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Longer phase-in cuts risk: report


TORONTO—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 yesterday 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 percent.

An economic analysis of the minimum wage increase conducted by the coalition earlier this year concluded that more than 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 reasoned.

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, Baldauf said.

“Businesses are going to have to determine how they absorb those new costs,” he noted, 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 then $15 the following year.

Labour minister Kevin Flynn defended the government plan yesterday, 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,” he said.

“We know the cost of doing nothing is simply too high—too high for workers and too high for our economy.”

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 yesterday that he's not surprised to see reports predict massive job cuts, but he disagrees that they actually will come to pass.

“It's quite easy to anticipate that you're going to get these comments," he remarked. ”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 workforce,” Osberg said.

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 noted.

“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,” Osberg added.

“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.”

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