$15 minimum wage threatens jobs for young people, low-skilled: Report

'Economic conditions not the same across Ontario, so negative economic effects grow more severe'
|hrreporter.com|Last Updated: 09/19/2017
Minimum wage, legislation
As the minimum wage increases relative to the average wage, it affects more and more workers, said the Fraser Institute. Shutterstock

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, according to a study released by the Fraser Institute, a public policy think-tank.

“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.

When the minimum wage is low relative to the average wage, there is a small, negligible effect on job loss, said the study, in analyzing previous research. That’s because when the ratio of the minimum wage to the average wage is low, any changes to it will affect very few workers.

But as the minimum wage increases relative to the average wage, it affects more and more workers, said the Fraser Institute. When the minimum wage passes 45 per cent of the average wage, the negative economic effects — mainly job loss for young and low-skilled workers — grow more severe.

Throughout the province of Ontario, a $15-per-hour minimum wage will be well above the 45 per cent threshold. And the average wage differs by region, which means the ratio — and the severity of the job losses — will vary, it said.

In Toronto, a $15 minimum wage will be 47 per cent of the city’s average wage, but elsewhere in the province, the ratio will be much higher due to lower average wages. For example, a $15 minimum wage in Hamilton, London and the Windsor-Sarnia regions will be 56 per cent of the average hourly wage there — well above the 45 per cent threshold beyond which negative economic effects grow more severe, said the institute.

And a $15 minimum wage will be 53 per cent of the average hourly wage in Thunder Bay and Sault Ste. Marie; and 51 per cent in North Bay and Sudbury.

“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.

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