The economic case for a higher minimum wage: Editorial

Posted
August 2, 2017
Article Source
Toronto Star

From a Toronto Star editorial: The public hearings on Ontario's proposed minimum-wage hike, which wrapped up last week, produced predictable clashes. Unions and social-justice advocates pointed out, among other things, that the minimum wage is too low today to keep workers out of poverty, even if they work full-time, while defenders of business, big and small, warned of dire consequences if the legislation is passed: cataclysmic job losses and business closures, an economy in ashes.

"There is no question that the proposed changes … will put the success and competitiveness of Ontario’s business community in jeopardy, particularly our small business community," said Ashley Challinor, director of policy for the Ontario Chamber of Commerce, in a typical caution.

The debate over wages has forever pitted employers against workers and those worried primarily about economic health against those worried primarily about economic justice. But in light of what we now know, there's every reason for all parties to come together and support the package of labour reforms now before Ontarians.

The arguments against the $15 minimum wage don't hold up — and the choice between social and economic ends is a false one. A cross-partisan consensus is emerging among economists that decent wages and decent work are good, not just for workers, but also for the economy.

It is not at all clear, for one thing, that the job losses predicted by the business lobby will actually occur. While some studies have shown hikes can have an impact on employment, the effect is not nearly as significant as those with a vested interest in keeping wages low claim.

Last month, 53 economists signed a letter in support of Ontario's plan, pointing to a number of encouraging relevant examples in the U.S. In states such as New York, California and Washington, which have significantly increased the minimum wage in recent years, we are seeing that such hikes are not the job-killers they’re purported to be. Or, in the language of the economists: "The weight of evidence from the United States points to job loss effects that are statistically indistinguishable from zero."

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