On April 15, thousands of fast-food workers in more than 200 U.S. cities, and thousands more workers in other countries, including Canada, participated in a global show of force in support of a $15-per-hour minimum wage and mandatory paid sick days.
In the U. S., the $15 minimum wage campaign has made remarkable legislative gains in the past two years. In 2015, policymakers in 14 cities, counties and states approved $15 minimum wage laws including impressive legislative breakthroughs at the state level in New York and California.
In contrast with the recent U.S. experience, actual legislative victories in Canada on the minimum wage file have been extremely modest. Alberta’s general minimum wage increased to $11.20 from $10.20 per hour on October 1, 2015 and Premier Rachel Notley’s NDP government campaigned on a pledge to hike Alberta’s minimum wage to $15 per hour by 2018. The Notley campaign plank and the campaign promise by the federal NDP to re-instate a federal minimum wage and increase it to $15 per hour by 2019 are certainly encouraging as is Ontario NDP leader Andrea Horwath’s recent support for a $15/hr. minimum wage in Ontario.
That said, unlike many U. S. jurisdictions, no jurisdiction in Canada has come close to actually passing legislation mandating a $15 per hour minimum wage and the dynamics of passing legislation is, by its very nature, very different than the dynamics animating campaign (or opposition) promises. Particularly with legislation it opposes, the powerful business lobby really only begins to apply pressure once legislation is tabled and the details it objects to become clear. As such, this post takes a detailed look at the recent New York state legislative victory and the lessons Canadian $15/hr. minimum wage advocates can learn from how the New York minimum wage movement beat back intense political opposition from business to pass the historic wage increase.
The $15 per hour minimum wage in New York
On April 4, 2016, New York Governor Andrew Cuomo signed a law which will significantly increase the minimum wage in the state of New York from the current rate of $9, to $15.
The remarkable New York $15 minimum wage victory contains many lessons for Canadian minimum wage advocates.
First, it is important to note that the timing and scope of the New York minimum wage increase varies depending on which county in New York State an employee works, and the size of the business. For instance, for employees in New York City who are employed by a company that has 11 or more employees, the minimum wage will increase to $11 per hour at the end of 2016, $13 at the end of 2017, and $15 per hour at the end of 2018. However, for employees in New York City who are employed by a company with 10 or fewer employees, the minimum wage increases are implemented over a longer time period of time, with the minimum wage rising to $10.50 at the end of 2016, $12 at the end of 2017, $13.50 at the end of 2018, and $15 at the end of 2019.
For employees who work in the New York City suburban counties of Nassau, Suffolk, and Westchester, the minimum wage will increase to $10 at the end of 2016, and then will increase in $1 increments at the end of each year, until the minimum wage reaches $15 at the end of 2021 – 3 years after New York City. For workers in the rest of New York State, the minimum wage will increase to $9.70 at the end of 2016, and then will increase in $0.70 increments at the end of each year, until the minimum wage reaches $12.50 at the end of 2020. After 2020, the minimum wage will increase to $15 in increments determined by the state Director of the Division of Budget in consultation with the state Department of Labor.
Finally, the New York minimum wage law contains a “safety valve” provision which provides that, beginning in 2019, the state Director of the Division of Budget will conduct an annual analysis of the economy in each region in the state, and the effect of the minimum wage increases, to determine whether a temporary suspension of the scheduled increases is necessary.
Sectoral wage setting in New York – the key to a more aggressive minimum wage policy?
There is an interesting back story to the remarkable progress made in the minimum wage fight in New York State – one with important lessons for $15/hr. minimum wage advocates in Canada.
In May, 2015, New York Governor Andrew Cuomo appointed a three person Wage Board to consider a higher minimum wage specifically for service and preparation workers in the “fast food” sector. The Board’s recommendations called for an increase in the minimum wage for these and other fast food sector workers to $15 an hour in chains with 30 or more outlets nationally. The 30 outlet threshold was put in place explicitly so that the chains covered under the new minimum wage would be large enough to adjust to the incremental increases. The fast food minimum wage would have to be in effect by 2018 in New York City and by 2021 in the rest of the state. The wage board decision contributed significantly to the momentum behind the implementation of the broader New York $15/hr. minimum wage law detailed above and to $15/hr. minimum wage movements across the U.S.
