Minimum wage set to rise New Year‘s Day

Ontario‘s new $14 per hour minimum wage takes effect Monday.

New Year‘s Day marks the first of two scheduled hikes, with the second to take place on Jan. 1, 2019, when the minimum wage will go up to $15. After that, it will be adjusted to keep pace with inflation.

The Ontario government says the change will bring greater purchasing power for working families and a stronger economy overall, but many small business owners across the province are wondering how they will maintain profits in the face of increasing payroll costs.

The Financial Accountability Office of Ontario – an independent watchdog agency that reports to the provincial legislature – has estimated that the minimum wage hikes could result in a loss of 50,000 jobs as employers struggle to keep up with staffing costs.

"Some businesses will attempt to reduce expenses by substituting minimum wage employees for higher paid, more productive workers or by increasing automation," the agency said in a report released in September. "This would lead to some job losses for minimum-wage workers.

But the higher minimum wage would also increase consumer spending, "stimulate economic activity and lead to job creation (that could) offset some of the loss in employment," it said.

Ontario Minister of Labour Kevin Flynn said last week that he doesn‘t believe the "doom and gloom" predictions about rising minimum wage hurting businesses or leading to unemployment.

"We‘ve raised minimum wage 70 per cent since 2003 and we‘ve seen increased employment right through that period," Flynn said at a news conference.

"I think we‘ve proven we can work with small business. We are lowering the tax rate, we‘re lowering the burden on small business so we‘re asking them to play a part here," he added, referencing the Liberal government‘s elimination of the capital tax for businesses, and reduced income tax rates for small businesses.

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