Minimum wage hike will cost young and low-skilled labour, says Fraser Institute
A new report from the right-leaning think tank says while the provincial government's plan to increase the minimum wage to $15 an hour would cost jobs in Toronto, the effects would be worse in cities where the average wage is lower
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TORONTO—A new report from the right-leaning Fraser Institute says raising Ontario’s minimum wage to $15 an hour—a 32 per cent increase over the current minimum wage—will lead to job losses across the province for Ontario’s young and low-skilled workers.
“Economic conditions are not the same across Ontario, so the negative effects of a $15 minimum wage—namely job losses for young and low-skilled workers—will be more severe in some areas of the province,” said Ben Eisen, director of the Fraser Institute’s Ontario Prosperity Initiative and co-author of Ontario Enters Uncharted Waters with a $15 Minimum Wage.
The report finds when the minimum wage is low relative to the average wage, there is a small, even negligible effect on job loss.
However, Fraser says as the minimum wage increases relative to the average wage, it affects more workers adversely, especially when the minimum wage passes 45 per cent of the average wage.
The think tank predicts a $15 an hour minimum wage would be well above this 45 per cent threshold throughout the province.
The report finds this ratio would differ by region as well, with a $15 minimum wage predicted to be 47 per cent of the average wage in Toronto, but as high as 56 per cent of the average wage in Hamilton, London and the Windsor-Sarnia regions.
“Young people and low-skilled workers will suffer job losses across Ontario, but the costs could be especially high in regions of the province where the average wage is lower than in Toronto,” said Charles Lammam, director of fiscal studies at the Fraser Institute and study co-author.