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How Missouri’s minimum wage rates will trump Ontario’s wages of sin

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Happy New Year, unless you live on Ontario’s minimum wage.

In which case, tough luck.

Activist Mohammad Ali speaks to protesters outside the Ford family-owned Deco Labels on November 17, 2018, in response to Premier Doug Ford’s freeze on Ontario’s minimum wage and cuts to other programs. The protest was organized by the Ontario Coalition Against Poverty.
Activist Mohammad Ali speaks to protesters outside the Ford family-owned Deco Labels on November 17, 2018, in response to Premier Doug Ford’s freeze on Ontario’s minimum wage and cuts to other programs. The protest was organized by the Ontario Coalition Against Poverty.  (Steve Russell / Toronto Star)

Ontario’s law mandating a $1 increase to the minimum wage, as of Jan. 1, has been formally rescinded by Premier Doug Ford. Instead, he legislated a 31-month freeze on the hourly minimum of $14.

Better luck in America, where the minimum wage is on the march while Ontarians stay frozen in time.

New York welcomed the New Year with a $15 minimum wage, catching up to San Francisco, but still lagging Seattle, which bumped it up to $16 last week.

You can do the math. Seattle’s minimum wage workers ($21.25 after conversion) earn about 50 per cent more than their Ontario counterparts — with no sign of an economic slowdown after several years of pay hikes on the west coast.

Ah, you say. Ontario is different.

Weren’t we warned of the high price to be paid by workers earning higher wages — the proverbial and political wages of sin?

TD Bank predicted 50,000 to 150,000 jobs lost by the end of 2019 if Ontario went from the old $11.60 an hour to $14 and then $15.

The Ontario Chamber of Commerce countered with an even more apocalyptic study claiming 185,00 jobs were “at risk” from raising the minimum wage last year.

When big banks and big business raise the alarm about workers losing their jobs, presumably they have the best interests of our economy at heart, not their own self interest. Right?

But what if they’re wrong — not so much ideologically, but empirically and economically?

Never mind the awkward tweet from the chamber’s president, Rocco Rossi, ringing in Jan. 1 with pictures of champagne and pastries in which he joked about “celebrating New Year’s the 1 percenter way! Let them eat cake:-)”

Even with an emoticon tagged on to it, the tweet from a business mouthpiece who has spent the past two years leading the charge against a decent minimum wage came across as rich. Rossi responded to the resulting online storm with a prompt apology, doubtless discovering that Twitter means always having to say you’re sorry.

But isn’t there a larger lesson to be learned, beyond his faux pas, over the fallacious premises underpinning his study projecting maximum risks from a minimum wage? Let’s measure the chamber’s research against reality, projections versus performance:

On Jan. 4, Statistics Canada brought in the New Year with a look back at the unemployment data. Precisely how many jobs were lost over the 12 months from December 2017 to last month — when the minimum wage rose from $11.60 to $14 an hour?

Answer: Ontario’s total employment went up, not down, as our economy grew by 77,500 jobs — pushing unemployment to a remarkably low 5.4 per cent last month.

What role did the admittedly sharp wage increase of $2.40 an hour increase play in the changes? We know that business economists feared the worst — up to 185,000 jobs lost by the chamber’s count — but labour economists took a different view.

They argued, during the minimum wage debate, that traditional fears of job shocks are not just overstated but under-researched. There is precious little evidence showing that higher wages lead to lower employment from jobs leaving the country.

It’s not just the upside — the rapid economic stimulus from putting a few more dollars in the pockets of the lowest-paid workers who live paycheque to paycheque, spending any extra money directly on essentials. It’s also the limited downside in today’s service economy.

Despite the doomsday scenarios from small business owners, if a Tim Horton’s outlet has to raise its prices to meet its payroll there is minimal risk of a minimum-wage increase shipping those jobs out of country: Customers can’t go cross-border shopping for a double double, and domestic competitors can’t undercut them if everyone has to pay the same minimum wage.

Even in Donald Trump’s America, economic reality is overtaking political rhetoric. In Arkansas and Missouri, state legislators who refused to approve minimum wage hikes were overruled by voters in ballot initiatives last fall.

Ah, but those are low-wage states, you say? True, Missouri’s minimum wage rose from a paltry $7.85 to $8.60 an hour on New Year’s Day.

