No kudos to Nobelist from chest-thumping Ford
This just in — just not noted by Doug Ford: The Nobel Prize for economics has been awarded to Ontario-born academic David Card.
Congratulations came first from Prime Minister Justin Trudeau, followed quickly by a public salute from the leader of Ontario’s loyal Opposition, Andrea Horwath.
Yet not a peep, as yet, from the premier. When I asked his office why not, no answer.
Why has Ford lost his tongue over a global triumph? What’s not to like about the latest, greatest contribution to economics?
After all, Ford is quick to boast about the province’s wealth of world-beating human talent. Is not a Nobel prize a valid proof point, or personal vindication, for a premier who tells the world that our classrooms produce world-class graduates?
Educated at Queen’s University, born and raised near Guelph (not unlike another renowned economist, the late John Kenneth Galbraith), Card has been praised in every quarter this week. Yet he remains unheralded at Queen’s Park.
Ford’s silence amid the province’s hour of triumph is a teachable moment, and a cautionary tale of competing storylines.
The plain-spoken premier is not fond of “elite economists” cloistered in the “ivory tower,” as he disparaged them in a remarkable 2019 speech. Yet that hardly describes Card, who was raised on a farm and now does cutting edge field work.
He broke new ground on the
minimum wage, shattering the conventional wisdom that raising the hourly rate would prompt employers to reduce the number of workers.
Until then, old-school economists relied on outdated econometric models based on arbitrary assumptions that are about as reliable as tomorrow’s weather forecast or last month’s epidemiological predictions. Card’s master stroke was to leave the confines of his UCLA Berkeley campus to perform a more natural field experiment, without recourse to esoteric models.
He co-authored a study on the impact of a minimumwage increase on New Jersey fast food joints by comparing them to neighbouring Pennsylvania, where the hourly rate remained static. When he measured the fallout, employment didn’t fall when wages rose, as people like Ford keep
insisting.
Card’s findings were greeted with skepticism in the 1990s, but are now widely accepted by economists who have replicated that experiment in other jurisdictions. In 2003, more than 650 Americans economists highlighted his work, echoed in 2017 by 40 Canadian economists who signed an open letter cautioning against “fear-mongering that is out of line with the latest economic research.”
Truth be told, Card’s empirical research is an inconvenient truth for Ford.
Upon taking power in mid-2018, the premier promptly cancelled a scheduled increase in the minimum wage to $15 an hour and imposed a freeze for the next two-and-ahalf years (he also cut two paid sick days). When the freeze expired, the rate increased by a paltry 25 cents to catch up with
inflation last year, and another 10 cents this year.
In fact, employment increased steadily and the unemployment rate declined to record low levels after the last Liberal government jacked up the minimum wage from $11.40 to $14 an hour. That’s because higher wages can reduce turnover and increase productivity, as employers are discovering amid today’s mid-pandemic labour shortages.
Still, Ford clings to his own idiosyncratic economic compass. Detailing his vision in 2019, he resolved to “ring the warning bell that the risk of a carbon-tax recession is very real.”
Never happened — Ontario’s recession came from COVID-19, not carbon. But on Friday, Ford was back to his imaginary economy.
“The carbon tax is the single worst tax on the backs of Canadians
that’s ever existed,” he told reporters. “I’m a strong believer in a different theory — put money back into people’s pockets. They’re going to be able to go out there and, you know, buy a refrigerator, do a renovation, go for dinner, so on, so forth. That’s what stimulates the economy.”
Forgetting for a moment his wilful distortion of the federal carbon levy — fully rebated to motorists, not retained by government — Ford’s musings on “what stimulates the economy” could be unintentionally instructive. Putting higher wages “back into people’s pockets” is precisely what underlies the minimum wage increases that lift all boats.
Ford has long since lost the battle over the carbon levy, but it’s not too late for him to wake up to wage rates. With a provincial election looming next year, the premier could reinstate the minimum wage trajectory he so rashly overturned (and restore the permanent paid sick days he removed).
Better belatedly than never, the premier could ring up the professor for congratulations — and conversations. There’s still time for him to learn a lesson from this “elite economist.”
Card could point him to Americans — not just on the coasts, but in conservative states and federally — who embrace a minimum wage of $15 and higher. That works out to more than $18.55 in Canadian currency, and exceeds $20 in some jurisdictions.
Ford’s favourite boast is that Ontario is “open for business.” It’s time to open his mind to what works for both business and workers — based on prizewinning research, not political rhetoric.