back into the economy.
As businesses continue to rise, consumers will ever more increase their spending, hence, the urgency for more workers will surge to meet up with the rising demand of goods and services.
Most economists have the notion that, increasing cost will ultimately lead to increase in productivity, which will benefit businesses. According to Statistics Canada, Canada has long since been operating a low-wage economy for decades and even outsmarted the U.S. on low-wage work reliance.
Raising wages might be bad for some businesses and jobs, nonetheless the other enterprises that solely depend on low wage work will realize a step up in productivity, little or no turnovers, reduced recruitment and training costs.
There is an urgent need for change and a higher minimum wage will surely do the trick.
J C Loum
