A new report from the Bank of Canada estimates that by 2019 Canada could lose as many as 60,000 jobs because of recent and upcoming minimum wage increases.
In the province of Ontario, the minimum wage on New Year’s Day rose from $11.60 per hour to $14 per hour, and similar increases will come into effect during 2018 in other areas of Canada. This includes Quebec, Alberta, and Prince Edward Island.
The issue over whether to raise the minimum wage has been a contentious one both in Canada and across the world. Some economists say that a higher minimum wage helps the economy and also helps alleviates income equality. But members of the business community insist that wage increases greatly increase costs for business owners, which in turn leads to lost jobs.
Kevin Howe, who runs a 5th-generation family farm in Aylmer, Ontario, says that he will likely have to reduce his workforce this year because he believes that consumers will be hesitant to pay the increased price of his products — an increase he says is necessary to cover the increased cost of labor. He says that if he doesn’t pass on these costs to consumers he’ll be unable to stay in business. He further says that he’s already decreased the amount of acreage he will farm this year and that the fewer hours available to his workers because of this will adversely affect his community.
On the other hand, minimum wage workers in Ontario will see a wage increase this year of about $5,000, before taxes and other deductions. The increase, according to the Bank of Canada, will also increase inflation by 0.1% and cause a reduction of this same amount in economic growth.
While most experts expect the economy to shed jobs because of the minimum wage increases, estimates vary on how many jobs will be lost. Some say as few as 30,000 jobs will be lost because of the increases, while others see as many as 136,000 jobs lost.
The Bank of Canada report further indicated that younger workers will be disproportionately affected by the wage increases, meaning that they are more likely to lose their jobs as opposed to older workers.