But Missouri will keep raising it over the next five years, reaching $12 an hour in 2023 (about $16 in Canadian funds) — well ahead of Ontario’s $14 rate, which will only be adjusted for inflation starting in late 2020 (adding about 30 cents a year assuming an annual inflation rate of 2 per cent).

Happy 2019. By 2023 we’ll know precisely how far once-proud Ontario has fallen behind the mighty state of Missouri.

Martin Regg Cohn is a columnist based in Toronto covering Ontario politics. Follow him on Twitter: @reggcohn

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Anglais

‘Business as usual’ for Dorel Industries after terminating go-private deal

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MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.

« Moving ahead. Business as usual, » a spokesman for the company said in an email on Monday.

A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.

But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday’s special meeting after reviewing votes from shareholders.

“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity, » he said in a news release.

Dorel’s board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal’s termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.

Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.

It said there is no break fee applicable in this case.

Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.

« We believe that several minority shareholders shared our opinion, » said Letko vice-president Stephane Lebrun, during a phone interview.

« We are confident of the long-term potential of the company and we have confidence in the managers in place.”

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Anglais

Pandemic funds helping Montreal businesses build for a better tomorrow

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Many entrepreneurs have had to tap into government loans during the pandemic, at first just to survive, but now some are using the money to better prepare their businesses for the post-COVID future.

One of those businesses is Del Friscos, a popular family restaurant in Dollard-des-Ormeaux that, like many Montreal-area restaurants, has had to adapt from a sit-down establishment to one that takes orders online for takeout or delivery.

“It was hard going from totally in-house seating,” said Del Friscos co-owner Terry Konstas. “We didn’t have an in-house delivery system, which we quickly added. There were so many of our employees that were laid off that wanted to work so we adapted to a delivery system and added platforms like Uber and DoorDash.”

Helping them through the transition were emergency grants and low-interest loans from the federal and provincial governments, some of which are directly administered by PME MTL, a non-profit business-development organization established to assist the island’s small and medium-sized businesses.

Konstas said he had never even heard of PME MTL until a customer told him about them and when he got in touch, he discovered there were many government programs available to help his business get through the downturn and build for the future. “They’ve been very helpful right from day one,” said Konstas.

“We used some of the funds to catch up on our suppliers and our rents, the part that wasn’t covered from the federal side, and we used some of it for our new virtual concepts,” he said, referring to a virtual kitchen model which the restaurant has since adopted.

The virtual kitchen lets them create completely different menu items from the casual American Italian dishes that Del Friscos is known for and market them under different restaurant brand names. Under the Prasinó Soup & Salad banner, they sell healthy Greek options and their Stallone’s Sub Shop brand offers hearty sandwiches, yet the food from both is created in the same Del Friscos kitchen.

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Anglais

Downtown Montreal office, retail vacancies continue to rise

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Some of downtown Montreal’s key economic indicators are heading in the wrong direction.

Office and retail vacancies in the city’s central core continued to climb in the fourth quarter of 2020, according to a quarterly report released Thursday by the Urban Development Institute of Quebec and the Montréal Centre-Ville merchants association. The report, whose first edition was published in October, aims to paint a socio-economic picture of the downtown area.

The survey also found office space available for sublet had increased during the fourth quarter, which may foreshadow even more vacancies when leases expire. On the residential front, condo sales fell as new listings soared — a sign that the downtown area may be losing some of its appeal to homeowners.

“It’s impossible not to be preoccupied by the rapid increase in office vacancies,” Jean-Marc Fournier, the former Quebec politician who now heads the UDI, said Thursday in an interview.

Still, with COVID-19 vaccinations set to accelerate in the coming months, “the economic picture is bound to improve,” he said. “People will start returning downtown. It’s much too early to say the office market is going to disappear.”

Public health measures implemented since the start of the pandemic almost a year ago — such as caps on office capacity — have deprived downtown Montreal of more than 500,000 workers and students. A mere 4,163 university and CEGEP students attended in-person classes in the second quarter, the most recent period for which figures are available. Border closures and travel restrictions have also brought tourism to a standstill, hurting hotels and thousands of local businesses.

Seventy per cent of downtown workers carried out their professional activities at home more than three days a week during the fourth quarter, the report said, citing an online survey of 1,000 Montreal-area residents conducted last month.

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