How will the minimum wage increase affect the housing industry? Image

How will the minimum wage increase affect the housing industry?

By Newinhomes on Jan 03, 2018

It is now illegal to make under $14 an hour in Ontario. While students and employees in entry level positions are eager to get back to work after the holidays, some business owners are nervous about the year ahead.

On January 1, 2019, the minimum wage will increase to $15 an hour, then increase at the rate of inflation on an annual basis.

“Our plan for fair workplaces and better jobs provides a minimum wage people can actually live on and modernizes our labour laws to adapt to an ever-changing economy,” says Kevin Flynn, Minister of Labour. “Too many families struggle to get by on part-time or temporary work. Those working full-time can be living in poverty. This is unacceptable in Ontario. Our plan will help ensure everyone who works hard has the chance to reach their full potential and share in Ontario’s prosperity.”

How will this all affect the housing industry?

In general, the more it costs to produce something, the more expensive it will be when it comes to market. So if Tim Hortons has to pay an extra $2 an hour for a good chunk of their employees, then it’s safe to assume that your morning double-double is going to cost you a bit more in 2018.

If prices don’t go up, that means jobs are being cut or hiring is being scaled back. For many businesses, it could be a combination of price increases and layoffs.

When it comes to building homes, there is a wide variety of professionals involved, including sales staff, graphic designers, publicists, tradespeople, equipment operators, business and financial experts, interior designers, and others. The vast majority of these professionals already make well over minimum wage.

minimum wage increase

According to Statistics Canada, the average hourly wage of an employee in a union was just over $30 as of November 2017. For business, financial, and administrative employees, the average was $26 an hour, and for trades, equipment operators, and other related fields, the average was nearly $25. So, if the minimum wage is going to affect the housing industry, it will do so indirectly.

What some don’t realize is that the minimum wage hike will also affect people already making more than minimum wage. There are likely many cases where employees have worked for years to gain the experience to make $14 an hour, and now they’ll be making the same as someone in a completely inexperienced entry level position. That can’t be good for morale.

Before the announcement of the hike, there were likely many positions offering $14 or $15 an hour, and they required a certain amount of experience. These would have been attractive positions, but now they’re not, so employers have to increase the offered wages.

Out of all the major industries (food, restaurants, retail, etc.) we think housing will remain balanced with the new minimum wage. There may be some adjusting when it comes to advertising and marketing budgets, but overall, homebuyers shouldn’t expect to pay more just because of the increase.

For all businesses and employees affected by the minimum wage increase, 2018 will be an interesting year. In the end, we think the increase is a good thing, though it will take time for everyone to adjust. We just hope this means more people are able to afford rent and to save to buy a new home!