Research on the Change of Minimum Wage in Ontario

Only available on StudyMode
  • Download(s) : 111
  • Published : April 17, 2013
Open Document
Text Preview
ABSTRACT
The purpose of this research paper is to analyze the minimum wage in Ontario based on the current minimum wage is $10.25 in Ontario. The minimum wage mainly happens to the unemployed women and the young. The research on the minimum wage can permit people to contribute to the discussion about the ongoing minimum wage policies in Ontario and the relevant impacts of raising the minimum wage in this province. This research paper will be divided into three parts. Firstly, this research paper will represent the introduction to the writing significance. Secondly, this paper will analyze the change of minimum wage in Ontario, which also be divided into third sub-parts. In the first place, this paper will introduce the theoretical framework. In the second place, this paper will introduce the general situation on the change of minimum wage in Ontario. Next, this paper will analyze the importance of minimum wage in the labor markets. And a conclusion will be made in the end. Research on the Minimum Wage in Ontario

1. Introduction
The minimum wage is generally considered as a controversial policy tool[1]. The minimum wage is one of potentially useful tool for redistribution of social wealth because it can increase the wages of low skilled workers[2]. However, other factors of production may become the expense for the increase of low skilled workers’ wage, such as the wages of higher skilled workers and capital. Therefore, it is essential to analyze how the minimum wage becomes $10.25 today and the impacts of the change of it. The purpose of this research paper is to analyze the minimum wage in Ontario, which can provide a chance for people to contribute to the discussion about the ongoing minimum wage policies in Ontario and the relevant impacts of raising the minimum wage in this province. Meanwhile, the change of minimum wage in Ontario can be influenced by some factors.

2. The Analyses of the Change of Minimum Wage in Ontario
In labor economics, the minimum wage is often analyzed in a competitive labor market model and a model in which the employers are granted with some degree of monopsony power. 1. The Theoretical Framework on Minimum Wage

The competitive labor market model involves the demand side and supply side. The demand side refers to the demand of labors of all the firms in the market. The supply side can illustrate that firms in the market have to pay higher wages to attract and retain workers. In the graph of competitive labor market model, there are the market supply curve and the demand curve, and these two curves have a cross point, which can be considered as the equilibrium wage rate. When a minimum wage is introduced in a competitive labor market, the reduction of employment will rely on the steepness of the labor demand curve. Meanwhile, the decrease in employment will lead to the increase in the wage rate in the competitive labor market[3]. 2. The General Situation on the Change of Minimum Wage in Ontario In 1991, the then current level of minimum wage in Ontario was $5.40 per hour[4] and the relevant authorities and governments in Ontario proposed that the minimum wage in Ontario should be raised to “a level of 60 percent of the average Ontario wage by 1995”, which made Ontario become the province with the highest minimum wage level in Canada[5]. However, during the period from 1995 to 2002, due to conservatives in office in Ontario, the minimum wage did not increase[6].

Theoretically, all the people in Ontario may suffer minimum wage. However, in practice, most of people suffering minimum wage are low skilled individuals holding low-paying jobs[7], including students, liquor servers, homeworkers, etc. What’s worse, in Ontario, the minimum wages of students’ liquor servers and homeworkers are less than general minimum wage. For example, the minimum wage of liquor servers is about $1.00 per hour less than general minimum wage.

Over the past two decade years, some significant changes of...
tracking img