Ontario’s minimum wage will increase to $17.60 per hour on Oct. 1 in what the government says is an effort to help workers keep up with inflation. The change will affect roughly 900,000 workers across the province, according to a Sept. 29 news release, with 36 per cent employed in retail trade and 23 per cent in accommodation and food services.
The raise is expected to help low-wage workers keep up with the rising costs, says Viet Vu, Manager of Economic Research at The Dais. “The increase in Ontario’s minimum wage is a cost-of-living adjustment to ensure the minimum wage keeps up with inflation,” Vu added, saying that broader affordability issues, including housing shortages, require government action.
“The bigger effect may be layoffs and to that extent then the minimum wage increase may actually hurt the labor force, which is the opposite of what it was intended to do,” said Eric Kam, economist at Toronto Metropolitan University (TMU), noting that slow economic growth could prompt some businesses to reduce staff to offset higher wage costs.
Kam suggested that the government should have delayed the increase until economic conditions improved. “I would’ve waited until the economy was stronger to kick in a minimum wage…,” he said, adding that “…Every economic action has a reaction,” highlighting the potential of a struggling labour market.
Some workers, however, note that the increase will not offset rising living costs.
“When I first heard about the wage increase, I honestly thought about all the inflation and all the other regular prices going up. Only extra money from minimum wage, most likely would not help with the inflation that it’s gonna cause later on,” said Elisa Monardo, a server at St. Louis Bar and Grill.
“Things have gotten more expensive as the minimum wage has gone up, with rent increases and higher hydro bills,” said Fiona Jones, a third-year professional music student. “All basically in time with these rent increases, if not faster than the pay increases.”
Despite the increase, the Ontario Living Wage network calculates that the living wage in the Greater Toronto Area (GTA) remains at $26 per hour, approximately $8.40 above the new minimum wage. The gap highlights ongoing challenges for workers meeting essential costs such as rent, food and transportation.
While the wage hike helps with rising costs, experts warn that without tackling broader issues like housing, many workers may still struggle. “If prices go up 2.4 per cent, then your purchasing power hasn’t changed; or even worse, if prices go up 3 per cent or 4 per cent, then you are actually made worse off by the changing minimum wage,” said Kam.
No AI tools were used in the production of this piece.
