Alberta Politics
No more jobs in the service sector? Don’t bet on it! (Photo: Wikimedia Commons).

Doomsayers, Chicken Littles and Conservatives get it wrong on the impact of minimum wage increases

Posted on August 15, 2018, 1:22 am
11 mins

Now there’s a surprise! Ontario’s minimum wage increase behaved exactly as predicted by most mainstream economists.

That is, the 21-per-cent wage increase implemented by the former Liberal government that took effect on Jan. 1 this year did none of the terrible things Conservative politicians, right-wing think tankers, Astro-Turf “tax watchdog” organizations, business groups, and the online Conservative Angry Brigade predicted.

University of Calgary economist Trevor Tombe (Photo: CBC).

Economic slowdown? Nope.

Employment drops? Nope.

Reduced hours hitting the very people the minimum wage increase was supposed to help? Nope.

“Ontario’s jobless rate hit an 18-year low in July, as the country’s largest economy continued to churn out jobs despite this year’s hefty hike in the minimum wage,” the Globe and Mail reported last Saturday. (Forgive me, Dear Readers, for being slow out of the starting gate with this commentary. I’ve been at a meeting of the Alberta Teachers Association in Banff, an honour, a pleasure and a valuable education, but surely an impediment to timely blogging!)

“Ontario’s labour market is on fire,” the Globe report went on.

Alberta Opposition Leader Jason Kenney (Photo: David J. Climenhaga).

“The province added 61,000 new jobs in July and the jobless rate fell from 5.9 per cent to 5.4 per cent the lowest level since 2000, according to the Statscan monthly Labour Force Survey released on Friday,” the Globe also noted.

Several news reports, including the Globe’s, quoted a bank economist who noted that “employers seem reluctant to part with their now more expensive workers perhaps due to reported labour shortages.”

Don’t expect this reality to have any impact whatsoever on the actions of the Doug Ford Conservative Government in Ontario, of course, which will parrot the usual business lobbyists and put a stop to the minimum wage in that province rising to $15, as planned by the Liberals, despite the evidence nothing bad happens when you put more money in the pockets of the working poor who tend to spend it at home.

Mr. Ford’s government, it is predicted here, will transfer that modest gain to the pockets of the richest Ontarians, where it will add up because there are so few of them, through tax breaks for the super-wealthy. Later, the cash shortage will be used to justify calls for cuts to social programs that benefit the poor and working poor.

Back in the fall of 2017, former Canadian Auto Workers union economist Jim Stanford (who now lives and commentates in Australia, unfortunately for us Canadians) used a column in the Globe to dare any comers to bet $500 against his augury planned higher minimum wages in Alberta, Ontario and B.C. would all result in more employment, not less, in those provinces.

Ontario Conservative Premier Doug Ford (Photo: Wikimedia Commons).

Tellingly, he had no takers.

Meanwhile, here in Alberta, where the economy is also undergoing a significant rebound from the recent recession under the NDP Government of Premier Rachel Notley, the Conservative Opposition leader, Jason Kenney, was immediately busy on social media complaining that too many of the new jobs Alberta has added are part-time, and not enough offer full-time employment.

As University of Calgary economist Trevor Tombe cautioned in a Tweet, it’s never a good idea to get your economic news from politicians with an axe to grind. His Tweet showed images of an NDP infographic touting an increase of 40,000 jobs in the economy, including a big increase in full-time jobs, and one from Mr. Kenney saying the economy has lost 21,700 full-time jobs.

Which raises the question, can the two parties be talking about the same time frame? The answer is no, Dr. Tombe explained in a Twitter direct message. “Private sector employment is up since January 2017 (when one might mark the end of the recession; though it may have ended two to three months prior). But it’s down since early 2015 still. So, the government is talking about the progress in the recovery while the Opposition is talking about since the start of the recession.”

So who’s telling the more accurate story? Dr. Tombe responded: “My take is the government tends to do a better job representing the data (though of course they embellish the good news) but the Opposition focuses only on the bad and seems to think that because we aren’t at 2014 highs that we are still in a recession.”

That’s wrong, he said, although it’s quite likely they know that and just don’t care.

