Evi­den­ce clear: Mi­ni­mum wa­ge hi­kes hurt most vulnerable

Uni­ver­sity of Wa­ter­loo study con­firms that the young and im­mi­grants lo­se out on jobs when mi­ni­mum wa­ge ri­ses

La Jornada (Canada) - - ENGLISH SECTION -

With many of Ca­na­da’s lar­gest pro­vin­ces (On­ta­rio, Al­ber­ta, Bri­tish Co­lum­bia) eit­her com­mit­ting to or con­si­de­ring a mi­ni­mum wa­ge of $15 per hour, many analysts - in­clu­ding us - no­te that this po­licy will hurt many vulnerable wor­kers by re­du­cing job op­por­tu­ni­ties.

But in an open let­ter to On­ta­rio Pre­mier Kath­leen Wyn­ne, 53 “eco­no­mic ex­perts” dis­mis­sed this con­cern as “fear-mon­ge­ring” and “out of li­ne with the la­test eco­no­mic re­search.”

That is simply fal­se. The aca­de­mic evi­den­ce in Ca­na­da, in­clu­ding the la­test re­search, con­sis­tently finds that rai­sing the mi­ni­mum wa­ge leads to lo­wer em­ploy­ment for vulnerable, low-ski­lled wor­kers (of­ten young peo­ple ages 15 to 24).

In a com­prehen­si­ve new aca­de­mic study, Uni­ver­sity of Wa­ter­loo pro­fes­sors Ka­te Ryb­czyns­ki and Anind­ya Sen mea­su­re the em­ploy­ment ef­fects of 185 chan­ges to mi­ni­mum wa­ges in Ca­na­da’s 10 pro­vin­ces from 1981 to 2011. The study con­trols for a host of fac­tors that could af­fect em­ploy­ment, in­clu­ding chan­ging la­bour mar­ket con­di­tions and the eco­no­mic cy­cle.

Per­haps un­sur­pri­sing to tho­se fa­mi­liar with the exis­ting body of Ca­na­dian re­search, the study finds mi­ni­mum wa­ge hi­kes re­du­ce job pros­pects for vulnerable wor­kers. It finds that a 10 per cent in­crea­se in the mi­ni­mum wa­ge leads to up to a four per cent drop in tee­na­ge em­ploy­ment. The On­ta­rio go­vern­ment is pro­po­sing a 32 per cent hi­ke in the mi­ni­mum wa­ge over the next 18 months.

Des­pi­te what the “eco­no­mic ex­perts” of the open let­ter claim, the 20 Ca­na­dian stu­dies pu­blis­hed in aca­de­mic jour­nals da­ting back to 1979 pro­du­ced a clear con­sen­sus: mi­ni­mum wa­ge hi­kes re­du­ce em­ploy­ment op­por­tu­ni­ties for young wor­kers. No­ne of the­se stu­dies con­tra­dicts this con­clu­sion.

That shouldn’t sur­pri­se an­yo­ne fa­mi­liar with ba­sic eco­no­mics. Just as con­su­mers tend to buy less if the pri­ce of a pro­duct in­crea­ses, em­plo­yers will hi­re fe­wer wor­kers and/or re­du­ce la­bour costs if go­vern­ment re­gu­la­tions ma­ke it more ex­pen­si­ve to em­ploy wor­kers wit­hout co­rres­pon­ding im­pro­ve­ments to work­pla­ce pro­duc­ti­vity.

It’s the least-ski­lled wor­kers - of­ten tho­se ages 15 to 24 - who lo­se out on em­ploy­ment op­por­tu­ni­ties be­cau­se they tend to be the least pro­duc­ti­ve due to their dearth of ex­pe­rien­ce and skills.

A se­cond - and no­vel - fin­ding of the study by the Uni­ver­sity of Wa­ter­loo pro­fes­sors is that im­mi­grants (ages 25 to 54) are al­so ne­ga­ti­vely af­fec­ted by mi­ni­mum wa­ge hi­kes.

Re­cent im­mi­grants can be vulnerable as they at­tempt to in­te­gra­te in­to the Ca­na­dian la­bour mar­ket with un­re­cog­ni­zed edu­ca­tion cre­den­tials, strug­gles with lan­gua­ge and ot­her pro­blems. Ac­cor­ding to the study, a gro­wing share of mi­ni­mum wa­ge wor­kers are re­cent im­mi­grants (arri­ving in the last 10 years), and the group com­pri­sed 19 per cent of On­ta­rio mi­ni­mum wa­ge wor­kers in 2011.

Far from fear-mon­ge­ring, the Ca­na­dian evi­den­ce clearly shows that mi­ni­mum wa­ge hi­kes re­du­ce em­ploy­ment op­por­tu­ni­ties for low-ski­lled wor­kers. Sa­ying ot­her­wi­se does a dis­ser­vi­ce to the pu­blic de­ba­te and tho­se Ca­na­dians ad­ver­sely af­fec­ted by the po­licy.-TROYMEDIA

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