Minimum wage increase: The Québec-Ontario divide

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Tyson Burger

The Québec government announced an increase in the minimum wage from $11.25 to $12 per hour on January 17 and stated that some 353,000 people will be affected by the increase.

Tyson Burger

The Québec government announced an increase in the minimum wage from $11.25 to $12 per hour on January 17 and stated that some 353,000 people will be affected by the increase.
The decision to raise the minimum wage comes in part as a response to Ontario’s recent minimum wage increase to $14 per hour, with plans to raise it to $15 by next year. There is still, however, a large gap between the provinces. Companies that operate in both Québec and Ontario will be forced to pay their Ontario workers more, and will in turn pass those expenses on to all consumers; therefore, Québec residents will get the short end of the stick.
Pontiac citizens have a unique relationship to Ontario’s economy, in that we are reliant on it for many of our everyday goods and services. As Ontario’s minimum wage climbs, so will the prices of those goods, and if we are still earning smaller salaries than our neighbours, then our overall standard of living will go down.
Minimum wages in the provinces correlate with their rates of inflation. As a person’s expenses (cost of food, entertainment, rent/home pricing) increase, so should their income. This ensures that employees consistently maintain about the same amount of disposable income in a changing market. Ontario has stepped outside of this model by raising their minimum wage more than the rate of inflation in order to rightfully put more money in the pockets of low-wage workers.
The rate of inflation also reacts to the minimum wage—if businesses pay their employees more, and they end up charging more for their goods, then the overall value of one dollar decreases. Business owners will recuperate their new wage expenses from consumers buying their product at a higher price. Since many of those consumers will be high-income earners, who are likely not getting the same ratio of a pay increase as low-wage earners, money will effectively be redistributed more fairly across society.
Perhaps Pontiac business owners should take it upon themselves to match Ontario’s wage model. While they would have to raise their prices accordingly, consumers would be willing to pay the difference since their wages will be higher and the goods won’t be any cheaper in Ontario.
Intuitively it seems like the business practice to pay employees more than the law requires. But a higher minimum wage actually boosts overall consumer spending because people spend a higher percentage of their total earnings. 
Are Pontiac businesses willing to offer their employees more competitive wages?  If our businesses don’t adapt, then Ontario’s new minimum wage could destabilize the local economy.
A better long-term solution would be to establish a common minimum wage across both provinces—a solution that citizens, business owners and politicians should all be talking about.

Tyson Burger is a resident of L’Isle-aux-Allumettes studying Honours English Literature at Concordia University in Montréal. You can follow him on Twitter @tyson_317.