The history behind New York’s wage boards is intriguing with parallels in Ontario (and Quebec) legislative history. In 1937, the state legislature enacted a law declaring that women and minors employed in any occupation should receive wages sufficient to provide them with adequate maintenance to protect their health. The law was amended in 1944 to cover men as well as women and children.
The law authorized the appointment of wage boards to investigate whether wages being paid in a particular sector were sufficient. After gathering evidence and holding public hearings, the wage board could recommend a minimum wage for workers in that sector.
The policy of the New York State government of the time was to apply the law primarily to industries not covered by the Federal Wage and Hour Law which prescribes a federal minimum wage. By 1956, about 1,260,000 New York workers were covered by orders from the state wage boards. The first industries to be covered were laundry, beauty service, and confectionery in 1938. The cleaning and dyeing industry was covered in 1939 and hotels and restaurants in 1940. As the cost of living rose, additional boards were appointed to make new recommendations for these industries.
In 1960, the state legislature adopted its first state-wide minimum wage of $1 an hour, which has since been increased 21 times by federal or state law to the current rate of $8.75 an hour.
Since the 1960 legislation, the sectoral minimum wage approach has been largely unused with no wage order being issued that assigned a sector – or occupation – specific minimum wage that exceeded the state’s statutory minimum wage — until this year.
Key take away for Canadian $15/hr. minimum wage advocates? New York Governor Cuomo’s move to appoint a wage board in order to raise the minimum wage for fast food employees created significant momentum for the broader $15/hr. minimum wage fight and took advantage of a vestigial labor law provision still on the books — but unused for over half a century! This is relevant because New York isn’t alone in having a history of sectoral wage setting laws. There are several examples from Ontario and Quebec which point to the feasibility of developing employment standards (including minimum wage) practices at the sectoral level.
The fight for a higher minimum wage in Ontario
The general minimum wage in Ontario is currently $11.25 and will be increased to $11.40 on October 1, 2016.
A little historical context is helpful to understand how Ontario got to this point.
The minimum wage in Ontario was frozen at $6.85 an hour from 1995 to 2003 under the Conservative Mike Harris government. Under the provincial Liberals (elected in 2003), the minimum wage was increased in two pre-determined series of steps from 2004 to 2010: first from $6.85 to $8.00 in four steps and then from $8.00 to $10.25 in three steps.
Following the recommendations of a minimum wage panel appointed by the Liberal government in 2013 (which included business, labour, youth and anti-poverty representatives), Ontario increased the minimum wage from $10.25 to $11 per hour effective June 1, 2014. According to the government, the new rate reflected the rise in the Consumer Price Index (CPI) since the last minimum wage increase in 2010 (in other words, the CPI increase over four years).
At the same time, the Liberal Government passed legislation that would tie future minimum wage increases to the CPI. Inflation has been running at just under 2% since the legislation took effect and economists project little change in the near-medium future. Given the new CPI indexed formula, Ontario’s minimum wage will be approximately $11.90 per hour in 2018, the date New York City’s minimum wage for companies with 25 or more employees will be $15 per hour. Furthermore, Ontario’s minimum wage will be just $12.50 per hour on January 1, 2022, the date all employers in California with 26 or more employees will have to pay a $15/hr. minimum wage.
In other words, Ontario minimum wage earners (particularly those working for larger employers) will fall considerably behind their California and New York counterparts in just a very few years.
So how come a high profile initiative under Ontario’s so-called “poverty reduction strategy” – and spear-headed by Ontario’s “social justice” premier, Kathleen Wynne – couldn’t do any better than put in place a formula that is delivering a paltry 15 cents per hour increase in the minimum wage, annually?
