‘It ultimately reduces costs’: Why Ontario businesses should consider closing the living wage gap

A financial expert is weighing in on how Ontario businesses can benefit from prioritizing paying a living wage to their employees, after a report suggested there’s an almost $10 per hour gap between minimum and living wages in Toronto.

The Ontario Living Wage Network’s 2026 report was unveiled earlier this week, suggesting that workers in the Greater Toronto Area (GTA) need to be making $27.60 per hour to afford basic expenses like rent and food. 

The average living wage increase across all 10 Ontario regions analyzed was of  1.6 per cent this year, which is modest compared to the 5.3 per cent increase registered the year before. 

Although the increase might not seem staggering, the living wage suggested by the report is significantly lower than the minimum wage in Ontario, which is $17.95 as of Oct. 1. 

This would mean someone making minimum wage in the GTA would be making $9.65 below what they would need to make per hour to afford basic needs. For someone working 40 hours a week, that would mean a difference of over $20,000 per year. 

On the other side of the table, businesses also struggle to keep up with costs, with many having to absorb costs, raise prices, and even pause hiring to deal with changing supply chains due to the U.S.-imposed tariffs and rising inflation. 

Lisa Colangelo, CEO of Your Neighbourhood Credit Union (YNCU), tells Now Toronto the company made a decision to pay an Ontario living wage benefit back in 2022 to help close the gap between living and minimum wages. Since establishing the commitment, YNCU is a Certified Living Wage Employer by the Ontario Living Wage Network. 

“We pride ourselves on being a people-first organization. What that means is that we prioritize ensuring that we’re taking care of our people, our team members, prioritizing our members who are owners who are part of our credit union, and then also making sure that we are contributing back to the communities we serve,” Colangelo said. 

What it means to be people-first 

According to Colangelo, being people-first means that the organization prioritizes allocating their budgets in a way that allows it to make sure its employees are getting paid an appropriate wage. 

“Every year, we ensure that when we are creating our budget for the year that we prioritize ensuring that we maintain that certified living wage status that we’ve committed to our employees,” she said. 

These decisions might not come lightly, as the expert explains that organizations themselves have to manage a limited budget, which often means cutting costs or having to choose between internal priorities. 

In order to help close the wage gap for their employees, Colangelo recommends other organizations plan ahead, consider seeking the help of a financial advisor, and be realistic about their priorities and budget. 

“Be really honest when you’re going into the budget cycle, and when you’re making those decisions on where to allocate your limited dollars. Think about how you can help your employees close the gap that currently exists,” she said. 

“Even if you can’t meet all of the gaps that exist, is there something that you can do to make it easier on your employees?” 

Paying living wages could help eventually cut costs

Closing the living wage could not only ensure employees have an easier time managing their expenses and life needs, as it could also be beneficial for the employer itself, according to Colangelo. 

As explained by the expert, paying living wages might make employees more willing to stay on board and remain committed to their company, which could reflect on their quality of work, as well as helping the company avoid costs related to welcoming and training new employees. 

“Sometimes when people think about the cost associated with it, I look at the benefit as well. And by retaining your team members, that also helps to reduce costs on bringing in new team members over time if employees are more likely to leave,” she said. 

“There’s lots of benefits to ensuring that you are helping your team close that gap. So, the advice we give to the businesses we serve is once again, starting with your people, starting with your employees, is always a good decision from an engagement and a retention perspective, which helps to ultimately reduce costs.”