Minimum wage up = jobs down, Who knew…certainly not our government

Upon taking power the Labour-led government quickly moved to raise the minimum wage.

The Finance Minister says it will help the poor…but will it?

Actually no, it will likely harm them. Canada is finding that out right now…as have other countries.

The Bank of Canada estimates there will be about 60,000 fewer jobs by 2019 due to the increases in minimum wages across the country, but that labour income will be higher due to the increases.

In examining the impact of the wage increases, the report estimated that the consumer price index could be boosted by about 0.1 percentage points on average and real gross domestic product could be cut by 0.1 per cent by early?2019.

The number of jobs lost was based on a 0.3-per-cent decline in the number of hours worked, while aggregate real wages were estimated to increase 0.7 per cent.

The research paper by the staff at the central bank noted that if the average working hours declined following the increase in the minimum wage, the number of jobs lost would also be lower.

The Bank of Canada estimated that about eight per cent of all employees work at minimum wage, a proportion that increases to 11 per cent if a threshold of five per cent above minimum wage is used.

Ontario raised its minimum wage to $14 per hour on Jan. 1 from $11.60 and plans to increase it to $15 in 2019, while Alberta is expected to raise its minimum wage to $15 later this year.

So, those who retain their minimum wage jobs will be better off, but 60,000 people in Canada get to be the sacrificial lambs so those others can keep their jobs.

I’m not sure that is a good result..especially for the 60,000 who will lose their jobs.

The simple fact is that as the minimum wage rises businesses costs also go up and they will seek ways to staunch that to keep profit margins. Eventually those minimum wage jobs will become uneconomic and automation and corresponding job losses will kick in.