The economic, rational reasons why a $15 an hour minimum wage helps Ontario.

July 11, 2017

Fifty (50) professional economists say it’s a good thing.

Economics

Might want to take a look – –  see July 4th media release

Canadian economists issue open letter in support of a $15 minimum wage in Ontario

TORONTO, ONTARIO–(Marketwired – July 4, 2017) – Ahead of Ontario’s public hearings on Bill 148, Fair Workplaces, Better Jobs Act, over 50 economists across Canada have penned an open letter supporting a $15 minimum wage. The signatories of the letter explain that a higher minimum wage is not only an economically responsible measure, but also a much needed one.

The full text of this letter is below, and can also be accessed at http://www.progressive-economics.ca/2017/06/29/economists-support-15-minimum-wage-in-ontario/.

We, the undersigned economists, support the decision to increase the minimum wage in Ontario to $15 an hour. Raising the wage floor makes good economic sense.

Today, Ontario’s minimum wage is $11.40 per hour. Adjusted for inflation, this is barely one dollar higher than its value in 1977. Yet over the same four decades, the average productivity of workers has increased by 40%. And the prevalence of minimum wage work is spreading. Around 1 in 10 Ontario workers make minimum wage today, with a large increase in this proportion over the last two decades.

Low wages are bad for workers as individuals. An individual working full-year, full-time on the minimum wage can still fall short of the poverty line. The situation for minimum wage workers trying to support families is no better—and evidence shows that this is increasingly what is asked of minimum-wage workers. The stereotype of the teenager living at home making minimum wage is out of date: over 60% of workers earning minimum wage in Ontario in 2015 were over the age of 20, as were over 80% of those making $15 or less.

But low wages are also bad for the economy. There are good economic reasons to raise the incomes of low-wage workers. Aggregate demand needs a boost. While Canada escaped the harshest impacts of the 2007-08 financial crisis, our country has also seen a slowdown in growth. We risk further stagnation without reinvigorated economic motors. As those with lower incomes spend more of what they earn than do those with higher incomes, raising the minimum wage could play a role in economic revival, improving macroeconomic conditions.

For years, we have heard that raising the minimum wage will kill jobs, raise prices and cause businesses to flee Ontario. This is fear-mongering that is out of line with the latest economic research. Using improved techniques that carefully isolate the effects of minimum wage increases from the remaining noise in economic data, the weight of evidence from the United States points to job loss effects that are statistically indistinguishable from zero. The few very recent studies from Canada that have used these new economic methods agree, finding job loss effects for teenagers smaller by half than those of earlier studies and no effect for workers over 25.

There are many possible reasons for minimum wage increases to lead to little or no job loss. Studies have found lower turnover, more on-the-job training, greater wage compression (smaller differences between higher- and lower-paid workers) and higher productivity after minimum wage increases. In short, raising the minimum wage makes for better, more productive workplaces.

The business lobby has also suggested that any minimum wage increases will simply be passed on as higher prices. First, the above-mentioned improvements will offset some part of the higher labour costs to business. Second, there is no instantaneous, automatic mechanism between higher labour costs and higher prices. Some of the costs not absorbed by increased efficiency may go to price increases, but these are likely to be small and, for low-wage workers, offset by higher incomes coming from rising wages. Furthermore, if we remember that over 1 in 4 workers in Ontario makes under $15 per hour, we should not treat slightly higher inflation as the main criterion of successful policy; instead we should focus on the substantial benefit to low-wage workers, their families and the economy as a whole.

Across North America, recent years have seen more minimum wages increases, some quite substantial. And so far, none of the doom-and-gloom predictions have come true. Seattle and the municipality of SeaTac, two of the first to institute minimum wage increases, continue to thrive even after increases. Of course, more rigorous studies will have to be conducted (as scientists we are excited by the prospect of new data to analyze) but so far the effects of minimum wage increases have been in line with the expectations of those of us who believe that raising the minimum wage is a positive step for workers and the economy.

Economics may be known as the “dismal science” but on the issue of the minimum wage many economists are ready to admit that the weight of evidence points to a strong case for raising the minimum wage. 600 of our colleagues in the United States, 7 Nobel Prize winners among them, signed a letter urging the United States government to raise the federal minimum wage to $10.10 an hour from the current $7.25—in percentage terms an even larger increase than that from $11.40 to $15 in Ontario. A further letter calling for a staged increase of the federal minimum wage to $15 was signed by 200 economists. There is no consensus against raising the minimum wage among our profession; indeed, the emerging understanding is quite the opposite.

