Ontario's minimum wage now $17.20, but the 'real' minimum in London likely more

If you're earning minimum wage in Ontario, you can look forward to a pay raise of just under four per cent starting Tuesday. 

Effective Oct. 1, the minimum hourly wage rises to $17.20, up from $16.55.

For workers who clock 40 hours a week, it means about $1,300 more per year. The increase is built into a provision in provincial legislation that ties the minimum wage to inflation. 

Michael Elliott thinks the "real" minimum wage, the figure that employees need to pay to attract and retain good employees, could be as much as $3 higher. 

Elliott owns Express Employment Professions, a London employment agency that connects companies with job-seekers. He advises employers who intend to pay minimum wage to consider paying at least a few dollars more. 

That's because many industries are struggling to hire and keep workers. By paying a bit more, Elliott said employers can reduce the costs that come with higher employee turnover. 

"If you're insisting on paying your employees low wages, you can expect that turnover because they can go across the street and find themselves another quarter or 50 cents an hour increase," he said. 

And while the increase is good for workers, Elliott said the "real" minimum wage in manufacturing, warehousing and administrative jobs is likely higher. 

"I think it would be safe to say that our new minimum wage is really closer to $20," he said. 

Elliott said with inflation pushing up the cost of everything from food, to fuel to housing, employees are motivated to switch jobs for more money. 

That jives with what Nirav Patel told CBC News. 

He owns Butterbites, a restaurant located in a shopping plaza on Dundas Street East near First Street in east London. He's found that paying his employees anything close to the legislated minimum wage simply leads to more turnover. 

"I think it's a good thing," he said of the higher minimum wage. "It makes employees happy, because inflation and the food costs are rising." 

Patel said he pays a few dollars above the minimum wager for servers and other staff. 

As of 2023, a total of 935,600 workers earned $17.20 per hour or less in Ontario.

Approximately 35 per cent of these workers were in retail trade and 24 per cent in accommodation and food services. With the new rate, Ontario's new minimum wage will be the second-highest provincial rate in Canada, only trailing behind British Columbia, which has a minimum wage set at $17.40 an hour.

Nearby, Gisele Ngam owns Unik Afrifoods, a store that sells African groceries and takeout meals. 

She said the higher minimum wage is good for her employees but it does put pressure on her margins at a time when the food she imports from her native Cameroon is already more expensive. 

"The prices keep going up. It's a challenge for us and a challenge for our customers," she said. "Increasing the minimum wage will also mean increasing prices so that we can meet our costs." 

Elliott said the higher minimum wage should be a benefit to employees earning above minimum wage. 

"I do think there is a group of workers making significantly more than minimum wage that will expect that their salary will increase relative to where the minimum wage is," he said. "You might see a group of workers expecting the four per cent increase."