Too much, too fast, too soon? Minimum wage hike under debate as amendment deadline draws near
Business lobbyists release a report damning $15 minimum wage while critics raise eyebrows
A report conducted by a private consulting firm says the province's minimum wage hike is "too much, too soon" and will leave both employers and workers reeling as the Ontario economy tries to adjust to what the report calculates is a $23-billion price tag on the coming wage reform.
But critics were quick to point out that the economic impact report, published Monday by the Canadian Centre for Economic Analysis (CANCEA), addressed only the costs, and not the benefits, of a $15 minimum wage.
The analysis, only partially complete, was commissioned by the Ontario Chamber of Commerce, which represents businesses across the province. It was released two days before the deadline to amend Bill 148, also called the Fair Workplaces, Better Jobs Act.
Paul Smetanin, president of CANCEA, spoke at a news conference Monday morning, outlining some of the challenges he says Ontario will face.
"Experts will have to agree: the changes are big and swift and at risk of being on the wrong side of zero," he said.
Jobs will be lost, report says
Smetanin noted the report's main points, including the cost of raising the minimum wage for Ontario's 1.5 million workers who currently earn $11.40 an hour.
He placed that cost at $23 billion over two years.
That price represents 21 per cent of capital that Ontario businesses may have planned to invest in the province, he said, and could threaten 185,000 low-wage jobs — which translates to a 2.4 per cent drop in employment.
Those are "jobs that could have been, but will no longer be there," he said.
"It's too big. It's just too big, too soon. It's like medicine you would take to improve your health: it's likely to make you sick if you take it all at once."
Chris Buckley of the Ontario Federation of Labour, which represents over 50 unions in the province, called the findings "nothing but fear-mongering."
"It's an attempt by big business to make sure workers aren't paid appropriately," Buckley said.
In a news release Monday, the OFL pointed out that the report doesn't include increased consumer power and reduced demand on social services in its calculations, which are benefits that the federation says will result from the wage hike.
Report lacking, says critic
David MacDonald, senior economist at the Canadian Centre for Policy Alternatives, suggested the report's findings fit into a pattern — wage increases, followed by alarm bells — he's seen from the business sector in B.C. and Alberta in recent years. "After the fact," he said, "there really weren't any major job losses."
MacDonald also expressed skepticism over the analysis itself. "All we have is a Powerpoint presentation, as far as I can tell," he said. "There isn't an actual report here, so we don't know what the methodology is."
As for the $23-billion price tag, he says, the report seems to assume workers will "take those wage increases and burn them in a hole in the backyard."
"It's much more likely they're going to spend them in the Ontario economy, and that reaction isn't contained here," he added.
'We're finding numbers that don't seem to make sense. The wage-bill impact of $23 billion seems far too high; the impact on households of $1,300 a year seems off by a decimal place. That may be an actual error in calculations or there may be something else going on."
MacDonald said one thing is clear: if the wage hike did lead to 180,000 job losses, it'd be within the worst 10 per cent of outcomes the continent has ever seen.
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With a minimum wage hike, "in most cases, looking at historical evidence, there's no impact on jobs," he said. "In fact, the economy continues to grow."
Minister of Labour Kevin Flynn echoed MacDonald in a statement, defending the province's plan.
"For the past three years, we have been leading the entire G7 in economic growth," Flynn said. "More than 700,000 jobs have been created since the recession, and the unemployment rate has been below the national average for 28 straight months."
The plan "will bring transformative changes to workplaces across Ontario, and will make sure that families have the support they need to succeed, while maintaining a competitive business climate where small- and medium-sized businesses can thrive," he added.
The Ontario Chamber of Commerce, the Ontario Federation of Labour and the Canadian Centre for Policy Alternatives all participated in a standing committee during the parliamentary debate on Bill 148.
Wednesday is the deadline to file amendments to the bill.