National Post (National Edition)
Weak opposition to Wynne’s economic war
Polls suggest Ontario Premier Kathleen Wynne’s ongoing war on economists is paying dividends. Fifty-three per cent approve of her Liberal government extending rent control to units built after 1991, according to a Forum Research poll conducted in May; only 25 per cent disapproved. In June, Forum found 53 per cent of Ontarians supported jacking up the minimum wage to $15 from $11.40 by Jan. 1, 2019, versus 38 per cent opposed. The move was hugely popular among Liberal voters (79 per cent) and NDP voters (28 per cent). Wynne’s approval rating is staggering back up toward, um, 20 per cent. But a Campaign Research poll released Sept. 13 had the Tories just five points ahead of the Liberals. That’s pretty great news for this beleaguered tribe.
The boffins still playing along, though.
Earlier this month, Queen’s Park’s Financial Accountability Office projected aren’t the hike would “result in a loss of approximately 50,000 jobs ... with job losses concentrated among teens, young adults and recent immigrants.”
And it could be higher, the FAO cautioned, because there’s very little precedent for, and thus little evidence on which to judge, a hike as rapid as the one the Liberals propose — 32 per cent per cent in less than two years.
This week, TD Economics weighed in with a higher number: “a net reduction in jobs of about 80,000 to 90,000 positions by the end of the decade.”
And the Canadian Centre for Economic Analysis paints the grimmest picture: “We (expect) that the Act will, over two years, put 185,000 jobs at risk” — that’s jobs that already exist or that would otherwise have been created.
It’s easy to see why raising the minimum wage is popular. Governments like it because it doesn’t show up in the budget. We in the media can pretty easily find victims of an $11.40 minimum wage, and reasonably compassionate people quite rightly sympathize. Forty hours a week at $11.40 an hour for 50 weeks a year is $22,800. You can’t live on that. Only jacking it up doesn’t accomplish half of what it seems to on its face, and it risks disrupting a labour market that works rather well for lots of people. “Just 27 per cent of the total gain in labour income would be expected to benefit low-income workers,” the FAO reported on the minimum wage hike.
“Households with incomes above the median would receive almost 40 per cent.”
The majority of minimum wage workers aren’t working 40 hours a week for 50 weeks: 60 per cent are part-timers, and 60 per cent are teens and young adults for whom minimum wage jobs are important stepping stones toward adulthood and productive careers. You don’t necessarily want to get rid of those.
On rent control: an Urbanation report commissioned by the Federation of Rental-housing Providers of Ontario and released this week claims 1,000 purposebuilt rental units have already been scrapped or turned into condominiums, thanks to the Liberals’ legislation.
“Without any changes in the supply outlook, a cumulative deficit of 62,500 rental units is expected to be amassed in the coming decade,” the report reads. “The only solution is for Ontario to build itself out of this situation,” FRPO president Jim Murphy told the Financial Post’s Garry Marr. “This begins with our provincial leaders working with industry to identify and implement policies that create more purposebuilt rental units, not less.”
Murphy has an interest here, obviously. But I don’t think I’ve ever come across an economist who thinks rent control actually incentivizes the construction of new rental units. And as I’ve written before, the Liberals slapped rent control on post-1991 builds almost exclusively to silence complaints from high-end condo renters (like me!). The policy helps vastly fewer legitimately sympathetic people than it puts at risk. And whatever the interests of these studies’ authors, surely they’re no less credible than Ontario’s desperate Liberal government. Luckily, we have politics! All of this ought to be fertile soil for a healthy policy debate down at Queen’s Park. Alas, it really isn’t. The NDP supports the $15 minimum wage, obviously. Some on the left want rent control to stick to a unit between tenancies, thus increasing the disincentive to build new units, but the general concept is certainly popular. It’s so popular, in fact, that PC Leader Patrick Brown supports it.
Huge rent increases “simply can’t happen,” he told TVO’s John Michael McGrath this week. He suggested looser rent controls like British Columbia’s might be an option. Brown also supports a $15 minimum wage. He just thinks — as do many — that we’re going there too quickly.
“I think everyone wants to get to a $15 minimum wage, but it’s the pace,” he said in June. Opposing minimum wages, period, and rent control, period, is mainstream economic theory. It ought to be mainstream conservative politics. When it’s not, it becomes alarmingly difficult for a government like Kathleen Wynne’s to bugger things up.