On November 4th the Ontario Government released it’s fall economic statement that included among other things another minimum wage increase of up to $2.45 per hour which is expected to take effect on January 1, 2022.
The minimum wage will be $15/hour for all employees 18 and over as it will remove the special minimum wage rate for liquor servers by raising the rate to the general minimum wage.
My personal opinion is I believe it’s great for employees and will hopefully help them move ahead, it’s not a significant annual increase for a full time general minimum wage employee but it’s still about $112 per month. This amounts to about a 4.5% increase in the minimum wage for the general minimum wage earners. A server on the other hand will see their minimum wage increase by over 20% and will see their income go from $12.55 up to $15 per hour. This means a server’s income will go up over $5000 per year for someone working full-time.
From a business standpoint however, I think this is horrible right now and couldn’t be worse timing for many industries that have been hard hit by the Covid Pandemic over the last nearly 20 months. Restaurant and entertainment venues in particular have been the hardest hit with lockdown and capacity restrictions and to see their wage costs go up by over 20% over night will likely put these businesses under further hardship due to necessary price increases that will have to occur as the entire chain will be disrupted causing increased food costs and labour costs for other services that these businesses rely on.
The issue is many people don’t see the “hidden” taxes that businesses also have to absorb with these increases as well such as increased CPP, EI and WSIB and while these may seem to be negligible, they still add additional costs on industries with already razor thin margins.
I also wonder how restaurant patrons will tip servers going forward based on knowing they will be earning the same minimum wage as everyone else since there will no longer be a secondary rate for them.
In closing, I don’t begrudge people getting closer to a “living wage” but I do feel that a more measured approach should be taken to get the servers up to the same minimum wage as everyone else.
That’s my 10 cents plus HST (Inflation is killer these days, so 2 cents is no longer feasible to give)
With 20 years and counting of industry experience working in the field of accounting and taxation, Shawn P. Stemmler brings a depth of knowledge in government legislation including the Income Tax Act, Excise Tax Act, Employment Standards Act, and more to the table when serving our clients.
Shawn’s addition to the Premier Professional Accountants team in 2021 has been a welcomed addition for our clients. He’s quickly put his tax compliance knowledge to great use in helping clients navigate relationships with his existing client base and the clients of Premier Professional Accountants Inc.
