As I spend the summer outside of Ottawa, Ontario, the Capital of Canada, something strange is happening in Ontario, the richest province in the Land of the North. They want to reduce poverty, and use a formula to do it. But before I hear about how Canada is a bunch of Socialist hordes on par with Castro, here’s some general facts about Canada before I get into the strange happenings:
Canada’s GDP is projected to be double that of the U.S. for 2013. Canada is mostly a commodities based economy, relying heavily on natural resources such as foodstuffs (particularly beef and pork), and (yes) oil as of late. The median income is $80,000, double that of the U.S. and has been that way since the 1990s. Canadian banks have had ZERO bank failures in its entire history, even during the Great Depression. Canadians are more educated (on average) than U.S. people, mostly because they start their freshman year of college (U.S. equivalent) while still in high school, making a Bachelor’s Degree program only 3 years, and more focused on a major.
With that out of the way, Ontario is considering raising its minimum wage from $10.25 per hour (enacted in 2010) using three variables in a “formula” on how to calculate all future raises in the minimum wage: inflation, economic growth, and productivity (also known as “earning your keep”). While it’s impossible to say to what level minimum wage will go to, here’s the 3 variables, including prices, put into perspective in one chart:
Sources: Statistics Canada
What’s interesting is that wages have outpaced all variables until 2006. What’s also interesting is how wages have kept pace with productivity since the same time. The last thing that’s interesting is that I’m not sure where GDP is supposed to play a role in the discussion of wages. The Canadian wage discussion should be interesting. For millions of Canadians though, they will literally bring home the bacon without paying too much for it, in more ways than one.