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Did Ontario's Minimum Wage Hike Kill Jobs? A Look At The Numbers, 1 Year Later

The $14-an-hour minimum wage didn't derail Ontario's job market, but for young workers, things are tougher out there.
Ontario Premier Doug Ford cancelled a planned minimum wage hike to $15 per hour on the argument that it's bad for the economy, but an analysis of labour data shows the last wage hike did not derail Ontario's strong overall job growth.
Ontario Premier Doug Ford cancelled a planned minimum wage hike to $15 per hour on the argument that it's bad for the economy, but an analysis of labour data shows the last wage hike did not derail Ontario's strong overall job growth.

It's been a little more than a year since Ontario's now-former Liberal government bumped the minimum wage to $14 an hour, from $11.40.

In that time, business groups have argued that the move has caused them to lay off staff, or defer hiring, or speed up automation. Those were the arguments Premier Doug Ford's government used to justify cancelling the planned increase in the minimum wage to $15.

Watch: Canada's most in-demand jobs for 2019. Story continues below.

It's hard to know what an economy would look like in a "what if" scenario that never happened. We'll never know what Ontario's economy and job market would look like had the minimum wage hike not happened.

But we can look at more than a year's worth of job data from Statistics Canada, and compare Ontario to other provinces that didn't have such a large hike in the minimum wage.

To be sure, all provinces hiked their minimum wage in 2018, but by far less than Ontario, which raised its wage by $2.40 per hour, far more than Alberta's increase of $1.40 per hour (to $15) and B.C.'s $1.30 jump to $12.65 per hour.

Quebec increased its minimum wage by 70 cents, and all other provinces hiked by between 10 cents and 30 cents.

So if minimum wage hikes kill jobs, then Ontario should stand out from the other provinces in that regard, in the job data for 2018.

Let's begin by looking at job growth. From January, 2018, the first month that the new minimum wage was in place, until January, 2019, Ontario increased its total number of jobs by 2.4 per cent, historically a very strong showing and in line with several other provinces that also clocked strong years for job growth.

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So the minimum wage hike doesn't seem to have had much noticeable impact on overall job growth. But let's take a closer look at the situation. Minimum-wage jobs are generally concentrated in two broad industries: food and accommodation, and wholesale and retail.

Looking at job growth in those industries, it's clear this was not a good year — at least not when compared to the overall job market, which had a strong 2018. Wholesale/retail shed 2.6 per cent of all jobs in Ontario, while food and accommodation added 0.5 per cent, a weaker showing than overall job growth.

But the situation in these sectors actually looked worse in many other provinces. All provinces except Nova Scotia and Quebec shed jobs in wholesale and retail, while employment in food and accommodation was all over the map.

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So it's clear that these sectors are shedding workers in many places, but the link to a minimum wage hike is far less clear. The sudden appearance of those self-serve checkouts at McDonald's and your local supermarket may have more to do with this, but to the extent that minimum wage hikes convince business leaders to speed up automation, there may be a link there.

Still, we can see that Ontario's outsized wage hike did not have an outsized impact on hiring in industries that are reliant on minimum wage workers. Other factors are clearly in the driver's seat here.

Now let's break things down by age group. Young people are much more likely to be employed in minimum wage jobs than others. So what has been happening with youth employment?

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It was not a good year for youth jobs. Canada as a whole had 2.9 per cent fewer employed people aged 15 to 24 in December of 2018 than a year earlier. The numbers were dragged down by large declines in Ontario, B.C., Alberta and Quebec. It's interesting to note that, with the exception of Newfoundland, the provinces with the largest declines in youth employment were also the ones with the largest minimum wage hikes. So there may be some negative impact on youth employment.

But again, youth jobs are also the ones most likely to be targeted for automation. So how much of this is automation and how much the minimum wage? Good luck unraveling that one.

Let's look at employment rates — the percentage of people in a given group who have a job.

Looking at "school-aged workers," those aged 15 to 24, we see that employment fell nationwide over the course of 2018, but more so in Ontario. But employment grew in the "core working-age group" aged 25 to 54. While this appears to be a nationwide trend, it's stronger in Ontario.

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Now let's look at wages (or what businesses call the cost of labour). Wage growth among youth in Ontario was stronger over the past year than it was among core working-age Ontarians. The average hourly wage for youth grew 10.2 per cent in 2018, versus 2.7 per cent growth for working-age Ontarians.

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Looking more closely at the data, we see that Ontario youth working in sales and service jobs saw wages grow by 18 per cent, compared to an increase of 11.9 per cent nationwide. In an era of sluggish wage growth, there is no explanation for this other than increases to the minimum wage. Young workers and those in low-wage industries benefited greatly from the wage hike.

The verdict

The data suggests that Ontario's minimum wage hike had very little effect on the overall provincial job market. It certainly did not derail job growth province-wide, as growth has been strong over the past year, and in line with other provinces which had much smaller minimum wage hikes.

The lack of a clear link between large wage hikes and job growth in food services and wholesale/retail suggests other factors are more important than the minimum wage when deciding on hiring.

But the evidence does suggest that the wage hike in Ontario, and the somewhat smaller hikes in Alberta, B.C. and Quebec, dampened demand for young workers and possibly accelerated automation in food services. The flip-side of that is that those in these industries are earning considerably more money today.

So whether or not the wage hike was a success depends on your values — which of these effects you consider more important.

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