Jul. 5, 2017 "Minimum- wage hike a boon to economy": Today I found this article by Andrew Jackson in the Globe and Mail:
There is no consistent, long-term, economy-wide trade-off between a decent wage floor and jobs
Owing to the strong lobbying efforts of labour and social activists, Canada’s minimum wage floor is rising significantly from the current level of between $11 and $12 per hour, depending upon the province. A new norm of $15 per hour will be in place, in Alberta by October, 2018, in Ontario by January, 2019, and very likely in British Columbia under the terms of the NDP-Green Party agreement.
A phased-in $15-an-hour minimum-wage standard will undeniably have a major impact on the Canadian job market. But, employer protestations of doom and claims of large job losses notwithstanding, the change will be for the better.
Canada stands out in international comparisons as a low-wage country. The Organization for Economic Co-operation and Development provides data on the proportion of full-time workers who earn less than the national median or midpoint wage. More than 1 in 5 Canadian workers (22.2 per cent) earn low wages by this definition, and close to a third of private-sector workers are low paid if one includes part-timers.
While Canada does slightly better than the United States, where 25 per cent of full-timers are low paid, low-wage work is less prevalent in many European countries because of higher minimum wages and/or higher rates of unionization in low-wage sectors of the economy.
The incidence of low-wage work is around 8 per cent in Scandinavian countries such as Denmark and Finland (8.4 per cent), and 18.4 per cent in Germany.
It is often claimed that a higher minimum-wage floor comes at the cost of jobs, but the employment rate (the percentage of the working-age population with jobs) is higher in the Scandinavian countries (Denmark, 74.5 per cent, Sweden, 76.4 per cent) and in Germany (75.1 per cent) than it is Canada, where it stands at 72.9 per cent.
The United States has lots of low-wage jobs, and the employment rate in that country is just 69.5 per cent, well below that of Canada and many European countries.
The comparative data suggest that, at a minimum, there is no consistent, long-term, economywide trade-off between a decent wage floor and jobs. Indeed, very low wages may discourage workers from accepting jobs, as seems to be the case for the many low skilled, male workers in the United States who have abandoned the job market in recent years.
The main way the economy responds to a higher wage floor is through higher labour productivity or higher output an hour worked. OECD data show that productivity in the Scandinavian countries and Germany is much higher than in Canada. Canadian output per hour worked is just 73 per cent of the level in Denmark and 76 per cent of the level in Germany (and we lag badly behind the United States, too.)
Countries with high wage floors tend to have somewhat fewer jobs in labour-intensive private services such as restaurants and retail trade, but these jobs are better paid and more productive because of higher investment in machinery and equipment, higher skills and much lower worker turnover.
Higher business-sector productivity sustains higher wages and boosts overall demand for goods and services as well as the tax base to fund more public-service jobs.
Here in Canada, studies suggest that higher minimum wages set at the reasonable level of about two-thirds of the median wage or about $15 an hour may lead to a modest reduction in hours worked.
But the vast majority of low-wage workers will be better off. (It is far better to work 35 hours at $15 an hour than 37 hours at $12 an hour.)
Businesses in low-wage industries will not be placed at a competitive disadvantage compared with one another since they will all need to adjust. Likely, there will be some price increases to cover higher labour costs and some long-term shift of employment out of very labour-intensive, low-wage sectors. That is a good thing.
The goal of economic policy makers should be to secure high employment at decent wages.
Having lots of low-wage jobs is just as much a sign of failure as is high unemployment.
What we need is higher productivity in low-wage industries, and a higher minimum-wage floor will help to do the job.
Sept. 28, 2017 "Group urges Ontario to phase in wage hike over 5 years": Today I found this article by Shawn Jeffords in the Globe and Mail:
The risk of job losses due to a minimum wage increase could be significantly reduced if the Ontario government extended the policy phase-in period, says a new report from a coalition of businesses.
The Keep Ontario Working Coalition, which includes groups such as the Ontario Chamber of Commerce and the Retail Council of Canada, said Wednesday that if the government implemented the change over a five-year-period, instead of the planned 15 months, it could decrease the risk of job losses by 74 per cent.
An economic analysis of the minimum wage increase conducted by the coalition earlier this year concluded that over 185,000 jobs could be impacted by the hike.
The coalition's spokesperson, Karl Baldauf, said the Liberal government should consider lengthening the transition.
"It would cost the government nothing but it would effectively be a more reasonable implementation timeline for this legislation," he said.
The report also suggests the minimum wage hike will add $23-billion in costs to business over a two year period. The economic stimulation created by the hike – estimated at $11-billion in the study – is not enough to offset the cost, he said.
"Businesses are going to have to determine how they absorb those new costs," Baldauf said, adding that may come in the form of cutting jobs or increasing the cost of goods and services.
In July, Premier Kathleen Wynne announced her government would increase the minimum wage to $15 an hour by Jan. 1, 2019. The increase would be phased in gradually and would rise with inflation, as scheduled, from $11.40 currently to $11.60 in October, to $14 an hour on Jan. 1, 2018 and $15 the following year.
Labour Minister Kevin Flynn defended the government plan Wednesday, saying in a statement that it is about fairness to workers.
"Thanks to our strong economy, we're now in a position to move forward with positive changes for workers in Ontario. We know the cost of doing nothing is simply too high – too high for workers and too high for our economy," Flynn said.
The latest report comes two weeks after the province's economic watchdog, the Financial Accountability Office, estimated the minimum wage increase would see more than 50,000 people lose their jobs.
However, many economists support the government move, saying hiking the minimum wage boosts economic activity and increases people's purchasing power. Dalhousie University economist Lars Osberg said Wednesday that he's not surprised to see reports predict massive job cuts, but he disagrees that they will actually come to pass.
"It's quite easy to anticipate that you're going to get these comments," he said. "No, they're not true. If you really want to worry about the total unemployment rate going forward ... you want to be looking at monetary and interest rate policy and you want to be looking at fiscal stimulus. At the end of the day, minimum wage workers are a relatively small fraction of the entire work force."
Osberg is one of 53 economists who signed an open letter in support of a $15 minimum wage.
"I think many economists are aware that the dominate perspective on the minimum wage in the economics profession has changed 180 degrees over the last 20 years," he said.
"It used to be the case that people talked very much about the labour market as if it was a perfectly competitive market where higher wages would have a big effect on employment. But two decades of solid, empirical research have shown that when the minimum wage is increased it really doesn't have very much impact on aggregate employment of low wage workers."
9401doug
1 day ago
A little info about those 53 economists that signed the letter.
http://www.torontosun.com/2017/07/16/minimum-wage-hike-proposal-out-of-touch
I'll believe the FAOoffice anytime over those 53.
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Kothar
2 days ago
It won't be, but once Brown gets in as new premier next year, it will be capped at $14.00 until 2025.
Nov. 14, 2022 My opinion: The minimum wage in Ontario is $15.50/hr.
Nov. 14, 2022 My opinion: The minimum wage in Ontario is $15.50/hr.
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