Minimum wage increases help economy grow

The new year has brought plenty of discussion about minimum wages across Canada, with new increases taking effect in many provinces just as data emerges about the results of past gains. And it’s worth taking the opportunity to examine the real — and trumped-up — effects of a livable minimum wage.

Let’s start with what we might expect in theory from the minimum wage increases already announced by provincial governments across Canada. For that, we can look to an analytical note recently authored by Bank of Canada staff.

On the balance, that note concluded that all of the anticipated effects of increasing minimum wages to up to $15 project to be modest in the larger picture. Factors including inflation, interest rates, GDP and employment levels are expected to change by 0.3 per cent or less. And real labour income would increase by 0.7 per cent, more than doubling the effect of any job impacts (which unfortunately dominated most media coverage of the analysis).

So does the conclusion that minimum wage hikes are an effective means of increasing wages with relatively minor (if any) downsides fit the observed results? For the answer, let’s look to Alberta, which shifted from the lowest minimum wage in Canada to the highest in a series of increases starting in 2015.

Like Saskatchewan, Alberta is facing a resource price crash which has affected core industries. But while both Saskatchewan and its lowest-paid workers are still stuck in a rut, Alberta has been able to get back on track.

While implementing its minimum wage increases, Alberta has seen its total employment jump back to a level last seen before the oil slump, while also enjoying far more economic growth in 2017 than any other province.

In contrast, Saskatchewan is facing year-to-year job losses. And the most the Saskatchewan Party can point to as a reward for keeping wages down is the projection that our total growth for a two- or three-year period might eventually match Alberta’s 2017 renaissance.

What’s more, even the service industries which typically raise the greatest outcry about fair wages have seen their sales and employment levels increase in Alberta.

And the gap between doomsayers’ claims about an increased minimum wage and the real effects brings us to the only part of the response to a minimum wage worth worrying about: The few employers who are so callous as to convert their rhetoric into collective punishment against workers.

For the most prominent examples of that phenomenon, we can look to Ontario, which saw a substantial minimum wage increase take effect Jan. 1. Most notably, a number of Tim Hortons franchises — including one owned by heirs to the chain’s founders — went out of their way to strip benefits away from workers in a supposed response to the increased minimum wage.

That step managed to earn the ire of even

Tim Hortons’ corporate office. But the public outcry didn’t stop the franchisees’ lobby group from releasing easily debunked claims about the financial impact of the minimum wage increase.

Some other employers likewise tried to turn the higher minimum wage into an excuse to strip cash or benefits from workers, with schemes ranging from stealing tips, to cancelling breaks, to dubious attempts to relabel employment relationships.

Of course, it’s never a secret that some employers go out of their way to exploit workers when they see the opportunity.

And the lesson to take from the latest set of examples is that we shouldn’t let those bad actors dictate our policy choices — particularly since improved wages for lower-income workers can fit into a strong economy for everybody.

While both Saskatchewan and its lowest-paid workers are still stuck in a rut, Alberta has been able to get back on track.