By Henry Gray (AIMS on Campus Student Fellow)
There are few things more iconically Canadian than an early morning Saturday drive to the hockey rink with a Tim Hortons coffee in hand. Recently, however, the warm and cozy Norman Rockwell-esque feelings the Tim Hortons brand tends to evoke in the public consciousness have taken a backseat to indignation at mistreatment of workers.
This indignation has even led some to take to the streets to express their displeasure. These protest efforts, centred primarily in Ontario, emerged following a dramatic increase in the minimum wage of Ontario that came into force on January 1, 2018. On that day, the minimum wage rose from $11.60/hour to $14.00/hour. While a minimum wage this steep and sudden is so unprecedented as to make its long-term economic effects nearly impossible to ascertain, the political repercussions were felt immediately. As a consequence of this $2.40 per hour jump, the management of some Tim Hortons locations in Ontario announced cuts to paid breaks and other employee benefits.
The institutional left pounced on this business decision, suggesting that it was illustrative of a broader problem of inequality in Canadian society. “This is about the multibillion dollar corporation and its parent company, Restaurant Brands International, who have the means to protect workers, but aren’t doing it,” Leadnow spokesperson Brittany Smith explained. Premier Kathleen Wynne of Ontario reacted rapidly, categorizing these decisions as “not decent” and “not fair” – “It is the act of a bully,” she said. Not satisfied with buying voter sympathy with the money of “bullies,” the Wynne government also announced that it would be hiring up to 175 new labour inspectors to investigate allegations that Ontario businesses violated workplace rules after the recent minimum wage hike.
Being seen as taking a stand against large corporations surely garners favour for the Liberal government among the base of their NDP rivals—whose support is badly needed at a time when the Liberals consistently trail the Conservatives in opinion polls—but is this harsh approach really the best way to make private companies treat their workers well? Contrast the Tim’s brouhaha with the aftermath of the Tax Cuts and Jobs Act of 2017 south of the border, which reduced the corporate tax rate from 35% (one of the highest rates in the world) to 21%. On the very day that the bill passed, Wells Fargo, Fifth Third Bancorp and Western Alliance Bancorp all notified their employees that they would be raising the minimum wage of their workers to $15 an hour. Capital One followed suit a few weeks later, and Walmart announced its intention to raise its base rate for US employees to $11 an hour.
The Ontario government’s policies in this domain would suggest a fundamental misunderstanding of how wages work. The (mistaken) assumption that undergirds the push for a higher minimum wage is that wages can be changed without affecting anything other than the pocketbooks of the owner and employee. These advocates are under the illusion that the only reason that workers’ wages are as low as they are is because their employers are mean and greedy. In reality, a wage is the price of a person’s labour. A minimum wage is, thus, an arbitrary price floor. What this means is that the minimum wage makes it illegal for those workers whose labour is worth less than the minimum wage to sell their labour, i.e. to have a job. It is those very working people that the minimum wage is meant to boost who are, in fact, harmed the most by such laws. It is these baleful effects that the now famous Tim Hortons employees in Ontario have been feeling. Because Tim Hortons is forced to pay some workers more than their labour is worth, it is forced to attempt to recuperate costs elsewhere. These policies, thus, create a “class warfare” dynamic in some places that may serve the short-term ends of some politicians, but their adverse effects fall almost exclusively on the least educated, least experienced, and most marginalized members of the workforce, which is quite unjust. We should blame governments, and not Tim Hortons or any other company, for the effects of bad public policies.