There's been a lot of sound and fury -- particularly from Tim Horton's franchisees -- about Ontario's recent minimum wage hike. But, Alan Freeman writes, the raise makes perfect sense:
If you go past the hysterical outpourings from the likes of the Canadian Federation of Independent Business — which specializes in crying wolf every time there’s a talk of improving the Canada Pension Plan or making any small improvement in the lives of employees — the overall impacts of the minimum wage hike for the economy are quite small.
The increase in the minimum wage to $14 an hour from $11.60 is about 21 per cent. That’s about the same percentage increase as Walmart is voluntarily giving its employees in the U.S. (22 per cent). US$11 is worth about Cdn$13.80. In that context, the Ontario wage hike doesn’t seem unreasonable.
The jobless rate in Ontario is currently 5.5 per cent — about as close to full employment as you can get, making this the best time to implement a big minimum wage hike. You might think that employers desperate for labour would do whatever they could to keep the good ones from bolting.
The usual complaint is that legislating minimum wages kills jobs. But that complaint needs to be put in context:
According to the Bank of Canada, about 8 per cent of Canadian employees work for minimum wage and minimum wage rates affect about 15 per cent of all employees with the lowest wages. The bank says the increased wages planned in Ontario and elsewhere could mean that 60,000 fewer jobs are created this year than otherwise — although that’s just a guess.
That may sound like a lot of jobs but it’s a blip in an economy that employs 18.6 million people — a figure that an economist at Scotiabank says is “likely within the margin of error.” It’s worth noting that the Canadian economy created 79,000 jobs in December alone.
The disciples of Milton Friedman are apoplectic. But, finally, labour is getting a little bit of what it is owed.
Image: The National Post