Boosting B.C.'s Minimum Wage Could Cost Jobs-Fraser Institute

By 250 News

Prince George, B.C.- A new  study by the Fraser Institute  concludes  up to 52 thousand jobs in B.C. could be lost if the minimum wage is increased to $10  an hour.

The study, The Economic Effects of Increasing BC’s Minimum Wage, examines the research on the effects of increases to minimum wages in Canada and around the world and calculates that an increase in BC’s minimum wage to $10 per hour from $8 per hour will result in job losses ranging from 10,898 jobs to 52,200 jobs.

“This is a conservative estimate that only looks at the impact on teen and youth workers,” said Niels Veldhuis, Fraser Institute director of fiscal studies and co-author of the report.
“Increasing BC’s minimum wage to $10 per hour will have a profoundly negative effect on employment opportunities for young and low-skill workers, and will have almost no effect on those most in need of income and a job.”

The study examines existing academic research from Canada and around the world on the effects of increases to minimum wages and finds the overwhelming consensus is that increasing the minimum wage has a significant negative impact on employment, particularly for younger workers.

Acording to the report,  a 10 per cent increase in the minimum wage is likely to decrease employment by three to six per cent among all young workers aged 15 to 24. For those young workers most directly affected – earning between the current $8 per hour wage and the new $10 per hour wage – the impact is more acute, leading to employment losses of 4.5 to 20 per cent.

The report also points out that higher minimum wages have other negative effects, including fewer benefits and less training for workers. Higher minimum wages can also induce high school students to drop out of school and search for employment.

“Fewer employment opportunities and less education and training are particularly harmful, given that experience and skill development are important drivers of higher wages,” said Keith Godin, co-author and a Fraser Institute senior policy analyst.

Who earns minimum wage?

Veldhuis and Godin note that the most commonly cited purpose of minimum wages is to increase the incomes of society’s low-income workers. But at the same time, there is a general misunderstanding of who actually earns the minimum wage.

Based on data from Statistics Canada, the authors found that 62,600 BC workers earned the minimum wage in 2007, representing 3.4 per cent of total employment in the province. The majority of these people were young workers between the ages of 15 and 24 (56 per cent), with 87 per cent of them living at home with family. More than half of these young workers were also attending school, while many of the remaining individuals earning minimum wages are adults supplementing their family income with part-time work during child-rearing years or after retirement.

“While implemented with the best of intentions, the economic reality is that minimum wages likely do much more harm than good. Minimum wages are simply incapable of achieving the intended results and can actually worsen the situation of the people minimum wage laws are intended to help,” Veldhuis said.

The complete report is available at www.fraserinstitute.org

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