Minimum Wage, Maximum Fearmongering
Only seven months after Ontario’s minimum wage was increased to $14/h, the business lobby’s grim job loss predictions have been demolished by reality. Over the last 12 months Ontario has added over 182,000 jobs, accounting for some 74 percent of all job growth in the country during that same period. Since February, a month after the minimum wage increased by over 20 percent, over 130,000 jobs have been added. The unemployment rate has hit an 18-year low.
If there was anything resembling accountability, let alone justice in our society, many members of the business community, the media and politicians would face a reckoning.
A year ago, Ontarians were subjected to months of fearmongering about the economic dangers of Bill 148 that would raise the minimum wage from $11.60 to $14/h in 2018 and to $15/h in 2019, introduce paid emergency leave sick days, and strengthen employment standards for all workers. With Bill 148, the big business lobby proclaimed, Ontario would be closed for business.
The Ontario Chamber of Commerce, through its front group Keep Ontario Working, commissioned a study by Canadian Centre for Economic Analysis (CANCEA) that was released one year ago today. It stated 185,000 jobs would be at risk in Ontario over the next two years. People would either lose their jobs or fewer jobs would be created than if we had a $14/h minimum wage and the improvements contained in Bill 148. Furthermore, youth employment (those under age 25) would actually decrease by 3 per cent. Wages, hours, jobs and prices would all suffer. As Paul Smetanin, President of CANCEA smugly stated last summer, “given the significant, sudden and sizable changes it would be remiss to expect that unintended consequences would not follow.” The risks of Bill 148, the report concluded, far outweighed the rewards.
The Financial Accountability Office of Ontario last September released a report stating that a minimum wage hike would “will result in a loss of approximately 50,000 jobs (0.7 per cent of total employment), with job losses concentrated among teens and young adults.” The FAO’s study actually claimed this job loss would be the result of a dip in future hiring (as in 50,000 less jobs created in the future).
TD Bank followed up the FAO study released followed a few weeks later with a study predicting 90,000 jobs will be lost in future job growth. The TD study claimed “our baseline job forecast builds in a net reduction in jobs of around 80-90k positions by the end of the decade and a 0.3% increase in Ontario’s Consumer Price Index (relative to business-as-usual levels). The estimated job impacts would still leave employment expanding over the next few years, but at a tepid clip of around 0.5% annually.”
The Fraser Institute cares
Also last September the Fraser Institute got in on the game, stoking fear that an increased minimum wage would hurt young workers the most. Building off their flawed 2016 study, the Fraser Institute claimed, “The economic literature suggests that as the minimum wage rises and becomes a greater proportion of the median wage, this is associated with greater adverse employment effects for young and unskilled workers who, without commensurate improvements in their productivity, will be increasingly priced out of employment opportunities.”
After all this fear-mongering, Bill 148 became law and large portions came into effect on January 1 2018, including the $14 minimum wage. Many employers, most notably Tim Hortons franchise owners, retaliated against workers by cutting shifts, hours, breaks, uniform allowance and even jobs. They did this all in the hopes of striking fear into the hearts of workers and showing them that strengthening employment standards is futile.
While the public and labour responded ferociously to these attacks with numerous protests, the Ontario Chamber of Commerce was quick to line up behind the reactionary business owners, many of whom are Chamber members, and declare Bill 148 unworkable:
For months, the OCC has forewarned that every objective analysis has indicated that these changes will lead to significant job loss, a 50% increase in inflation over and above what would otherwise be expected in the next few years, and an acceleration toward automation.
Now we are seeing these consequences come to fruition as businesses take extra-ordinary actions.
The implementation was too much too fast. It is clear that the Government of Ontario must take further action to mitigate the unintended consequences of Bill 148.
Mainstream media coverage was heavily bent towards following the lead of business concerns, not workers. A torrent of articles, call-in shows, op-eds and editorials sowed doubt about the wisdom of raising the minimum wage, choosing to frame the debate on the most business friendly terms such “do minimum wage hikes hurt workers?” or “how are restaurants dealing with the minimum wage hike?” or is this too much too soon?
For too many politicians and much of the media this was just a story about the bottom line, not a story about the actual lives of workers. There were scant few stories in the mainstream press about the impacts on low-wage workers and the struggles with rent, food, childcare, transportation, and more.
The media, the business lobby and right-wing politicians pounced when the January job numbers showed Ontario had lost 51,000 jobs that month. But January’s job numbers were deceiving. Many part-time jobs were replaced full-time jobs and job loss was concentrated in sectors of the economy largely not impacted by Bill 148.
Myths and reality of the minimum wage
Now that Bill 148 is in effect, the exact opposite of what the big business lobby claimed. If you track the record of big business claims about the minimum wage it should be no surprise.
The job numbers from February onwards have been in the positive, with over 71,000 jobs being added between February and June. The unemployment rate also remained low.
The July job numbers continued this trend of strong job and wage growth for workers. In July 61,000 jobs were added, which were mostly part-time. But wage growth has remained strong. Workers continued to gain in average hourly wages and in total number of hours worked. Unemployment is at its lowest point since 2000. Youth unemployment in Ontario has actually remained at almost the exact same level since July of last year, meaning the 20 percent hike in the minimum wage has not as of yet impacted young workers – other than put more money in their pockets.
Over the last 12 months sectors of the economy with more low-wage workers have actually grown faster than the average. Information, culture and recreation, along with accommodation and food services have seen job growth, 5.2 percent and 6.1 percent respectively, that more than doubles the Ontario average of job growth, 2.6 percent, for the last year. Even where job growth has stumbled such as in the wholesale and retail trade, the stumble over the last 12 months of negative 0.8 percent growth has exceeded the rest of the country which had a negative 1.8 percent growth. Wholesale and retail trade job growth numbers had a strong July, adding 23,000 jobs and growing by 2.2 percent. Ontario’s economy in terms of job creation is out performing provinces that have a far lower minimum wage.
Business lobby predictions busted
So in summary, Bill 148 has not led to job loss, job growth deceleration, or negative impacts on young workers. In fact, job growth in the province is doing much better than it has done in almost two decades. CANCEA stated that its baseline of job growth expectation for Ontario is roughly 80,000 per year. Seven months in and Ontario has already shattered that mark (roughly 80,000 new jobs have been created this year).
The predictions of 185,000 jobs, 50,000 jobs or 90,000 jobs being lost or not created because of Bill 148 as predicted by CANCEA, the FAO and TD Bank has, for now at least, turned out to be way off the mark. In fact the opposite has happening, jobs are being created, hours of work are climbing and wage growth is robust. It is an ideological rout of the business lobby.
Last summer Karl Baldauf, then vice-president at the Ontario Chamber of Commerce (he has since gone on to work for the PC government), said, “if the Ontario government chooses to proceed with these sweeping reforms so quickly, all of us will be affected, and the most vulnerable in our society chief among them.” Baldauf was completely right, just not in the way he intended, low-wage workers and indeed most Ontarians have benefitted from the sweeping changes.
The latest job report has created a little flare in the media, but almost no self-reflection, no sense of responsibility by either the media or politicians who opposed this. To date, only one Toronto Star news story has compared the reality of Ontario’s job market to the dire predictions pushed by the big business lobby. The article is short, thin on information, and doesn’t name names.
While we shouldn’t hold our breath for accountability, we should feel extra confident to pushback against the big business experts, media pundits, and politicians who plan on telling us we need to cut wages and workers’ rights to fix Ontario’s economy. They can only cry wolf for so long.