Will increasing the minimum wage cost Ontario 50,000 jobs?
Labour Minister Kevin Flynn rebutted a recent assessment of the $15/h increase, saying that Ontario’s growing economy can absorb the costs— and that "low wages are bad for the economy.”
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Increasing the minimum wage to $15 an hour could cost 50,000 jobs, warns Ontario’s independent fiscal watchdog.
The Financial Accountability Office on Tuesday released a six-page assessment of the Liberal government’s forthcoming hike to the $11.40-an-hour wage, which will jump to $14 in January and $15 in 2019.
“On net, the FAO estimates that Ontario’s proposed minimum wage increase will result in a loss of approximately 50,000 jobs (0.7 per cent of total employment), with job losses concentrated among teens and young adults,” the office said.
“The higher minimum wage will increase payroll costs for Ontario businesses, leading to some job losses for lower income workers,” it continued, echoing the concerns of the Ontario Chamber of Commerce and other business groups.
“At the same time, higher labour income and household spending will boost economic activity leading to some offsetting job gains.”
The FAO estimates the number of minimum wage workers will climb from about 520,000 to 1.6 million by 2019.
“As well, under a $15 minimum wage, adults and those with full-time jobs would represent the majority of minimum wage workers,” it said.
“By comparison, under the current minimum wage of $11.40 per hour, teens and young adults and those with part-time jobs account for the majority of minimum wage workers.”
The non-partisan office noted “there is evidence to suggest that the job losses could be larger” than 50,000.
That’s because “Ontario’s proposed minimum wage increase is both larger and more rapid than past experience, providing businesses with a greater incentive to reduce costs more aggressively.”
But the FAO cautioned that its analysis “did not consider other potential non-economic benefits of a minimum wage increase, including improving workers’ well-being and health outcomes.”
In a statement, Labour Minister Kevin Flynn noted Ontario’s economy is growing and can absorb the higher wages.
“Our economy created more than 30,000 jobs last month and the unemployment rate is sitting at 5.7 per cent, the lowest level in more than a decade,” said Flynn.
“Thanks to our strong economy, we’re now in a position to move forward with positive changes for workers in Ontario. We know the cost of doing nothing is simply too high — too high for workers and too high for our economy,” he said.
“Many leading economists share this belief. Studies written over the past number of years — including work done by the OECD, the Center for Economic and Policy Research, and the Canadian Centre for Policy Alternatives — lay out the long-term benefits of higher wages for low-income workers, as well as the economic benefits that come with alleviating this problem.”
Flynn argued that “low wages are bad for the economy.”
“We don’t believe that anyone in Ontario who works full time should be struggling to pay their rent, put food on their tables or care for their families — especially when the provincial economy is doing so well.”