Not so long ago, a serious study on the effects of Ontario’s minimum wage hike by TD Bank study suggested the move could cost the province some 90,000 jobs. Industry group Restaurants Canada warned the wage hike, along with other labour law reforms, would put 185,000 jobs at risk, including 17,000 in food services.
But in the months following the wage hike there is no sign of the wage hike having negatively impacted job creation in Ontario which in fact went on to add some 60,000 jobs in July (though many of those were in the public sector) and its unemployment rate fell to 5.4 per cent, according to Statistics Canada data — the lowest rate in 18 years.
There is a real labour shortage across Canada.
The Canadian Federation of Independent Business reports there were nearly 400,000 jobs in Canada that had been unfilled for four months or more in the second quarter of this year. Ontario accounts for nearly 155,000 of those vacant jobs.
The 3.1 per cent job vacancy rate is the highest since the CFIB started tracking these numbers in 2004.
It looked at two industries that rely particularly heavily on minimum wage workers: Accommodation and food services, and retail and wholesale trade.
In accommodation and food services, Ontario added an impressive 14,000 jobs since the $14-an-hour minimum wage came into force in January, an increase of 2.3 per cent.
That’s stronger job growth for that category than across Canada as a whole, which saw a 1.5 per cent increase over that time.
In wholesale and retail, Ontario lost jobs — down 0.8 per cent since the start of the year. But Canada as a whole saw jobs drop by a much steeper 1.8 per cent over that time. In this category, Ontario is still outperforming the Canadian average.
Critics however will point out that one reason why prices are up is because consumers are subsidizing the minimum wage hike. Also, one wonders how many more jobs could’ve been created had there not been such a massive minimum wage hike.
But the data suggests that the minimum wage hike didn’t derail Ontario’s economic momentum. It reflects what some economists have argued for a long time: Minimum wage hikes have little impact on job growth. Other factors in the economy play a larger role.
In Ontario’s case, that may have to do lately with the very strong population growth the province has seen over the past year — up about 1.8 per cent, according to a recent analysis from Bank of Montreal. That is creating a lot of new demand in the economy.
The previous provincial Liberal government had planned to raise the minimum wage again at the beginning of 2019, to $15 an hour.
But the new Progressive Conservative government under Premier Doug Ford has vowed to roll back that hike. The government has vowed instead to eliminate provincial income taxes for minimum wage earners.
What is clear is that there will be a gradual culling of jobs as many businesses are now either in the process of adopting worker-eliminating technology or will probably consider other ways to cut back the number of workers required to keep their businesses running. -CINEWS