Mr. Kenney is right to be concerned about the loss of full-time jobs, as we all should be, but this seems pretty rich coming from a politician who objects to any policy that would encourage levelling the labour relations playing field to help working people retain quality full-time jobs with benefits, or to add any regulations to prevent the worst abuses of the gig economy.

It’s hard to believe Mr. Kenney is serious in his criticism that more of the jobs created during the current recovery are part-time than full-time when the entire economic package he advocates is designed to hand more power to employers to do just that.

What about those terrible Calgary employment numbers?

Someone is bound to ask: What about those terrible Calgary employment numbers? The Calgary Herald said they were caused by the minimum wage increase.

Economist Jim Stanford, now of Australia (Photo: David J. Climenhaga).

So it did, but as we used to say back in the days newspapers were still a thing, you can’t believe everything you read in the paper.

The Herald’s story – which quoted an employer and two small-business associations, with no opposing viewpoints – drew on the Stats Canada monthly Labour Force Survey to claim close to 27,000 service sector jobs have been lost in Calgary because of the NDP Government’s minimum wage increases.

Naturally, Mr. Kenney was all over this, also blaming the NDP and “their hasty minimum wage hike” for the losses.

But how does this square with what we’ve seen in Ontario?

“When you line Alberta up to Saskatchewan you see the *exact same* rate of job loss among young people,” Dr. Tombe said in a DM. “They’re the group with the hardest time in the recession, and also the group many expect the minwage to hit hardest. So it’s easy to blame the minwage, but that doesn’t explain Saskatchewan’s similar experience. So, it’s much more reasonable to blame low oil prices and the recession.”

Later, he Tweeted again in this topic, having discovered from a closer look at the Statistics Canada numbers that according to the same monthly report, service sector employment was up in Winnipeg, Regina and Edmonton. So, he asserted, in that case you can’t blame the minimum wage.

Moreover, he Tweeted, the Statscan numbers for Calgary were extrapolated from a drop of just 18 survey responses between July 2017 and July 2018.

Whether or not that extrapolation is correct, Stats Canada does not blame any changes in the minimum wage for state of service sector jobs in Calgary.

The jury’s still out on the impact of a higher minimum wage in Alberta, Dr. Tombe explained. “There’s no basis in evidence for anyone to claim otherwise yet.”

What job losses there have been, he added, have “more to do with oil price and the drop in discretionary spending” or the same thing would have happened elsewhere.

Green Party to try again, OKs three leadership candidates

Their leader quit suddenly last spring after less than six months on the job, but the Green Party of Alberta is now ready to try again. On Friday, it announced three candidates have been approved to contest the leadership. They are:

Cheryle Chagnon-Greyeyes, a Calgary activist devoted to Indigenous, social justice, and environmental causes. She is employed by the University of Calgary.

Brian Deheer, a Lac la Biche music teacher, active in local environmental organizations. He has run as in federal and provincial elections, and is a former deputy leader.

Matt Levicki of Lamont, a student with a background in media and broadcasting. He was a provincial Evergreen candidate in the 2012 election.

The winner will be chosen at the party’s Sept. 22 annual general meeting.

9 Comments to: Doomsayers, Chicken Littles and Conservatives get it wrong on the impact of minimum wage increases

  1. Farmer Brian

    August 15th, 2018

    David took a quick look at the Statscan report. The 61000 job increase in Ontario was all in part time work. “The employment increase was driven by public sector employees, while there was little change in the number of private sector employees or the self employed.” How does this show that the minimum wage increase was a positive for the economy? To me it simply points to the continuing increase in the size of government. And if employment in the private sector hasn’t changed at least it didn’t cost any jobs in July. But when I read articles like yours or a very similar one in the Huffington post both trumpeting the success of Ontario’s minimum wage policy and using July’s increase driven by part time jobs in the public sector as proof I just shake my head. Enjoy yor day

    Reply
    • Expat Albertan

      August 19th, 2018

      You’re asking the wrong question farmer. The proper one is whether or not full-time hours have fallen.

