$15 minimum wage could cost Ontario 50,000 jobs: watchdog
Ontario’s plan to increase the province’s minimum wage to $15 an hour by 2019 will be mostly ineffective at reducing poverty, and could ultimately cause a net loss of 50,000 jobs, an independent analysis of the policy has found.
The Financial Accountability Office of Ontario on Tuesday released a commentary covering the province’s proposal to increase the minimum wage, finding the added labour costs for businesses will increase workers’ incomes, but that those extra payroll costs will force firms to axe some lowerincome positions.
The watchdog estimated that the wage hike will reduce total employment in the province by about 0.7 per cent, or a net total of 50,000 jobs, as businesses try to shrink their costs through automation or price increases that could lead to reduced sales and cause layoffs.
“However, there is evidence to suggest that the job losses could be larger than the FAO’s estimate,” the FAO said. “Ontario’s proposed minimum wage increase is both larger and more rapid than past experience ...”
Businesses in Ontario and Alberta — where a $15 minimum wage is slated to go into effect next year — are bracing for the added payroll expenses.
The new B.C. government also supports a minimum wage of at least $15 per hour.
The FAO concluded that “higher minimum wages are not an effective way to alleviate poverty,” as just 27 per cent of the gain in labour income would flow to low-income families. Instead, households above the low-income cutoff would reap most of the benefits, the watchdog found.
Ontario Premier Kathleen Wynne’s Liberal government says the province’s strong economic growth justifies the minimum wage hike. It also cited economic studies touting the benefits of higher wages.