Minimum-wage increase is proving a good move as jobless rate falls to 5.4 per cent,

Payrolls jump as the province’s jobless rate falls to the lowest level since 2000

In spite of some predictions to the contrary, Ontario’s sharp minimum wage increase hasn’t killed its labour market.

Business owners and economists fretted that the 21per cent wage hike, which took effect on Jan. 1, would cause a slowdown.

But the latest employment report shows the province’s jobless rate fell to 5.4 per cent in July, the lowest since 2000, and lower than every other province except British Columbia.

Ontario’s payrolls jumped 0.8 per cent last month for the biggest gain since 1989, and employment has been climbing since February.

The minimum wage increase stoked controversy: Advocates said lower-income families would benefit from having more disposable income. Crit- ics predicted they would suffer as businesses cut staff and reduced hours.

Owners of grocery stores and restaurants said while the government moved too fast, they would make changes to cushion the blow — such as buying more equipment or raising their prices.

Doug Ford, now premier, said tax cuts were a better way to help families, and that argu- ment helped propel his Progressive Conservatives to a June election victory.

The labour gains suggest companies are coping with higher wage costs because of the strong economy, said Krishen Rangasamy, senior economist at National Bank Financial in Montreal.

“While Ontario’s minimum wage increase had the expected effect of lifting Canada’s aver- age wage growth this year, the advertised negative impact on employment is less apparent,” Rangasamy wrote in a research note.

“Employers seem reluctant to part with their now more expensive workers perhaps due to reported labour shortages, although the persistence of strong sales and profits could also explain the resilience of employment.”