Simple. Governments, regardless of their political bent, have difficulty implementing aggressive minimum wage policies that are opposed by the small business communities in their elected MPP’s constituencies. In addition to facing fierce opposition to significant minimum wage increases from local Chambers of Commerce and the Canadian Federation of Independent Business (CFIB), all elected government MPP’s have to deal regularly with influential local Business Improvement Associations (BIA’s) comprised primarily of member businesses with fewer than 10 employees. These BIA members also tend to be hostile to aggressive minimum wage increases.
Put bluntly, any minimum wage increase that is the same regardless of the size of the community and the size of the business (and implemented according to the same timetable), is going to be a very modest minimum wage increase. There is simply no way New York Governor Andrew Cuomo could have pushed through a $15 per hour minimum wage (from $9) for workers with larger employers in New York City by the end of 2018, if that same minimum wage increase and same implementation time table also applied to small employers in rural, upstate New York. But that is the current approach in Ontario where the minimum wage (and schedule of increases) is exactly the same for large employers like Walmart in Toronto as it is for a family run dry goods store in Kenora. And this poses significant political obstacles for proponents of an aggressive minimum wage policy in Ontario.
That’s why the February, 2015 announcement by the Ontario government of its Changing Workplaces Review was, at first glance, welcome news for minimum wage activists. The broad parameters of the review – which covered all aspects of employment standards and labour relations related to the provincial Employment Standards and Labour Relations acts – would seemingly allow room for the development of creative solutions that could potentially free Ontario’s political actors from the impasse posed by a solid wall of small business opposition to significant minimum wage increases.
According to the Terms of Reference released at the time, the Review would:
“….seek to determine what changes, if any, should be made to (labour) legislation in light of the changing nature of the workforce, the workplace, and the economy itself, particularly in light of relevant trends and factors operating on our society, including, globalization, trade liberalization, technological change, the growth of the service sector, and changes in the prevalence and characteristics of standard employment relationships.”
But such was not to be the case. In the fine print of the terms of reference of the review it was explicitly stated that the minimum wage was excluded from the Changing Workplaces Review! Apparently, Ontario’s Liberal government felt that it had taken enough heat from small business in the 2013 review and had no interest in revisiting the divisive issue just two years later.
So is there any hope for a $15/hr. minimum wage in Canada? Is there anything to be learned from the strategies and tactics used in the recent successful U.S. $15/hr. minimum wage campaigns?
The Ontario Industrial Standards Act
While little known, Ontario has a history of sector-based employment standards similar to New York’s. In 1935, the Ontario government reacted to sub-standard working conditions in the garment industry by enacting the Industrial Standards Act (ISA).
From 1935 through 2001, the Industrial Standards Act (ISA) provided a model for sectoral standards.
In its original form, the ISA gave the Ministry of Labour the authority to designate part or all of the province as a “zone” for an industry, including industries subject to interprovincial competition. Upon the request of representatives of either employers or employees, the Minister of Labour had the authority to convene a conference of employers and employees in the industry to investigate conditions of labour. The parties were able to submit a “schedule” to the Minister containing conditions of work for the industry, including hours of work, minimum rates of pay, overtime rates, vacations and the like. If the Minister concluded that the schedule submitted by the conference was “agreed to by a proper and sufficient representation of employers and employees”, the schedule could be declared by the government as a regulation binding on all employers and employees in the designated industry and geographic zone.
Within a decade of the 1935 implementation of the Act, additional Ontario legislation on minimum wages and the 1944 Hours of Work and Vacations With Pay Act, eclipsed the Industrial Standards Act in setting minimum conditions for a majority of Ontario workers. Industrial Standards Act schedules continued in many industries, focusing on hours of work. However the framework for sectoral negotiations with minimum wage and conditions of work schedules remained in effect until the repeal of the ISA by the Harris government in 2001.
Sectoral Standards in the current Ontario Employment Standards Act
With the adoption of the Employment Standards Act in 1969, Ontario’s contemporary framework for minimum workplace regulations was established. However from the outset, this framework also provided for industry standards and the authority of the government to establish regulations that affect wages or working conditions in any specific industry or part of an industry.
