BUSINESS

Minimum Wage: Canadian Cities Unlikely To Mimic L.A., Chicago Hikes

05/21/2015 07:37 EDT | Updated 05/21/2016 05:59 EDT
Los Angeles has become the latest U.S. city promising to raise its minimum wage, but a city-specific approach would be unlikely to work in Canada for reasons both practical and political.

L.A.'s city council recently gave initial approval to a plan that would hike the minimum wage to $15 an hour by 2020, in a decision its supporters say will help families in a city with some of the most expensive real estate in the U.S.

Other large U.S. cities that have increased the hourly minimum wage within their borders include Seattle ($15), San Francisco ($15) and Chicago ($13). 

With calls fora $15 minimum wage in B.C. and a $14 rate in Ontario, could a city-specific approach work in large cities like Vancouver or Toronto?

Sheila Block, a senior economist with the Canadian Centre for Policy Alternatives' Ontario, told CBC News that city-specific wages could work, given that a city like Toronto has the population of several provinces.

Provinces already tweak their minimum wages for certain jobs. For instance, Ontario has a different minimum wage for liquor servers, students under 18, homeworkers and hunting and fishing guides, while B.C. has different rates for liquor servers, live-in support workers, live-in camp leaders and crop harvesters.

'A number of difficulties'

"I think it's an idea that has some potential," said Block. "I also think there are a number of difficulties associated with it."

Block wrote a paper in 2013 that showed about 150,000 minimum-wage workers in Ontario are between 25 and 54, which she says undermines the argument that advocates for a higher minimum-wage are "teenagers looking to buy the newest smartphone." The same paper showed that visible minorities and immigrants who have been here 10 years or less were more likely to be on minimum wage, she said.

Those numbers suggest that diverse cities like Toronto and Vancouver would be an especially good fit for their own minimum-wage rates, when considered along with their status as the two most expensive Canadian cities for real estate.  

But any change would be met with pitfalls big and small.

For one, Block said, governments would need to ensure that geographic minimum-wage rates could only be raised, not lowered, lest cities compete with each other for the lowest pay rates.

Second, a city that raises its minimum wage would need to be large enough to have an infrastructure that could enforce its own rules. "If your rights aren't enforced, they don't have much muscle or teeth," she said. 

Third, businesses would be likely to balk at such a change, Block said. And while that would have little effect on service sector jobs like those at Starbucks, it might result in, say, a wholesale processing centre moving just over Toronto's borders into a city like Vaughan. 

Block said there's only been the beginnings of conversations about city-specific minimum wages in Canada, unlike the major municipal moves south of the border.

Block said that's partially because it's less necessary in Canada. Unions face stronger resistance in the U.S., and American workers are forced to turn to cities because they have no traction elsewhere, she said.

By comparison, lobbying for higher wages continues in B.C. and Ontario, while Alberta's new NDP government has promised a $15 minimum wage.  

"I don't think we've exhausted the options we have at the provincial level … I'd go there before I tried to do that municipally," she said.

'I don't see those handcuffs loosening'

There's another key difference between the U.S. and Canada that makes city minimum wages unlikely north of the border. Canada has a completely different division of powers from the U.S., where both mayors and cities are more powerful than their Canadian counterparts.

In Canada, labour laws are almost exclusively a provincial responsibility.

Nelson Wiseman, the director of the Canadian Studies Program at the University of Toronto, said the only reason people even make the comparison is because the two countries are side by side.

"Why don't we compare it to Mumbai? We're living in different worlds jurisdictionally," he said.

Provincial governments aren't likely to give up their jurisdictional powers, he said, especially if it means favouring one area over another. 

For instance, infrastructure needs are probably most pressing in Toronto, but governments go out of their way to say money will be distributed to all communities.

"In the U.S. cities can impose tolls. I'm reading in today's paper that Toronto can't impose tolls on its own roads [without provincial approval]. That tells you how they're handcuffed, and I don't see those handcuffs loosening."​

He suspects supporters would say a higher minimum wage is needed in a place with a higher cost of living, while detractors would say an increase would artificially pump up the cost of living. 

But he believes the conversation about city-specific minimum wages is moot.

"My angle is more institutional," he said. "It's not going to happen."

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