The Minimum Wage, Lost Jobs, And Poverty in Canada

DM

Raising minimum wages is usually done in an attempt to help low-income households. However, extensive research shows higher minimum wages rarely provide a boost to the intended households, and often hurt the very people they intend to help. There is near unanimity among researchers that higher minimum wages cause employment losses in Canada, especially among youths who account for most of the people earning a minimum wage. The extent of these job losses varies. In particular, we have little experience with the type of large increases in the legislated minimum recently enacted in Alberta and Ontario, but these losses are likely to exceed the estimates based on past incremental increases. The reduction in labour inputs usually happens over an extended period of time; it is naïve to look at employment in the few months following a minimum wage hike to evaluate their impact. As well, large increases in the minimum wage put upward pressure on consumer prices.

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