The New Year brought with it new challenges for owners of small and medium-sized businesses across Ontario.
On January 1st, The Fair Workplaces, Better Jobs Act—better known as Bill 148—came into effect. The legislation makes significant changes to Ontario’s labour and employment law landscape, from extending paid vacation for qualifying employees, to making it easier to unionize. Other new compliance requirements will be rolled out this year and next.
But there was one major amendment that sent shockwaves across the province’s entrepreneurial community: an increase of the minimum wage to $14 per hour from $11.60, with another $1 jump slated for Jan. 1, 2019.
Almost immediately, business owners took action to protect their bottom lines. Some laid off workers, while others eliminated paid breaks and rolled back some paid benefits. The latter was the case at several Tim Hortons franchises in Cobourg, Ont., owned and operated by Ron Joyce Jr. and his wife, Jeri Horton-Joyce—the son and daughter of company founders Ron Joyce and Tim Horton, respectively.
In response to the Joyce’s cost-saving moves, Premier Kathleen Wynne decried the actions of the Tim’s franchisees and cautioned others who might consider similar changes in future. The Ministry of Labour promised to crack down on any organization that violated the Employment Standards Act to protect its profit margins in the wake of the minimum wage increase.
Labour Minister Kevin Flynn followed by saying this: “The problem with the minimum wage was that the baseline was too low. We were doing it the right way, but we started from too low a place. So, what we don’t want to do is we don’t want to politicize this issue again.”
He’s right. ‘Politicizing the issue’ is exactly what should be avoided.
To be clear, our organization stands firm in its support for a strong living wage for our employees—many of whom earn at or near the minimum. In our view, providing adequate pay helps our staff make ends meet, helps ease the many financial stresses they might encounter, and helps them be better, more productive employees—not to mention engaged members of society who don’t have to struggle simply to put food on the table. That’s a win-win for our province and everyone across the political spectrum.
The challenge with raising the province’s base salary by nearly 30 per cent literally overnight is that it created an unbearable burden for entrepreneurs. And no, most business owners are not multimillionaires who can afford to shoulder the burden of such a rapid increase in overhead costs.
According to the Great White North Franchisee Association, which represents more than 50 per cent of Tim Hortons franchisees, the new minimum wage will cost the average Tim’s franchise $243,889.10 per year. Those numbers are staggering. Worse, they could send some franchises into bankruptcy. But the ripple effect doesn’t end with restaurants and food services companies. Other, far larger, firms such as Wal-Mart announced layoffs soon after the wage spiked.
I think we can all agree that our small and medium-sized business owners contribute a great deal to Ontario’s economy, including innovative new products and services, all while driving economic activity and helping to create jobs that fuel our province’s growth. A simple compromise—namely, a more gradual increase in wages—would have helped mitigate the impact of these changes.
It’s important to remember that entrepreneurs are not bullies. We’re simply trying to earn a living ourselves, while also keeping our staff employed in the face of crippling changes to the provincial business landscape. That’s not an easy task at the best of times—less so in the face of sweeping amendments to employment standards laws and compliance requirements.
Winston Stewart, founder