Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday October 15, 2021
Ford should rethink outdated minimum wage stand
Doug Ford’s minimum-wage policy is the product of minimal thought.
Since becoming Ontario’s premier more than three years ago, Ford has rejected any meaningful increase in the baseline wages that employers must by law pay to their workers. After freezing minimum wages during his first 27 months in office, the premier consented to a 25-cent-an-hour increase one year ago then followed up with a paltry 10-cent-an-hour hike on Oct. 1. That brought the current hourly minimum wage to $14.35.
For many of the province’s 500,000 minimum-wage earners, this month’s change felt like a slap in the face instead of a helpful hand up. Those extra 80 cents they have in their pockets after an eight-hour-day’s efforts wouldn’t even cover the cost of their bus ticket to work. Yet Ford stubbornly insists any significant minimum wage increases would shutter businesses and drive higher unemployment.
The problem with this defence is that real-life evidence and real-live economists prove it’s wrong. And if Ford needs an expert second opinion on the matter from a fellow Ontarian, he should consult David Card, the Berkeley university professor who just won the Nobel Prize in economics. The native of Guelph and graduate of Queen’s University, Card was awarded the prestigious honour this week largely for his groundbreaking work into the economic and human impacts that followed minimum-wage increases.
Before his research, many economists would have agreed with Ford that boosting wages for some people can make life worse for more by forcing business closures and job losses. If the cost of labour grows too high, the demand for it would drop as many businesses scramble to adapt and some even go bust. Or so went the reasoning — supported for a time by many studies.
But in 1993, Card and the late Alan Krueger challenged conventional theory by looking at what happened to jobs at several New Jersey fast-food restaurants after the state raised its hourly minimum wage from $4.25 (U.S.) to $5.05 (U.S.). After comparing the situation in New Jersey to what was going on at similar fast-food restaurants in neighbouring east Pennsylvania, they concluded the rise in the minimum wage had no effect on the number of people being employed.
In response to skeptical colleagues, Card launched another study in 2000 using new information. His findings were the same. And over time, he won over most of the doubters to his viewpoint. There are still vigorous debates over how governments should manage minimum-wage legislation. But the prevailing opinion of economists is that moderate and gradually introduced wage increments benefit low-wage employees, do not cost jobs and help reduce poverty.
In fact, Premier Ford should already know this. After the previous Liberal government raised the hourly minimum wage from $11.60 to $14 in 2018, he railed against what he called “a failed Liberal policy that is driving jobs and investment out of Ontario. It’s equal to the carbon tax when it comes to job killing.” The Ontario Chamber of Commerce was of the same mind and issued dire warnings of economic devastation to come.
Six months after the Liberal minimum-wage hike, however, Ontario’s unemployment rate had dropped to 5.4 per cent, the lowest it had been since 2000. Meanwhile, business profits in the province had risen while its annual inflation rate was running at a modest 2.2 per cent.
Let’s hope the worldwide publicity surrounding Prof. Card’s Nobel Prize will push Ford and the Progressive Conservatives to rethink a minimum wage policy that has so widely been discredited. In its place should be a minimum wage that rises annually and matches wage growth across the provincial workforce. It’s time for a minimum wage based on maximum wisdom. (Hamilton Spectator Editorial)