Lee Friday – November 28, 2018
The Canadian Hockey League (CHL), which consists of the Ontario Hockey League (OHL), the Western Hockey League (WHL), and the Quebec Major Junior Hockey League (QMJHL), is currently embroiled in a “$180-million class-action lawsuit. The suit on behalf of all current and many former players seeks outstanding wages, overtime pay, holiday pay and vacation pay.”
There are 60 teams in the CHL (including 8 in the U.S.). Players are 16 to 20 years old. This is the primary development league for the NHL. Equipment, billeting, and travel costs are paid by the team, and for each season he plays in the league, the league pays for one year of post secondary education (tuition, books, compulsory fees) for the player.
With games, practices, and travel, these young players ‘work’ a considerable amount of time each week, for which they receive a stipend which is far below the minimum wage dictated by the government in each jurisdiction. Thus, the lawsuit. The players say the CHL is in breach of employment standards legislation.
The players should be careful what they wish for and consider two important questions.
First question: Is a government legislated minimum wage a good idea?
Second question: Why are you suing, given that the teams have complied with the terms of the contract which each of you voluntarily signed?
Minimum Wage Legislation
Employers are treating workers unfairly! Living standards are low! We must help the workers! This is the propaganda of politicians supporting the minimum wage. They love minimum wage legislation because workers outnumber employers by a significant margin, which means it is an easy way to buy votes, regardless the consequences.
Most economists who have no connection with the government agree a legally mandated minimum wage reduces employment. Example: an employer estimates an inexperienced unskilled worker will add value to his company equal to $8.00 per hour. This person will NOT be hired if the government mandated minimum wage is $8.00 or higher, because the employer would lose money. Thus, the government discriminates against inexperienced unskilled workers by ‘legally’ denying them an opportunity to gain experience and develop skills to enhance their future economic prospects. We complain about teenagers having too much time on their hands. Why aren’t more of them working, we ask. Now you know.
Jacob G. Hornberger, former trial attorney and professor of law and economics, wrote: “Perhaps the best manifestation of the economic horror that the minimum wage inflicts on people is with respect to black teenagers.” Why? Because minimum wage laws removed an economic weapon from the hands of black people.
When the government’s minimum wage was either non-existent or set at a rate not substantially higher than the market rate, many employers were racist, but nevertheless hired black people who offered to work for lower pay than white people. Result: employment was higher among black teens than white teens. As economics professor Walter Williams wrote, “in 1948, black teen unemployment was less than white teen unemployment, and black teens were more active in the labor market. Today black teen unemployment is about 40 percent; for whites, it is about 20 percent.”
Discrimination in the private sector pales in comparison to the massive discriminatory effects of the government’s minimum wage laws.
Understanding Basic Principles
This brings us to the Ontario government’s response to OHL commissioner David Branch’s request to confirm players’ amateur status, thereby excluding players from employment standards legislation, which would presumably strengthen the league’s defence against the lawsuit. The government gave Branch what he wanted, thus replicating the response from governments in other jurisdictions.
Hockey commentator Don Cherry said if the lawsuit is successful, 75% of junior owners will fold their teams. Whether this is true or not, teams’ costs will rise substantially if players are paid the minimum wage instead of receiving scholarships. So, when the Ontario government says it is “protecting the long-term sustainability of local junior hockey teams,” it is acknowledging that minimum wage legislation raises costs for employers, which in turn creates unemployment.
Politicians say they support minimum wage legislation because it helps workers, but they do not stand firm on this principle, misguided as it is. A principle, by definition, is not open to compromise, but politicians make exceptions when it is politically expedient. If this lawsuit teaches us anything, it is that politicians have no principles.
The players also have something to learn about principles. The stipend they receive is clearly stipulated in the contract each of them voluntarily signed with their teams. A contract is supposed to mean something. It reflects the commitments made by all parties to the contract, and to keep one’s word is an important principle to live by.
Future junior players should decline to sign contracts if they don’t like the terms. This is a good tactic if they believe teams are sufficiently profitable to pay them the minimum wage (or more). But if their demands are not met, they still have the option of signing for lower pay. The important point is that players are currently free to exercise this option, an option which the government forcibly denies to workers in other industries.
When we use the force of government to get what we want, there is usually a high price to pay, but we fail to connect the dots. If they win their lawsuit, many players could lose their jobs when teams are forced to pay minimum wages they cannot afford. For decades, this has been the economic reality for workers in other industries.
Courts are supposed to enforce contracts, not overrule them. If we can appeal to government courts whenever we decide we don’t like the terms of a contract, the inevitable outcome is (and has been) an erosion of societal trust and economic prosperity because fewer contracts are consummated.
The players can seize the moral high ground by honouring their contracts and instructing their lawyers to drop the lawsuit. Teach politicians what it means to stand on principle.