In late May the Ontario Government announced that the minimum wage will rise to $14.00 per hour in January 2018 and $15.00 in January 2019. This 32% spike over the next two years came at quite a surprise since currently minimum wage is $11.40. There are always many economic and financial consequences of raising the minimum wage in an area and the effects certainly extend to the childcare industry.
Many nannies and caregivers are being paid minimum wage - so how could this affect their jobs and the families that employ them? Could part-time nannies face the risk of working fewer hours? Our guess is that nanny sharing will become more attractive.
The average hourly rate for a nanny in many major cities is currently below $15 - and keep in mind that even if you are paying your nanny $15 right now, you should allow for a raise in two years time.
Here is a list of the 10 largest cities in Ontario most affected by the minimum wage hike:
(Along with the current average hourly rate for a nanny in that city)
Toronto - $14.03
Ottawa - $13.08
Oakville - $13.22
Mississauga - $12.06
Etobicoke - $13.02
Burlington - $12.92
London - $12.82
Markham - $12.04
North York - $13.00
Guelph - $11.97
These are 10 biggest cities in Ontario where the average hourly wage for a nanny is currently below $15.00. Many smaller towns and cities have rates even lower than those in the list but we’re expecting to see the largest impact of the wage increase in these more populated areas where there a ton of families with young children and nannies. In the coming two years, families in these cities will have to shell out more money for childcare and nanny fees.
News about increases in minimum wage always brings forth strong reactions - positive and negative. Let’s see who’s affected, and how.
Good News for Nannies and Caregivers
If you are currently a full-time nanny being paid minimum wage then this is great news for you! The minimum wage increase comes as a good sign for many nannies and caregivers who are currently being paid around $11 or $12 per hour, and could even encourage more workers to enter this industry. Being a nanny is a tough job sometimes and this increase in minimum wage is welcome news for those in the childcare industry.
Troubling Problems for Families
An increase in the cost of childcare could create setbacks for many families. Many households will choose to bear the increased costs of paying their nannies (which could be as much as $600 more every month if they are currently paying minimum wage).
Part-time nannies may find themselves in a bind as well. Some families who employ part-time help can choose to cut back on hours to save money, and instead opt for asking grandparents or close friends to help out instead.
Time will ultimately reveal the full effect of the minimum wage increase in the childcare industry and Ontario overall. The economic landscape in 2019 will also heavily influence what impact the higher minimum wage has on workers and employers alike. Toronto isn’t the first city to move towards a $15 minimum wage and it looks like it won’t be the last, with cities in the United States following suit.