MONTREAL, Nov. 20, 2018 /CNW Telbec/ - The rapid increase in the minimum wage in Ontario, which jumped from $11.60 to $14 at the start of 2018, has already contributed to the loss of over 56,000 jobs among young workers in the province, shows a publication launched today by the MEI.
"Given the size of the increase, it is not surprising to observe a drop in the employment rate for workers aged 15 to 24 since the adoption of the law. It is all the more significant due to the fact that this rate had been rising for quite some time," explains Alexandre Moreau, Public Policy Analyst and author of the publication.
The size of the drop in the employment rate for young workers is even more striking in the current context of strong economic growth in Ontario. While not every single one of these 56,100 jobs lost can be blamed on the minimum wage hike, this figure does approach the prediction made by the Financial Accountability Office of Ontario.
Moreover, the prices of meals in restaurants—a sector in which nearly 70% of workers earned less than $15 an hour last year—increased three times faster in Ontario than in the other provinces. "As could have been expected, restaurants passed on practically all their additional costs to consumers," adds Mr. Moreau.
The rapid increase in the minimum wage is also likely to have a more substantial effect in rural regions, where the average wage is generally lower. Workers who live there are thus more at risk of losing their jobs, or of having their hours cut. New arrivals are also among those who are disproportionately affected.
"Those who continue to call for rapidly increasing the minimum wage surely have good intentions, but that does not make it an effective measure for reducing poverty. There are other ways of doing so, including raising the basic income tax exemption and reducing the barriers that restrict access to the labour market. These are the kinds of things we should be looking at," concludes Alexandre Moreau.
The Viewpoint entitled "The Minimum Wage: Ontario Was Right to Cancel the Hike to $15" was prepared by Alexandre Moreau, Public Policy Analyst at the MEI. This publication is available on our website.
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The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.
SOURCE Montreal Economic Institute
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