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Doomsayers, Chicken Littles and Conservatives get it wrong on the impact of minimum wage increases

Woman protests for a higher minimum wage. Photo: Fibonacci Blue/Flickr

Now there's a surprise! Ontario's minimum wage increase behaved exactly as predicted by most mainstream economists.

That is, the 21 per cent wage increase implemented by the province's former Liberal government that took effect on Jan. 1 this year did none of the terrible things Conservative politicians, right-wing think-tankers, Astroturf "tax watchdog" organizations, business groups, and the online Conservative Angry Brigade predicted.

Economic slowdown? Nope.

Employment drops? Nope.

Reduced hours hitting the very people the minimum wage increase was supposed to help? Nope.

"Ontario's jobless rate hit an 18-year low in July, as the country's largest economy continued to churn out jobs despite this year's hefty hike in the minimum wage," The Globe and Mail reported last Saturday. "Ontario's labour market is on fire."

"The province added 61,000 new jobs in July and the jobless rate fell from 5.9 per cent to 5.4 per cent -- the lowest level since 2000, according to the Statscan monthly Labour Force Survey released on Friday," the Globe went on.

Several news reports, including the Globe's, quoted a bank economist who noted that "employers seem reluctant to part with their now more expensive workers perhaps due to reported labour shortages."

Don't expect this reality to have any impact whatsoever on the actions of the Doug Ford Conservative government in Ontario, of course, which will parrot the usual business lobbyists and put a stop to the minimum wage in that province rising to $15, as planned by the Liberals, despite the evidence nothing bad happens when you put more money in the pockets of the working poor who tend to spend it at home.

Ford's government, it is predicted here, will transfer that modest gain to the pockets of the richest Ontarians, where it will add up because there are so few of them, through tax breaks for the super-wealthy. Later, the cash shortage will be used to justify calls for cuts to social programs that benefit the poor and working poor.

Back in the fall of 2017, former Canadian Auto Workers union economist Jim Stanford (who now lives and commentates in Australia, unfortunately for us Canadians) used a column in the Globe to dare any comers to bet $500 against his augury planned higher minimum wages in Alberta, Ontario and B.C. would all result in more employment, not less, in those provinces.

Tellingly, he had no takers.

Meanwhile, here in Alberta, where the economy is also undergoing a significant rebound from the recent recession under the NDP government of Premier Rachel Notley, the Conservative Opposition Leader, Jason Kenney, was immediately busy on social media complaining that too many of the new jobs Alberta has added are part-time, and not enough offer full-time employment.

As University of Calgary economist Trevor Tombe cautioned in a tweet, it's never a good idea to get your economic news from politicians with an axe to grind. His tweet showed images of an NDP infographic touting an increase of 40,000 jobs in the economy, including a big increase in full-time jobs, and one from Kenney saying the economy has lost 21,700 full-time jobs.

Which raises the question, can the two parties be talking about the same time frame? The answer is no, Tombe explained in a Twitter direct message. "Private sector employment is up since January 2017 (when one might mark the end of the recession; though it may have ended two to three months prior). But it's down since early 2015 still. So, the government is talking about the progress in the recovery while the opposition is talking about since the start of the recession."

So who's telling the more accurate story? Tombe responded: "My take is the government tends to do a better job representing the data (though of course they embellish the good news) but the opposition focuses only on the bad and seems to think that because we aren't at 2014 highs that we are still in a recession."

That's wrong, he said, although it's quite likely they know that and just don't care.

Kenney is right to be concerned about the loss of full-time jobs, as we all should be, but this seems pretty rich coming from a politician who objects to any policy that would encourage levelling the labour relations playing field to help working people retain quality full-time jobs with benefits, or to add any regulations to prevent the worst abuses of the gig economy.

It's hard to believe Kenney is serious in his criticism that more of the jobs created during the current recovery are part-time than full-time when the entire economic package he advocates is designed to hand more power to employers to do just that.

What about those terrible Calgary employment numbers?

Someone is bound to ask: What about those terrible Calgary employment numbers? The Calgary Herald said they were caused by the minimum wage increase.

So it did, but as we used to say back in the days newspapers were still a thing, you can't believe everything you read in the paper.

The Herald's story -- which quoted an employer and two small-business associations, with no opposing viewpoints -- drew on the Stats Canada monthly Labour Force Survey to claim close to 27,000 service sector jobs have been lost in Calgary because of the NDP government's minimum wage increases.

Naturally, Kenney was all over this, also blaming the NDP and "their hasty minimum wage hike" for the losses.

But how does this square with what we've seen in Ontario?

"When you line Alberta up to Saskatchewan you see the *exact same* rate of job loss among young people," Tombe said in a DM. "They're the group with the hardest time in the recession, and also the group many expect the minwage to hit hardest. So it's easy to blame the minimum wage, but that doesn't explain Saskatchewan's similar experience. So, it's much more reasonable to blame low oil prices and the recession."

Later, he tweeted again in this topic, having discovered from a closer look at the Statistics Canada numbers that according to the same monthly report, service sector employment was up in Winnipeg, Regina and Edmonton. So, he asserted, in that case you can't blame the minimum wage.

Moreover, he tweeted, the Statscan numbers for Calgary were extrapolated from a drop of just 18 survey responses between July 2017 and July 2018.

Whether or not that extrapolation is correct, Stats Canada does not blame any changes in the minimum wage for state of service sector jobs in Calgary.

The jury's still out on the impact of a higher minimum wage in Alberta, Tombe explained. "There's no basis in evidence for anyone to claim otherwise yet."

What job losses there have been, he added, have "more to do with oil price and the drop in discretionary spending" or the same thing would have happened elsewhere.

This post also appears on David Climenhaga's blog, AlbertaPolitics.ca.

Photo: Fibonacci Blue/Flickr

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