      Reply
  2. St Albertan

    August 15th, 2018

    Thanks for this post! My experience (long ago now) was that wages and benefits drove productivity and reduced the cost of turn over. The turnover, or churn as the MBAs liked to call it, was astronomically higher where wages were low and benefits zero. Poor work environments always led to accidents, malfeasance, and organizational disease. I witnessed this. The goal should be that every person you walk past on the street should have your default respect as a citizen. Why certain people want to drive a toxic wedge into the heart of society by targeting the lower middle class baffles me. I tipped every TFW! I told each one that they should be Canadians! Every one of them agreed! Why not Jason? Sincerely! Retired.

    Reply
  3. Dave

    August 15th, 2018

    I suspect the recent strong Ontario employment figures will quiet down some of the Conservative critics of the minimum wage increase briefly, but I expect any respite will be temporary. As you may have observed, they do not always let the facts get in the way of their arguments and beliefs. I think soon after this headline fades away, they will be making the same arguments as before – increasing minimum wages, reduces employment.

    Of course it is not true, but it allows them to pretend their interest rests with the employees getting minimum wage, rather than the employers having to pay it. Further to this, I have noticed that in their view there is never a good time to increase it – not when the economy is strong, nor when it is weak. However, they’ll use different somewhat contradictory arguments for these different situations.

    As the Alberta economy continues to recover, their arguments will appear more and more ridiculous, so at least they will probably not dwell on this issue as much as they would have a year or two ago, when unemployment in Alberta was higher. It seems to me the UCP outrage machine is starting to run out of gas as the Alberta economy continues to recover and pipelines progress, hence Kenney’s recent focus on civility and more carefully worded comments. I suppose they can always go back to being outraged about social issues as a way to motivate their supporters, but as I am sure Kenney realizes that has great potential pitfalls, as most Albertans are not nearly as outraged about that as Kenney and his clique.

    Reply
  4. Scotty on Denman

    August 15th, 2018

    How do the usual whiners avoid indictment for disingenuousness when, by inference, the unfettered capitalist system they extol is alleged to be so vulnerable to collapse if the lowest-paid workers are given a modest wage increase?

    Reply
    • Expat Albertan

      August 19th, 2018

      Just one of many contradictions in the system that we’re not supposed to notice.

      Reply
  5. Common Sence

    August 15th, 2018

    Everyone should get 50 dollars per hour then nobody will be poor everand they will have lot of money for spending on necessaries like cars and credit card bills and entertainment.

    Reply
  6. Jerrymacgp

    August 16th, 2018

    The Alberta economy is growing again, and outside the Calgary region employers are once again looking for people. The deceptively large StatsCan economic region of Banff-Jasper-Rocky Mountain House & Athabasca-Grande Prairie-Peace River—which they lump into one huge conglomerated swath of the province—with its July 2018 unadjusted unemployment rate of 6.0%, conceals the nascent labour shortage in the northwest due to newly revived oil & (especially) gas activity. Once again, ‘patch employers are running expensive radio job ads and hosting job fairs, not something you do in a recession. Once again, area highways are bustling with heavy industrial truck traffic moving 24/7.

    Calgary is admittedly lagging behind the rest of the province with a 7.5% unemployment rate. But Calgary does not equal Alberta: no other economic region of the province has unemployment at 7.0% or higher. That doesn’t make it any easier for Calgarians who are still struggling to get by, but it does put their statistics into a broader provincial context.

    Reply
  7. Bob Raynard

    August 16th, 2018

    On the CBC phone-in show yesterday that had a representative from the Canadian Federation of Independent Business, who commented that small businesses are being hit by several minimum wage hikes, and other employment regulations updates as well, and it was all too much too quickly.

    That may be a fair comment, but one wonders how much they are the author of their own misfortune. Prior to the election of the Notley government in 2015, they had the ear of a sympathetic government, and took advantage of it. If memory serves, Alberta had one of, if not the, lowest minimum wage in the country, and I expect employment standards were falling behind as well. When the topic of increasing the minimum wage, or modernizing employment standards came up, government members would nod in agreement, acknowledging it would be a good idea, before falling on their tried and true mantra that ‘now is not the time…’

    On the topic of minimum wages, I would love to see a graph showing how the purchasing power of the minimum wage has fluctuated over the years. From my own memory, the $1.25 minimum wage I earned in the early 70’s was more than enough to pay for a pack of cigarettes; I haven’t looked at the cost of cigarettes for a few years, but the last time I did it was over $10.

    Reply

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