Social Policy in Ontario

Should Toronto have a higher minimum wage than the rest of Ontario?

Posted on December 3, 2014 in Debates

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TheStar.com – GTA – With urban living costs soaring alongside urban inequality, some U.S. cities are starting to set their own minimum wages to help poor residents. Should Toronto follow suit?
Dec 02 2014.   By: Eric Andrew-Gee, Staff Reporter

It’s a tale of two cities. The average price of a new single-detached house in Windsor this year? $335,590, according to the Canada Mortgage and Housing Corporation. In Toronto? $835,000.

The numbers point to something that most Ontarians already know: the cost of living varies wildly across the province.

What doesn’t vary at all is the minimum wage. It’s set at $11.00 for all of Ontario. But with economic inequality soaring in Toronto, in part due to a mix of low-wage jobs and high housing costs, some economists and policy researchers are starting to believe that employers in expensive cities should be forced to pay workers more.

“The cost of living in these communities are so different, that we could index [the minimum wage] to living costs,” said Richard Florida, who leads the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management.

“If you’re living in one of these less expensive cities and working in a service job, it’s easier to make ends meet.”

The idea is relatively novel in Canada, but more than a dozen U.S. cities have already adopted local minimum wages, most in the last few years. San Francisco is the latest – residents there voted for a $15 wage basement in early November.

“It’s really taken off this year in the United States,” said Paul Sonn, a program director at the New York-based National Employment Law Project.

“It really is striking how this idea that cities have a role to play in tackling inequality has gone mainstream.”

In 2014 alone, ten American municipalities have set local minimum wages, ranging from $10.10 in Las Cruces, New Mexico to $15.00 in San Francisco and Seattle.

U.S. cities with local minimum wage laws: < https://a.tiles.mapbox.com/v4/torontostar.kcl66047/3/1/3@2x.png?access_token=pk.eyJ1IjoidG9yb250b3N0YXIiLCJhIjoicjB0aUZoayJ9.kA7XwicoTQeHbRCo5dzjkw >

With their concentrations of wealthy employers and hard-up workers, cities are natural places to raise the minimum wage, argues Ken Jacobs, chair of the UC Berkeley Center for Labor Research and Education. The kinds of low-paying jobs remaining in North American cities tend to be in the service industry, pouring lattes at Starbucks, folding sweaters at the Gap, or cleaning hotel rooms.

“There’s a real logic here,” he said. “Given the higher cost of living, and the greater concentration of wealth in cities, they tend to have a higher capacity for a higher minimum wage, and a greater need.”

Toronto appears especially ripe for a local pay hike. An estimated 200,000 people in the city work for the provincially-mandated $11 hourly wage. Those low earners aren’t distributed equally across the city. Research by Florida and his colleagues found that in large swathes of Toronto’s inner suburbs – namely north Scarborough and north Etobicoke – more than 50 per cent of workers are members of the “service class,” where low wages are the norm.

On top of being home to low-paying jobs, Toronto is also unusually expensive. According to an estimate by the Canadian Centre for Policy Alternatives (CCPA), it costs $57,400 for an average family of four to live in Toronto for a year. That’s if they’re renting, and both parents are working full-time and year-round. (The study was conducted in 2008 – the figure would likely be higher now.) Covering those costs would mean hourly pay of $16.60.

Still, local businesses tends to balk at minimum wage increases. At the city level, there would seem to be an even greater risk of companies moving to lower-wage jurisdictions. Couldn’t a Walmart in western Etobicoke just move to Mississauga and escape the hike?

Berkeley’s Ken Jacobs said this tends not to happen because the businesses that are affected – coffee shops, clothing stores, hotels – are intimately tied to their locations. People who are used to buying burritos at the Chipotle on Front St. are unlikely to drive to the 905 for their carnitas fix.

“The success of a restaurant depends on where that restaurant is located,” he said. “Real estate matters, it matters intensely. A restaurant can’t pick up and move somewhere else that’s a decent distance away in order to avoid the higher wages.”

In San Francisco and Santa Fe, New Mexico – the first two American cities to independently raise their minimum wage – “academic research has found no evidence of negative impact on employment,” Jacobs said.

The largest obstacle facing many U.S. metros is a lack of authority over local labour policy; that power often rests with the state.

As it currently stands, Toronto would have to gain special dispensation from the province to set its own minimum wage, a prospect that CCPA economist Sheila Block described as “not very likely” but technically possible.

“Cities in Ontario are creatures of the province, constitutionally, so cities have whatever power the province gives them,” she said.

New York City is currently locked in negotiations with the statehouse over just this sort of power devolution. Mayor Bill de Blasio wants the right to raise the city minimum wage, and Governor Andrew Cuomo has signaled that he may allow cities with higher costs of living to set their minimum 30 per cent above the statewide figure, though no deal has been reached.

Despite the flurry of U.S. activity around the issue, it remains largely off the radar in Canada. “I have to confess I haven’t thought about the city-specific minimum wage in the Canadian context,” said Jim Stanford, an economist with Unifor, Canada’s biggest private sector union. “I haven’t seen a serious discussion of it in Canada.”

Still, Stanford said that the status quo, province-wide policy isn’t adequate for the urban poor.

“I think it’s worth pointing out that the minimum wage leaves you well below the poverty line in a big city,” he said.

< http://www.thestar.com/news/gta/2014/12/02/should_toronto_have_a_higher_minimum_wage_than_the_rest_of_ontario.html >

Tags: economy, housing, ideology, poverty, standard of living

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