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What The $15 Minimum Wage Increase Means For Logistics Management Companies

Apr 9, 2018 | Logistics Industry

The odds are that you’ve heard about changes to the minimum hourly wage for Ontario employees

As of January 1st, 2018, legislation was passed to increase the minimum wage from $11.60 to $14, and then to $15 by January 1st, 2019. After 2019, the wage is to rise annually with inflation.  

However, you may be curious as to what’s involved in the changes, how you’ll be affected, and how logistics management companies might take a hit. So, we’ve taken some time to address these concerns. 

What’s Changing? 

The Ontario wage increase is part of larger legislation called ‘The Fair Workplaces, Better Jobs Act’. This Act is designed to protect workers, including part-time and contract workers. The Act also proposes changes such as: 

  • When an employee reaches five years with a company, vacation should rise to three weeks per year.
  • Employees should be entitled to 10 personal emergency days a year, with a minimum of two days paid. 
  • Employers are not permitted to ask for a “sick note” from those taking personal leave. 
  • Equal pay for part-time workers and full-time workers, and more. 

Here’s an overview of what the change will look like financially:

infographic showing the minimum wage increase


Why The Change?

According to Premier Kathleen Wynne: 

“People are working longer, jobs are less secure, benefits are harder to come by, and protections are fewer and fewer…In a time of change like this, when the very nature of work is being transformed, we need to make certain that our workers are treated fairly.” 

For more information, we invite you to watch the following debate on the impact of Ontario’s new minimum wage, published by The National: 

How Will the Minimum Wage Hike Affect Supply Chains? 

Supply chain management is one of the most affected components of a business when it comes to wage hikes as:

  1. Warehouse employees typically have their wages increased.
  2. Warehouses are typically an area where cutting jobs can be all too easy. 

Increases in minimum wage tend to mean wage increases for warehouse employees, not because warehouse employees typically earn minimum wage, but because workers that are paid more typically have their wages increased alongside these changes.  

And while most businesses are feeling the pressure to sacrifice workers to accommodate financial stress, at McKenna, we have worked to anticipate these changes and have put measures in place to cover the increasing cost of doing business. 

How Will Businesses Cover the Cost of their Supply Chains?

While McKenna is the exception, other logistics companies will need to make some hard decisions. Below are just a few of the ways businesses are cutting costs: 

Laying Off Workers

For other logistics companies, job cutting is the “go-to” solution after wages are increased. When businesses are forced to pay their employees more, they try to mitigate this damage by employing fewer people. And unfortunately, it is becoming easier to reduce manual labour in warehouses due to the rising popularity of technology.

Automation Replacement

More and more, businesses are opting to use automation software or robots to operate supply chains. While these technologies can prove useful by increasing speed and accuracy while fulfilling orders, especially for ecommerce companies, these technologies also leave supply chain management vulnerable to job loss. Just as automated ordering systems are replacing front-line employees at grocery stores and fast food restaurants, the same is happening behind the scenes in warehouses.

Moving Out Of Ontario 

Another tactic used to lower supply chain management costs is moving warehouses outside of Ontario – to areas where the minimum wage is lower. While this can reduce labour costs, moving away from metropolises like Toronto will make companies less efficient because it will make order fulfilment to these highly profitable areas slower. So, this tactic is really only feasible for companies that don’t focus on e-commerce where fulfillment to individuals is important.

How the Wage Hike will Impact Companies Using Third-Party Logistics

For larger companies that keep their logistics in-house, the onus will be on them to find a way to deal with the potential increase in operating costs. 

For smaller companies that outsource to third-party logistics providers, they might be wondering how to control these costs when they don’t set the prices themselves.

The McKenna Approach

At McKenna, we are a family-run business and always have been. McKenna employees have always had fair wages, and we don’t plan on cutting costs by sacrificing talented employees as the minimum wage increases. 

We’ve also made a commitment to engage quality part-time team members by extending our company benefits to them instead of using individuals from a temporary agency. This protects and supports our part-time workers – as they are granted the same respect and opportunity as every other McKenna employee. 

For us, it will be business as usual so that we can continue putting our employees and the wellbeing of our customers’ supply chain management first.

Learn more about our:

Contact McKenna Today

If you have any concerns about the minimum wage increase and how it may be impacting the working environment of our team or the quality of our solutions, please feel free to reach out

Contact us today to learn more about our cost-effective, efficient solutions for your supply chain management needs. We’re here to help.

Importing to Canada?

We serve all of Canada and we understand the unique Canadian logistics market

Looking for a Better 3PL?

Discover McKenna’s commitment to accuracy and timeliness

Ready to Grow Your Business?

If you’re getting started with mass retailers, we can help