Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • The fight against ISDS in Romania June 24, 2019
    CCPA is proud to co-sponsor this terrific video from our colleagues at Corporate Europe Observatory. It chronicles grassroots resistance to efforts by Canadian mining company Gabriel Resources to build Europe’s largest open-pit gold mine in a culturally rich and environmentally sensitive region of Romania. After this unimaginably destructive project was refused by the Romanian public and courts, the […]
    Canadian Centre for Policy Alternatives
  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers

Meta

Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

The headline you didn’t see: $15 per hour will have a big net benefit

You wouldn’t know it from today’s headlines about impending job losses, but an analysis of the impact of Ontario’s move to a $15 minimum wage from the province’s Financial Accountability Office shows a net benefit for Ontario workers.

Overall, this is a much more cautious report than what the Ontario Chamber of Commerce and its allies had furnished, noting both the costs and benefits of $15. While the media is focusing on job loss figures (more on this below), the report predicts a big overall rise in incomes. Even if we assume its job loss estimates come true, the FAO says real labour income will go up by 1.3% after taking into account any negative effects, with over 60% of that going to the bottom 50% of households.

Anything raising wages (*cough* CEO pay) will create impacts elsewhere. The important point here is that this report admits that $15 is a poverty- and inequality-fighting shift. Some jobs will be lost, but others will be created. (Lagging) productivity will rise. Even a very modest bump in inflation could push growth upwards. Today’s growing but imbalanced economy is well-placed for a boost for low-wage workers.

Returning to the job loss figure, the FAO report is another in a long line to present a skewed picture of minimum wage research, relying exclusively on the old view that features high estimates of job losses focused on teens. The recent, landmark Canadian study from David Green and Pierre Brochu (2013) is not mentioned — using modern methods, the pair found lower elasticity estimates (the percentage effect on employment for every 10% increase in the minimum wage) that would predict far lower job loss. Nor do the FAO economists mention the extensive work of Arin Dube and colleagues from the US, today’s leading minimum wage researchers. Dube and co. reevaluated US teen studies and found employment effects either effectively zero or very, very small — even among teens!

(It’s surprising, given the FAO’s focus on poverty, that they ignore Dube’s recent work on this issue as well, which found substantial decreases in the number of people living in poverty coming from minimum wage increases. In fact, it will be very interesting how the FAO calculated the distribution of income impacts and what they imply about poverty rates.)

Today’s new minimum wage research, if applied to Ontario would predict job losses anywhere from half of what the FAO is putting out to ten times smaller to nil (some studies, including well-known papers, have even shown small but positive aggregate employment effects). In short, there has been a tectonic shift in the economic consensus towards negligible job loss. This leads one to wonder how 50,000 jobs lost is to be a mid-point estimate.

Here is my main take-away: the FAO shows a $15 per hour minimum wage having a net benefit for Ontario workers and reducing inequality; that it ignores new minimum wage research only means that its already positive conclusions should be much stronger and job loss estimates lower.

Enjoy and share:

Comments

Comment from Larry Kazdan
Time: September 12, 2017, 7:02 pm

The truth about the minimum wage

http://www.msnbc.com/msnbc/the-truth-about-the-minimum-wage

“The research on minimum wage increases in the United States over the past two decades is clear:

[Moderate] increases in the minimum wage raise the hourly wage and earnings of workers in the lower part of the wage distribution and have very modest or no effects on employment, hours, and other labor market outcomes.”

Comment from Leeanne
Time: June 15, 2018, 5:38 pm

Im wondering what is the point in raising minimum wage when everything else in the econemy goes up?
i mean minimum wage isnt even up to 15$ in alberta yet but gas is the highest its been ever barely ever going below 130.9.
I just don’t see the benefit to making more when you end up paying more to survive.

Write a comment





Related articles