Higher minimum wage results in a widened gap of inequality

Megan is a first year Social Welfare student at Wilfred Laurier University in Brantford.

An increase in minimum wage will only result in an increasing gap between the rich and poor. Income inequality is a large and complex issue that cannot be reduced by simply adjusting the minimum wage.

New legislation has been made in regards to minimum wage, according to the Ontario provincial government, invoking an increase in pay of $3.60 an hour to reach $15 starting January 1, 2019. Although seemingly a positive change, there remain issues that suggest a more negative side to this concern. Reduced employment, pressure on smaller businesses, and inflation will likely result as part of such rise in minimum wage.

As a child, I did not have a very good understanding of the financial position my family was in at the time. My understanding today only comes from what my parents have told me as I have aged. My family acts as a prime example as to how fluctuation in minimum wage dramatically affects the lives of many.

As reported by Statistics Canada, the minimum wage in Ontario increased from $7.60 an hour to $8.00 between 2005 and 2007. To some this may not seem like a lot, but this did in fact disrupt the rate of inflation at the time, causing much of the working population to become unemployed. This is the exact situation that my parents were placed in, while simultaneously having to raise and fend for three children. As a result, my family’s income plainly reflected that of the disadvantaged population.

While some may suggest that increasing the minimum wage will result in better living conditions, this is most certainly not the case for everyone. Such action causes employers, especially those of small businesses, to fire current employees in order to maintain a profit. This leaves current employees without any source of income and possibly leading them to a hard life in poverty. In some cases, smaller businesses will even go out of business due to competing economies and high inflation rates.

A more current example of this type of inflation is the price change in Tim Hortons coffee. As inflation rates begin to take over our provincial economy furthermore, Tim Hortons has begun to prepare itself by increasing the price of their medium — now $1.77, large — now $1.98, and extra-large — now $2.19 coffee. There has even been some talk about another increase in Tim Horton pricing as the minimum wage adjustments come into play in 2019. This is essentially how we can see inflation taking effect in our everyday lives and how it will presumably play out in the future.

It is also notable that the wage gap between the rich and poor has widened over time. Conditions and changes to our economy will only continue to affect this gap as it is apparent after examining my family’s former financial situation. The rich will experience very little (if any) challenges as inflation takes over, whereas the poor will continue to struggle with the everyday costs of living. This will therefore negatively impact and most likely worsen the general living standards of this already disadvantaged population.

The provincial government has set out this new legislation in attempt to alleviate the poor from their struggles and hardship that come from such an impoverished lifestyle. However, the only one gaining anything within this situation is the government itself. Taxes, deductions, and other personal credits will only continue to rise as a consequence of accelerating wages, thereby forcing the general working population to face even more payments than currently.

Generally, there will tend to be families, such as my own, where both parents work to support their families on minimum wage as their sole income. Living under such pay can feel nearly impossible at times and rising inflation will only make matters worse. Yet, although this is the hard truth within our current society, this is not the way things should, nor have to be. We must conduct new mechanisms of addressing the increasing wage gap in order to pull those in poverty out of their difficult lifestyles.

It is crucial that we understand the effects that increases in minimum wage and inflation have on all members of our society as it is often easy to overlook certain issues that do not affect us personally. Even if we do not believe so now, these changes may come to affect us in the coming future. The negative effects surely override the positive as the changes in wages bring about reduced employment rates, pressing pressure on smaller businesses, and drastic rises in inflation. With having all of this said, it is evidently pivotal that we care about such an issue in order to establish complete equality and balance among not only Ontario, but Canada as a whole.

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