REPORT: Ontario Liberals Minimum Wage Change Will Cost 50,000 Jobs, Won’t Reduce Poverty

That’s the prediction of Ontario’s Financial Accountability Office.

The FAO – which operates independently of the Ontario government – says the Ontario Liberal plan to increase the minimum wage to $15 per hour will cost at least 50,000 jobs.

They also say the change won’t reduce poverty.

As noted by BNN, “Raising the minimum wage will boost total labour income by an estimated 1.3 per cent, but just a quarter of those gains will go to low-income families, estimates the FAO.”

The FAO report states that “Since the income gains would not be concentrated on low-income families, raising the minimum wage would be an inefficient policy tool for reducing overall poverty.”

Job losses could be even worse

According to the FAO report, there could be even more job losses than predicted:

“There is evidence to suggest that the job losses could be larger than the FAO’s estimates. Ontario’s proposed minimum wage increase is both larger and more rapid than past experience, providing businesses with a greater incentive to reduce costs more aggressively.”

A better way to support workers

Canadian workers need a pay raise. The minimum wage should certainly be tied to the inflation rate to ensure people can keep up with the cost of living. However, increasing the minimum wage in a way that causes big job losses is not a smart idea.

There are better ways of increasing wages, and creating more good jobs.

First, the Temporary Foreign Worker program must be drastically scaled-back, or even eliminated outright. It’s simple supply and demand that more cheap labour reduces the leverage and therefore the wages of workers throughout the economy. Cutting or scrapping the program would boost wages.

Second, rejecting free trade with cheap labour countries, and imposing tariffs on cheap labour countries (like China), would also drive up wages by creating more good manufacturing and production jobs. The severe decline of Ontario’s manufacturing sector coincides with the explosion in our trade deficit with China around 2001, and by reversing that trade deficit through tariffs and investment in Canadian manufacturing we can create good, high-paying, secure jobs.

The combination of fewer temporary foreign workers and a reduction in our trade deficit with China – and other cheap labour nations – would do far more to raise wages and reduce poverty than the policies being imposed by the Ontario Liberals. And even better, it would create jobs instead of destroying jobs.

Spencer Fernando

***

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jack grandvilleAlberta1st (@Civil__Civilian)SpencerFernandoMaryam McKinley Recent comment authors
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Maryam McKinley
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Maryam McKinley

Spencer: what I like best about your columns is that the problem is clearly stated AND you offer solutions. So many writers forget to do the latter. Excellent suggestions on increasing wages and jobs in last three paragraphs.

Alberta1st (@Civil__Civilian)
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A lot of kids who live here want to work but the places are filled with tfw and the service with these ppl is very poor. They arent worth 15$ the buisiness should promote young canadians instead provincial government works against the grain.

jack grandville
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That inevitable result of another bad Liberal policy is so obvious one must wonder if there is any real intellectual capability in the Ontario government at all — and, distressingly, the answer is all too obvious.