Evidence shows a $15 Minimum Wage will be good for Alberta’s economy

Newly released business community reports are raising the alarm on the impact minimum wage increases could have on youth employment. Yet here in Alberta, the employment of 15-24 year olds is more directed by the recession than to minimum wage increases.

In a comparison with Saskatchewan, our 15-24 year old employment rate is broadly consistent despite very different minimum wage policies between the provinces, and Alberta has enjoyed a higher recovery in employment rate compared to Saskatchewan, despite these higher wages. “The C.D Howe Institute report presents a stark vision where employment and higher wages are trade-offs. However, there is evidence to suggest that we can achieve higher wages and higher employment simultaneously”, said McGowan. “Comparing Alberta’s economic and employment recovery with Saskatchewan’s is proof of that.”

“Increasing the minimum wage to a point where people working full-time hours can afford to live above the poverty line will be a boost for Alberta’s economy, because low-income workers are the likeliest to need the money, they are the likeliest to spend it”, said McGowan. “When you look at the meta-analysis of studies done that look at the effect of minimum wage increases on employment, time and time again, you see that none of the catastrophic employment impacts predicted have come to pass.”

The idea that a higher minimum wage would boost the economy, rather than harm it, is not a radical idea. Mainstream economists have been making this argument for years now, and it is borne out by the evidence which shows the money low wage workers earn is returned in to the economy very quickly, meaning local businesses and economies reap the rewards. “The bottom line is that increasing the minimum wage to something close to the living wage is a win-win for both workers, their families and the economy”, said McGowan.

The C. D Howe Institute’s report is written using highly theoretical employment modeling which leads to drastic overestimates of job losses. For example, the report incorrectly assumes who minimum wage earners in Alberta are; ignoring minimum wage earners over 25 who we know are the majority of minimum wage workers in the province. In an economic analysis of Ontario’s plan to raise the minimum wage to $15 in that province, TD Economics uses similar flawed theoretical modelling to overstate job losses. However, TD Economics also admits that due to the high median income levels of Albertans, the rate of increase in minimum wage will be manageable. They state that in this scenario “the benefits of a higher minimum wage, including reduced income inequality, may outweigh the costs”.

Chris Gallaway
Alberta Federation of Labour
587.984.7569 or cgallaway@afl.org.

Updated: 4 October, 2017 — 8:31 pm