We believe that raising Ontario’s minimum wage to $15 an hour is a good idea and one that is economically sound.

  1. Abdella Abdou, Brandon University
  2. Fletcher Baragar, University of Manitoba
  3. Michael Bell, Manitoba Teachers’ Society
  4. Sheila Block, Canadian Centre for Policy Alternatives – Ontario
  5. Hassan Bougrine, Laurentian University
  6. Michael Bradfield, Dalhousie University
  7. Jordan Brennan, Unifor
  8. Robert Chernomas, University of Manitoba
  9. Robert W. Dimand, Brock University
  10. Catherine Douglas, University of British Columbia
  11. Lynne Fernandez, Canadian Centre for Policy Alternatives – Manitoba
  12. Kelly Foley, University of Saskatchewan
  13. Marc-André Gagnon, Carleton University
  14. David Green, University of British Columbia
  15. Marjorie Griffin-Cohen, Simon Fraser University
  16. Pierre-Antoine Harvey, Centrale des syndicat du Québec
  17. Rod Hill, University of New Brunswick
  18. Ian Hudson, University of Manitoba
  19. Mustapha Ibn Boamah, University of New Brunswick
  20. Gustavo Indart, University of Toronto
  21. Iglika Ivanova, Canadian Centre for Policy Alternatives – British Columbia
  22. Andrew Jackson, Carleton University
  23. Mohsen Javdani, UBC Okanagan
  24. J. Rhys Kesselman, Simon Fraser University
  25. Anna Klimina, University of Sasketchwan
  26. Marc Lavoie, University of Ottawa
  27. Marc Lee, Canadian Centre for Policy Alternatives – British Columbia
  28. John Loxley, University of Manitoba
  29. David Macdonald, Canadian Centre for Policy Alternatives
  30. Angella MacEwen, Canadian Labour Congress
  31. Hugh Mackenzie, Canadian Centre for Policy Alternatives
  32. Brian MacLean, Laurentian University
  33. Fiona MacPhail, University of Northern British Columbia
  34. Joan McFarland, St. Thomas University
  35. Anthony Myatt, University of New Brunswick
  36. Lars Osberg, Dalhousie University (past President of the Canadian Economics Association)
  37. Patricia E. Perkins, York University
  38. Mathieu Perron-Dufour, Université du Québec en Outaouais
  39. Craig Riddell, University of British Columbia (past President of the Canadian Economics Association)
  40. David Robinson, Laurentian University
  41. Louis-Philippe Rochon, Laurentian University
  42. Michal Rozworski, Ontario Confederation of University Faculty Associations
  43. Toby Sanger, Canadian Union of Public Employees
  44. Mario Seccareccia, University of Ottawa
  45. John Serieux, University of Manitoba
  46. Garry Sran, Alberta Union of Public Employees
  47. Jim Stanford, McMaster University
  48. Kaylie Tiessen, Unifor
  49. Peter Victor, York University
  50. Jesse Vorst, University of Manitoba
  51. Barry Watson, University of New Brunswick
  52. Armine Yalnizyan, Public Economist
  53. Vicki Zhang, University of Toronto
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An Ontario $15 an hour minimum wage has franchisors and their minions crying “The Sky is Falling”

July 11, 2017

Maybe franchisors could stop gouging their franchisees on forced, tied couponing, buying of supplies, renovations and services?

A good summary in the Globe and Mail today, entitled, Ontario seeks public input on $15 minimum wage:

Businesses are strongly opposed to the increase, particularly the quick pace of it. A coalition of groups including the Ontario Chamber of Commerce, Restaurants Canada and the Canadian Franchise Association are sending Premier Kathleen Wynne a letter Monday, slamming the “arbitrary” increase.

“Many Ontario employers, especially small businesses, are now considering closing their business because they do not have the capacity to successfully manage such reforms,” they write.

That way, they could afford to pay their 400,000 to 600,000 Ontario staff a living wage.

Just like the 50 professional economists say they could/should.


My best work has always started around a single franchisee’s kitchen table.

March 23, 2017

A few franchisees with concern ask me to meet them at their home.

The problem-solving starts almost immediately.

Les Stewart

Midhurst, ON

705 737-4635

les.j.stewart-AT-gmail.com


Is it fair to force franchisees to prove that their franchisor has acted in “bad faith”?

