Minimum wage wars: U of T professor breaks down the fallout

You asked and we found the answers.

Since the minimum wage increase went into effect on Jan. 1, many of our viewers and listeners shared stories of how hours were cut, benefits were stripped and tips taken away across all industries.

CityNews reached out to Rafael Gomez, professor of employment relations at the University of Toronto, to help analyze the finer points and breakdown the fallout.

CN: What is your response when you hear about the Tim Horton’s response to the minimum wage increase?

RG: It’s a mixed feeling. As a professor who studies labour markets and employment, and looks closely at the workers side, you feel empathy for workers who have jobs that by the standards of the whole labour market aren’t the best paid but they do have some benefits.

What we’re talking about now with a franchise like Tim Horton’s, is it’s very difficult for those “owners” to do a lot. They can’t change the product. They can’t make the doughnut in a different way. They can’t even change the price. They can’t even offer different menu items.

I think the parent or lead company also has a role, because if you don’t allow your franchises the scope and discretion to do things, the only scope and discretion they seemingly have is on the employee side. We need to maybe ask more of the parent companies.  Maybe there should be rules and regulations that are also imposed that make sure those franchises aren’t using the only place they have discretion over — their workforce — to disadvantage them.

CN: It would seem that some businesses are using the minimum wage increase as a way to make changes in the workplace.

RG: Using the minimum wage as a scapegoat backfired on these employers. If they just consulted, they’d have time not to do the first thing that came into their minds, as a response to the minimum wage, they actually could have made better decisions. Ones that wouldn’t have cost them the bad will that consumerS seem to be giving some of these companies.

CN: These kinds of measures aren’t really new either.

RG: They tend to happen all the time but we’re not looking at it with a lens. For example, employers are always doing things, especially in this non-unionized space.

CN: So are we hearing more because of the new minimum wage being implemented?

RG: That you would have to wait. You need data to be gathered, you need to look back six months from now to see if these things happened more than before. It’s shed light on practices in the private sector that have normally gone undetected. Not every employer does this or works this way. Some employers treat their employees like family. The employers you don’t hear from are managing this in a much better way.

CN: So is there a way to manage this without it falling on the workers?

RG: Yes for sure. There is a spectrum of management practices out there from the good, the bad, to the ugly. The latest research shows that part of the thing that is driving this inequality is the rise of superstar firms. They pay high wages and do well in terms of profits and growth, and that there is this real divide between well-managed companies and sometimes less well-managed companies.

This interview has been edited for length and clarity.