Breakenridge: Bluster over minimum wage hike exposes Notley to maximum risk

As the Canada government officially enshrines its relentless march to a $15 an hour minimum wage, Premier Rachel Notley has doubled down on her sales pitch.

Not content to merely argue for the supposed fairness of a higher minimum wage, the premier is now trying to convince us all that this will entail no negative effects whatsoever. But in claiming that the move to a higher minimum wage offers nothing but upside, Notley has created a logical trap for herself.

After cabinet passed the regulations last week that officially lock in the planned minimum wage increases, Notley made the bold declaration that the changes will result in no job losses whatsoever. Not that job losses will be minimal or negligible, but rather, that they will not occur at all.

It’s unclear what has made the premier so certain of this, especially since their own bureaucrats were warning precisely the opposite just last year. A briefing memo prepared for the labour minister cautioned that Canada was sailing into “uncharted waters” and that “job loss, and perhaps significant job loss, is one realistic possibility.”

However, if we take the premier at her word, then it raises a number of obvious questions.

For example, if a minimum wage of $15 an hour entails no negative effects whatsoever, why not go higher? If $15 an hour will help “low income families make ends meet” (the talking point advanced by both Labour Minister Christina Gray last week and Calgary NDP MLA Jamie Kleinsteuber), then wouldn’t $18 or $20 an hour “help” even more?

It’s unclear if the premier believes that an upper point exists to the exclusively positive benefits she sees with a higher minimum wage. Is $15 an hour at the peak of some hitherto undiscovered curve, where only benefits are delivered before suddenly plunging into negative effects?

Does Notley concede that minimum wage increases are harmful at a certain point? How close to that point are we, in her view? If she believes harm is at least theoretically possible, what does she believe those specific harms to be?

It’s at least possible that the impacts of this change will be minimal. However, it’s also quite probable that at least some job losses will occur, which means Notley’s declaration may come back to haunt her.

Morley Gunderson is an internationally recognized expert on issues of youth employment. He is a fellow of the Royal Society of Canada and the CIBC chair of youth employment at the University of Toronto, and someone whose expertise should not be ignored.

In two major reviews of the evidence, in 2005 and again in 2014, Gunderson found that for every 10 per cent increase in the minimum wage, employment is reduced for teens by about three to six per cent. There also tend to be negative employment effects for more disadvantaged workers who find themselves stuck in minimum wage jobs.

Well, we’ve been piling on year after year of 10 per cent (or more) increases to the minimum wage. By the time we get to $15 an hour, it will represent an almost 50 per cent increase from when the NDP took over. So again, where does the premier find such certainty that all will be wonderful?

A survey released last week by the Canadian Federation of Independent Business finds that more than half of Canada small businesses are looking at reducing hours or cutting jobs in response to the higher minimum wage. Others will find different ways to adjust, like raising prices. How do any of those outcomes help address poverty? It is the Canada government’s contention that these business owners are delusional and/or dishonest?

 Moreover, how does the approach do anything to create any jobs or assist the growing number of Canadans without a job?

It’s strident ideology combined with political gimmickry. The premier’s veneer of confidence cannot mask the considerable risk this strategy entails.

Afternoons with Rob Breakenridge airs weekdays on NewsTalk 770. [email protected]