February 24, 2015

No. Since 1971, there have been recommendations in Ontario that franchisors should have the burden of proof when challenged about acting unfairly.

Reverse the onus

The first one was by a retired Superior Court Justice and the next one a former partner to the actual Arthur Wishart, a lawyer from Sault Ste. Marie.

1. The Grange Report

MGCS

Legislative approach

(iii.) Contractual v. equitable approach

3. In these dealings also, placing the burden upon the franchisor to prove,

(a) that the contract is fair; and

(b) that the franchisor’s exercise of his rights under the contract is justified in the circumstances.

Report of The Minister’s Committee on Franchising, The Honourable Arthur Wishart, W.C., M.P.P., Minister of Financial and Consumer Affairs by S. G. M. Grange, Q.C., June 1, 1971.

2. Public Hearing testimony

Wishart

I think it’s interesting that in that circumstance the Grange report does a reverse of onus. It says there has to be fair dealing, and if there isn’t fair dealing, then it’s up to the franchisor to show, and I quote, “that the contract between the parties was fair.” In other words, the onus shifts, not from the franchisee to prove they were treated unfairly but to the franchisor to prove that franchisor dealt with this individual fairly. I think that’s an extremely important concept. It goes on to say that the franchisor’s conduct was “equitable in the circumstance.” So you have this onus on the franchisor, at that point, to prove they dealt with this person fairly.

Mr. Gerald Nori, Wishart and Partners, March 7, 2000.

One of the greatest barriers is franchisee access to information.


How frequently does Tim Hortons terminate their franchised stores in the United States?

February 24, 2015

Termination of a franchise agreement is the most financially devastating action a franchisor can take.

Terminations 2013

It is the “weapon of mass destruction” for mom-and-pop franchisee life savings and employment

Terminations 2012

 

Responsible franchisors avoid this too because it is such a red flag to the investment community.

Terminations 2011

It is only fair to compare it to their peer group and to best practices.

Terminations 2010ie. Tim Hortons terminated their U.S. franchisees 22.9, 1.1, 2.1, and 9.4 times more frequently than McDonald’s had done in the same year (2010 to 2013).

The frequency that the franchisor chooses to terminate a franchisee is a material fact to any buying or renewing franchisee.

Source: Information from Franchise Disclosure Documents (see for example Wisconsin Department of Financial Institutions). Free download for U.S. filed documents. One of 4 online sources.

Canadian information is unavailable because no provincial law requires these CDN documents to be (1) publicly filed or (2) put online.

Alberta, Ontario, New Brunswick, Prince Edward Island, Manitoba and soon-to-be British Columbia

Posted also on ConcernedTimHortonsFranchisees.ca.


The second-order, knock-on economic effects of franchisor insolvencies are very profound.

February 11, 2015

Target and Tim Hortons franchisees, staff, and equity are invisible to CDN insolvency law.

Click here for a no charge SSRN download of the Ansett case mentioned in the video: The Domino Effect: How Ansett Airlines’ failure impacted on Traveland franchisees. Dr. Jenny Buchan, University of New South Wales broke this discussion open in 2006. This is the CPA study she mentions in the video: download at no charge at WikiFranchise.org.

When the franchisor fails

Chapter 6 of her book that franchisees (v. franchisors) are handicapped in defending themselves by the following asymmetrical sources of vulnerability: information, adviser, education and regulator, risk and reward, resource, contract, and regulatory.

Chapter 6

Click here for a full Table of Contents of Dr. Buchan’s book, Franchisees as Consumers.

Franchisees as Consumers

Will the ON and CDN governments choose (or be forced) to make “informed informed policy to respond to some very real issues” (start at 8:25)?


Which smart Tim Hortons franchisees will choose to prosper under the new 3G Capital regime?

January 8, 2015

Unlike TDL, franchising has accurately been known as a Trap for the Trusting.

running businessman

 

With the proper use of research, information sharing, technology, and consulting, even a few operators can act to defend and even help themselves in a new regime.

But they need training and ultra-high levels of confidentiality.

  • A few, smart, willing-to-learn and -adapt operators will survive, grow, and prosper.

Others will choose to live in the past.

Originally posted on LesStewartConsulting.caConcernedTimHortonsFranchisees.ca and Canadian Alliance of Franchise Operators website (CDNafo.ca).


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