Minimum wage increase a positive for employees, a concern for businesses

Many Ontario employees will soon see a bump in their paychecks as Ontario increased the minimum wage as of Oct 1.

The increase, which was announced earlier this year, puts the new wage at $15.50. It follows an increase back in January when the rate went up by 65 cents to $15.

With Canada’s annual inflation rate reaching new highs, the 50 cent increase is a relief to those struggling with the cost of living.

“If you're a minimum wage worker of course you want to see an increase in your income, particularly right now given the cost you're facing as a worker have gone through the roof,” says Dan Kelly, the president & CEO of the Canadian Federation of Independent Business (CFIB).

The news is a win for employees. But it has proven to be a challenge for some businesses who have to incur the extra cost.

“I think the hardest pill for me to swallow is servers used to make less than others because they received gratuities. At the start of the year we were paying servers $12.50 an hour [and] now we’re paying $15.50 an hour," says Dave Monture, the owner of the Wortley Roadhouse in London, Ont.

Monture told CTV News London that they've had to slightly raise their prices this year due to the cost of food going up, which makes the minimum wage hike potentially another hurdle.

“We’re at a point where we’re starting to get closer to pre-pandemic sales numbers but the margins are just shrinking incredibly because the cost of everything going up so quickly," he adds.

According to the CFIB, 60 per cent of small businesses in Ontario are still not hitting their usual revenue levels.

“Minimum wage increases really disproportionately affect parts of the economy that are very labour intensive,” Kelly says. “They tend to be small businesses in retail, hospitality, the service sector. Coincidentally these are the very same sectors that were hit the hardest by pandemic restrictions.”

Students under the age of 18 are now earning $14.60 per hour, while homeworkers are seeing a raise of 55 cents to $17.05 per hour.

Labour Minister Monte McNaughton has said Ontario will continue to announce each years planned wage that will take place every October.

The increase in minimum wage will be determined depending on inflation from previous years.

— With files from CTV’s News Kitchener’s Krista Sharpe