Minimum wage: frozen in time
Facts don’t support Premier Ford’s fears of paying people more
Happy New Year, unless you live on Ontario’s minimum wage.
In which case, tough luck. Ontario’s law mandating a $1 increase to the minimum wage, as of Jan. 1, has been formally rescinded by Premier Doug Ford. Instead, he legislated a 31-month freeze on the hourly minimum of $14.
Better luck in America, where the minimum wage is on the march while Ontarians stay frozen in time.
New York welcomed the new year with a $15 minimum wage, catching up to San Francisco, but still lagging Seattle, which bumped it up to $16 last week.
Ah, that’s in U.S. funds. At prevailing rates, New York’s $15 minimum is worth about $20 Canadian.
You can do the math. Seattle’s minimum wage workers ($21.25 after conversion) earn about 50 per cent more than their Ontario counterparts — with no sign of an economic slowdown after several years of pay hikes on the west coast.
Ah, you say. Ontario is different. Weren’t we warned of the high price to be paid by workers earning higher wages — the proverbial and political wages of sin?
TD Bank predicted 50,000 to 150,000 jobs lost by the end of 2019 if Ontario went from the old $11.60 an hour to $14 and then $15. The Ontario Chamber of Commerce countered with an even more apocalyptic study claiming 185,00 jobs were “at risk” from raising the minimum wage last year.
When big banks and big business raise the alarm about workers losing their jobs, presumably they have the best interests of our economy at heart, not their own self-interest. Right?
But what if they’re wrong — not so much ideologically, but empirically and economically?
Never mind the awkward tweet from the chamber’s president, Rocco Rossi, ringing in Jan. 1 with pictures of champagne and pastries in which he joked about “celebrating New Year’s the 1 percenter way! Let them eat cake:-)”
Even with an emoticon tagged on to it, the tweet from a business mouthpiece who has spent the past two years leading the charge against a decent minimum wage came across as rich. Rossi responded to the resulting online storm with a prompt apology, doubtless discovering that Twitter means always having to say you’re sorry.
But isn’t there a larger lesson to be learned, beyond his faux pas, over the fallacious premises underpinning his study projecting maximum risks from a minimum wage? Let’s measure the chamber’s research against reality, projections versus performance:
On Jan. 4, Statistics Canada brought in the new year with a look back at the unemployment data. Precisely how many jobs were lost from December 2017 to last month — when the minimum wage rose from $11.60 to $14 an hour?
Answer: Ontario’s total employment went up, not down, as our economy grew by 77,500 jobs — pushing unemployment to a remarkably low 5.4 per cent last month.
What role did the admittedly sharp wage increase of $2.40 an hour play in the changes? We know that business economists feared the worst — up to 185,000 jobs lost by the chamber’s count — but labour economists took a different view.
They argued, during the minimum wage debate, that traditional fears of job shocks are not just overstated but underresearched. There is precious little evidence showing that higher wages lead to lower employment from jobs leaving the country.
Despite the doomsday scenarios from small business owners, if a Tim Hortons outlet has to raise its prices to meet its payroll there is minimal risk of a minimum-wage increase shipping those jobs out of country: customers can’t go cross-border shopping for a double double, and domestic competitors can’t undercut them if everyone has to pay the same minimum wage.
Even in Donald Trump’s America, economic reality is overtaking political rhetoric. In Arkansas and Missouri, state legislators who refused to approve minimum wage hikes were overruled by voters in ballot initiatives last fall.
Ah, but those are low-wage states, you say? True, Missouri’s minimum wage rose from a paltry $7.85 to $8.60 an hour on New Year’s Day.
But Missouri will keep raising it over the next five years, reaching $12 an hour in 2023 (about $16 in Canadian funds) — well ahead of Ontario’s $14 rate, which will only be adjusted for inflation starting in late 2020 (adding about 30 cents a year assuming an annual inflation rate of 2 per cent).
By 2023 we’ll know precisely how far once-proud Ontario has fallen behind the mighty state of Missouri.