Employment standards: What is the evidence for the status quo?

Across Ontario this month, MPPs held hearings on Bill 148, the Fair Workplaces, Better Jobs Act, 2017. The result of a two year review of how labour legislation ought to be updated in response to changes in the economy, the bill would introduce a significant package of reforms on pay and benefits, work hours, vacation and leave, and collective bargaining. The most prominent of these changes is a sharp increase in the minimum wage from $11.40 per hour today to $14.00 in 2018 and $15.00 in 2019.

At the hearings, in op-ed pages and in public campaigns, we have been hearing from two main vocal camps with sharply opposing views. In one camp are a coalition of community organizations, labour leaders, and others who see the changes as a significant step forward to protect workers’ rights against eroding job quality and security while improving productivity through a healthier workforce and more purchasing power for lower-income consumers. In the other camp are advocates from within the business community who have been portraying the changes as a damaging choice that will lead businesses to close or reduce employment, and weaken the economy as a whole.

Each side can cite respected economists and point to studies in support of their assessment of what the effects of the changes will be. Yet while surely more evidence and research is better in making public policy decisions, in this case there is certainly an over-emphasis on the potential costs and benefits of what might happen and not nearly enough about the costs and benefits of the status quo.

Even at their most sophisticated, estimates of economic impact can only give us a general sense of how a given policy change might impact the economy. However, the greater the complexity, the less clarity these models can offer about what the net effects might be. And a broad package of labour reforms covering a large share of the labour force in different industries and regions of Ontario is about as complex as you can get. We can see the challenge of trying to isolate the effects of a particular policy change (compared to other forces like exchange rates, global competition, consumer behavior) in recent studies of minimum wage increases in Seattle. Even when looking at the same data on what has already happened in the region’s labour market following those increases, different researchers have drawn vastly different conclusions. If we can’t say with confidence what the impacts of past changes have been, we certainly can’t say what those experiences elsewhere will mean for Ontario’s labour market.

The Ontario Chamber of Commerce and others have been pointing to that uncertainty as a reason not to act until there is conclusive evidence on the economic consequences. That call for more public policy analysis sounds good on the surface but ignores an equally important question – what is the justification for the status quo? The reason that question is ignored is because the justification is not there.

When voices claiming to speak for the business community say “we can’t afford a $15 wage/paid sick days/advanced scheduling of shifts,” what they are really saying is “someone else should bear the costs of running my business.” And that is exactly what is happening today. When a business expects employees to be effectively “on call” for scheduling without any minimum guarantee of paid shifts, they are asking workers – often low-income workers – to bear the cost of that flexibility in the opportunity cost of their time to benefit the profit margin of their employer. The same is true for the current minimum wage policy, which leaves even full-time workers with earnings that would keep them in poverty. The costs of that poverty are ultimately borne by society. In some cases, those are direct costs, such as the Working Income Tax Benefit which boosts the income of low-wage workers or child benefits for families working full-time but left with very low incomes. In other cases, the costs are more indirect, as programs to increase access to education or medicine, or for retirement income security are responses in part to low wage, low benefit work.

But the economic costs and benefits are not the only measure by which we should look at the status quo. We also have to ask how well our current environment of legal employment standards, employer practices, and consumer expectations contribute to protecting the fundamental right to decent work. We have to ask ourselves whether the status quo and any potential changes take us closer to living up to those obligations. On that front it’s clear that we can and must do better.

We can’t say for certain what all the impacts of Bill 148 would be, if passed. But we do know for certain that the existing set of standards allows many employers to unfairly socialize their costs or push them on to their workers. Keeping the status quo is as much an active choice as choosing to undertake reforms. Those arguing to maintain the status quo should face the same burden of proof on why those standards are fair and productive, and how they protect the right to decent work.