Report finds little evidence to link employment, wages
A hike in minimum wage has no effect on employment levels, a recent study reports.
Released by the Canadian Centre for Policy Alternatives (an independent non-profit research group) on Oct. 21 and penned by two Unifor economists, the report noted there is no consistent connection between a higher minimum wage and employment levels.
“Our results confirm that stimulating more purchasing power in the economy is the most important way to support job creation,” said Jim Stanford, author of the study and economist with Unifor and the CCPA.
Looking at the relationship between minimum wage and employment levels in all 10 provinces between 1983 and 2012, Stanford said there was no evidence directly linking the two for better or worse. Instead, the research concluded employment levels are determined by macroeconomic factors. That means raising the minimum wage could just as likely result in a more robust labour market.
The CCPA report comes on the heels of other such studies, particularly from the Canadian Federation of Independent Business, that raising the minimum wage is not a benefit it purports to be.
“An increase to minimum wage forces small businesses to look for ways to absorb the cost through measures such as reduced hours, reduced training, or even job cuts,” a statement from the CFIB said.
But boosting the minimum wage, particularly toward living wage levels, can not only promote greater equality, but will also stabilize the labour income share of the GDP and reduce poverty, the CCPA report added.
“Those with a vested interest in keeping wages down have exaggerated the alleged unemployment effects of raising the minimum wage,” said Jordan Brennan, another economist with Unifor and the CCPA. “The minimum wage is not solely an anti-poverty measure — it has a broader effect in strengthening labour incomes.”