These powers are long established by a set of ESA schedules and regulations applying to several specific industries, ranging from automobile manufacturing and parts to temporary help agencies.
Moreover, the ESA also incorporates a wide range of industry-specific provisions covering health care, hospitality services, agriculture, landscaping and retail services, among others.
The case for a sectoral approach to employment standards with regional and employer-size differentiation.
In an excellent 2015 report for the Canadian Centre for Policy Alternatives entitled “A Higher Standard”, noted labour economist Sheila Block illustrates the deteriorating state of Ontario’s labour market with two startling facts:
- The share of workers earning the minimum wage in Ontario skyrocketed from 2.4 per cent
of all employees in 1997 to 11.9 per cent in 2014 – a five fold increase over a 17-year time frame.
The share of workers making within $4 of the miniminum wage, $15 in 2014, also exploded over this time period. It rose from 19.8 per cent in 1997 to 29.4 per cent in 2014 – a 48 per cent rise in the share of low-wage workers in Ontario.
The striking imbalance in Ontario’s labour market today can be traced in part to changes made under the Harris Conservative government – notably the 1995 elimination of the legislative gains contained in the NDP government’s Bill 40 labour law reform package, the end of card certification which had existed in Ontario for many years prior to the NDP government, the freezing of minimum wages for almost a decade, and the significant diminishment of employment standards in the amendments to the ESA in 2000.
The results of these regressive legislative measures, combined with low wage, foreign competition experienced in many sectors of the economy and the weakening of private sector union density, has left increasing numbers of Ontario workers relegated to low-wage, precarious work.
As described above, Ontario’s Employment Standards Act already contains provisions that allow the government to put in place employment standards specific to certain sectors, occupations and regions. Although there would no doubt still be some business opposition, it would not be a particularly complicated legislative task to amend the ESA to allow the Ontario Labour Relations Board to define – in consultation with employers and labour – an industry and a region, and prescribe for that entity one or more terms or conditions of employment, that would apply to employers and employees. Needless to say, such terms or conditions could include a higher minimum wage than the province-wide floor.
Nor would a more robust regime of regional and sectoral employment standards in any way interfere with the long-term development of sectoral collective bargaining structures such as those which now exist in Ontario’s construction industry. In fact, Unifor, Canada’s largest private sector union, recently proposed a complimentary set of sectoral collective bargaining and employment standards regimes for Ontario. The Ontario based Workers Action Centre also endorsed a sectoral approach to collective bargaining in their excellent submission to Ontario’s Changing Workplaces Review.
To sum things up, the fight for the $15/hr. minimum wage represents an important response to the increasing precarity of work and a return to a more progressive and ambitious approach to labour market regulation. And what is clear from the U. S. minimum wage movement’s astounding successes of the past few years is that an important ingredient of achieving this more aggressive labour market regulation is to use general employment standards as a floor and then to vary higher minimum employment standards according to distinct regional, sectoral, and occupational labour markets.
The above history of Ontario regional and sectoral employment standards practices shows that far from being a deviation from Ontario’s tradition of progressive labour law reform, this approach would represent a continuation of a balanced, socially progressive approach to employment standards going back many decades.
The remarkable success of New York’s minimum wage movement suggests that Canadian minimum wage activists and their allies shouldn’t be afraid of aiming high and dreaming big. It’s unlikely that under the current CPI based formula, Ontario’s minimum wage will even reach $12 by 2018 – and that’s just not good enough.
Ontario’s Industrial Standards Act implemented in 1935, had its origins in the exploitive sweatshop conditions in Toronto’s garment industry that existed at the time. It could be argued that the “sweatshops” of today exist behind the counters and in the kitchens of thousands of fast food outlets blanketing the province.
Wouldn’t it be something for Ontario to one-up New York and put in place a legislated $16/hr. minimum wage by the end of 2018 at Tim’s, McDonald’s and other Toronto area outlets belonging to large, national and multi-national fast food chains!