Skip to main content

The Ontario government announced last week that it would lift a four-year freeze on the province's minimum wage, raising the hourly rate from $10.25 to $11.00. The news came in the wake of U.S. President Barack Obama's move to raise the minimum wage for federal contract workers from $7.25 to $10.10.

The province should be commended for raising its minimum to the highest level in the country. Doing so will boost the living standards of the more than half a million Ontario workers who currently toil in low-wage jobs.

But, it fails to take into account how much more workers need to make ends meet in a big city such as Toronto, with its prohibitive housing costs, than they do in smaller cities and towns. It is high time that minimum wage standards reflected these very real differences in living costs.

Story continues below advertisement

The basic clustering of companies and talent that makes cities engines of innovation and economic growth also drives up housing costs. Obviously these costs are more affordable for high-paid knowledge workers than for low-paid service workers, the majority of whom are employed in the fast-growing job categories of food service, personal care and retail sales. These workers now represent nearly half the labour force.

A simple way to account for city-by-city differences is to peg the minimum wage to the local median wage. Arindrajit Dube, an economist at the University of Massachusetts and a leading expert on wage policies, says governments should aim for a threshold of 50 or 60 per cent of the prevailing median wage. Such a target would bring North American municipalities more or less in line with international standards.

In order to determine appropriate minimum wages based on Mr. Dube's guidelines, the labour-market data and research firm EMSI provided current median wages for 10 of Canada's largest metropolitan areas. The results are interesting.

First off, the minimum wage in the greater Toronto Area would need to be $11.24 to put it at 50 per cent of the prevailing median, and $13.48, closer to the $14 an hour sought by labour and social activists, to reach 60 per cent. In Ottawa-Gatineau the suggested minimums would be $12.08 and $14.50. They would be lower in Hamilton if pegged to its metropolitan median wage, $10.94 at 50 per cent or $13.13 at 60 per cent.

Still, Ontario's recent hike puts the province's largest cities in much better shape than their western counterparts. The current minimum wage in Vancouver is $10.25. It should be $11.01, to bring it to 50 per cent of the region's median wage, or $13.21 to be at 60 per cent. Alberta's minimum wage is $9.95. Calgary would need a minimum wage of at least $12.58 to be at 50 per cent of the regional median, and $15.09 to be at 60 per cent.

The province's new minimum-wage standard leaves workers in Toronto in far better shape than their counterparts in many comparably sized U.S. metro areas, such as the San Francisco Bay Area, Washington, D.C., and Boston, where the minimum wage would need to rise to $13, $14 or even $15 per hour to meet 50 per cent of the metro median.

The Ontario government was right to raise its minimum wage, and to introduce legislation that would peg future increases to inflation. But the new legislation should also take into account the significant differences in costs of living across the province. It should include provisions to index the minimum wage on a geographic basis.

Story continues below advertisement

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

If your comment doesn't appear immediately it has been sent to a member of our moderation team for review

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.