Ontario increases minimum wage. Is it enough to live on as a newcomer?

As of October 1, the provinces of Ontario, Prince Edward Island, Manitoba, and Saskatchewan have raised their legal minimum hourly wages. Most of these increases are linked to inflation. For instance, the minimum wage in Ontario?has risen from $16.55 to $17.20 per hour.

The income of minimum-wage earners varies based on the weekly hours worked. According to Statistics Canada data from 2023, the average full-time employee in Ontario works 39.3 hours per week. Assuming all of these hours are paid, an employee earning the new minimum wage of $17.20 can expect to gross $675.96 per week, before taxes and deductions.

In Ontario, most employers pay their workers biweekly. For a full-time minimum wage worker, this translates to an average gross paycheck of $1,351.92. Over the course of a year, with 26 pay periods, a full-time minimum wage earner would gross around $35,149.92 annually.

Using Wealthsimple’s income tax calculator, an employee in Ontario with this gross salary can expect to take home about $29,026 after taxes, assuming they have no other income, investments, or contributions to a Registered Retirement Savings Plan (RRSP).

Whether someone can survive on a full-time minimum wage job in Ontario is a crucial question, particularly for newcomers who may not have secured a higher-paying job or need to quickly find work to support themselves. Many newcomers also need to show proof of income to secure housing.

Living on a minimum wage salary of $29,026 net income can be challenging, especially in urban areas like Toronto, where the cost of living is high. Housing is often the largest expense, with rent for a one-bedroom apartment in Toronto averaging over $2,500 per month, which would take up a substantial portion of a minimum wage worker's income.

However, in more affordable parts of Ontario, particularly in smaller towns or rural areas, surviving on a minimum wage income may be more feasible. Careful budgeting is essential, focusing on affordable housing, and public transportation, and minimizing discretionary spending.

For newcomers, it’s important to explore government support programs (such as housing assistance or subsidies) and consider potential career advancements, like upgrading skills or credentials, to increase earning potential over time.

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Cost of living for newcomers in Ontario

For newcomers in Ontario, particularly in Toronto, the cost of living can be a significant concern. According to 2021 census data, 46.6% of Toronto's population consists of immigrants, making it the Canadian city with the highest number of newcomers. Many of these individuals rent while they save for a home. Here's an approximate breakdown of the monthly living costs for a single person living alone in Toronto:

• Average rent for a one-bedroom apartment: $2,452 (as of September 2024, TRREB)
• Groceries: $526.50 (numbeo.com)
• Utilities (Electricity, Heating, Cooling, Water): $160.44 (numbeo.com)
• Phone plan: $56.20 (numbeo.com)
• Internet: $69.70 (numbeo.com)
• Public transport: $3.30 per trip or $143 for a monthly adult TTC pass (ttc.ca)

The total cost of essentials adds up to approximately $3,407.84 per month or $40,894.08 per year.

For a full-time minimum wage worker earning $35,149.92 gross annually, this cost exceeds their income by $5,744.16. After taxes, with an average net income of $29,026, a minimum wage earner would be short by over $11,000 each year to cover basic living expenses.

Strategies to reduce living costs for newcomers include:

• Shared accommodation: Renting with roommates to reduce housing costs.
• Budget-conscious shopping: Buying groceries on sale or in bulk to cut costs.
• Cheaper phone and internet plans: Opting for basic packages or discounted providers.
• Reducing transportation costs: Walking, cycling, or carpooling to limit the need for public transit or ride-shares.

These adjustments can help make living in Toronto more manageable on a limited income while newcomers look for better job opportunities or further their career prospects.

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Newcomers in minimum-wage roles

Newcomers to Canada often find themselves in minimum-wage roles while waiting for their foreign credentials to be recognized. According to government data, around 20% of all jobs in Canada are in regulated occupations, meaning these professions require a license or certificate to practice in the country.

Each province has its licensing authorities, which leads to variation in the time it takes for newcomers to have their credentials recognized. As a result, there is no standardized national data on this process. In the meantime, many newcomers must take on jobs outside their trained professions, frequently in minimum-wage or slightly higher-paying roles.

A report from Statistics Canada highlights that between 2001 and 2021, the number of immigrants working in low-skilled occupations increased. Immigrant workers, along with Temporary Foreign Workers (TFWs), have taken on many of the low-skilled jobs that Canadian-born workers previously filled. This trend underscores the reality for many newcomers, who, while waiting to re-enter their fields, contribute to essential sectors of the economy through entry-level or low-skilled positions.

The experience of working in minimum-wage jobs can be a stepping stone for newcomers as they build Canadian work experience and transition into their professions once their credentials are recognized. However, navigating this period can be financially challenging, especially in high-cost regions like Ontario.

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