Minimum Wage Hike Could Cost Ontario Over 50,000 Jobs: Watchdog
More than 50,000 people could lose their jobs if the Ontario government goes ahead with its plan to raise the minimum wage to $15 an hour by 2019, the province's financial watchdog said Tuesday in a report that assessed the economic impact of the proposed increase.
The job losses would be concentrated among teens and young adults, while the number of minimum wage workers in Ontario would increase from just over 500,000 to 1.6 million in 2019, the Financial Accountability Office said in its report. FAO chief economist David West said the province is entering "uncharted waters" with the increase because no other jurisdiction has gone so far so quickly.
While the move will have a positive impact on the province's total labour market income -- hiking it by 1.3 per cent -- it will also result in job losses over a number of years.
"There's evidence to suggest these job losses could be larger given the magnitude and rapid pace of this increase," West said.
In July, Premier Kathleen Wynne announced her government would increase the minimum wage to $15 an hour by Jan. 1, 2019. The increase would be phased in gradually and would rise with inflation, as scheduled, from $11.40 currently to $11.60 in October, to $14 an hour on Jan. 1, 2018 and $15 the following year.
West said that while the FAO report makes no recommendations about the proposed policy, it does raise red flags for legislators. The report specifically sites the speed with which Ontario will phase in the change as a concern for business, he said.
"It would be wrong to suggest that there won't be some employment impact," he said. "Some businesses will certainly struggle to accommodate these higher payroll costs and will of course look at options for automation, and will look at hiring higher paid, higher productivity workers perhaps. But one way or the other, they're going to have to adjust."
The proposed changes are in response to a government-commissioned report released last week that included 173 recommendations addressing precarious work. The Changing Workplaces review concluded that new technology, a shrinking manufacturing sector and fewer union jobs, among other factors, have left approximately one-third of Ontario's 6.6 million workers vulnerable.
Labour Minister Kevin Flynn said Tuesday that because of the province's strong economy the government can move forward with the minimum wage increase. He pointed to studies written in recent years by the Organisation for Economic Co-operation and Development, the Center for Economic and Policy Research and the Canadian Centre for Policy Alternatives that support the move.