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Do Minimum Wage Increases Kill Jobs? Look at the Evidence and Judge for Yourself

When it comes to raising minimum wages, the argument of those opposed to the raises is most often that higher minimum wages kill jobs. The argument is straight-forward and makes sense: A higher minimum wage increases the cost of doing business for those employers who hire in minimum wage positions, pushing some of them out of business. A higher minimum wage also makes it less attractive for businesses to hire in minimum wage positions. If this is true, this should  mean that higher minimum wages  result in higher unemployment rate,  everything else being equal.

Statistics Canada just issued a study today (July 16, 2014)  titled “ The ups and downs of minimum wage, 1975  to  2013” where they have collected the historic minimum wage rates, which they have  adjusted for inflation. The data in this study (along with   Statistics Canada’s  unemployment rate statistics since 1976)  makes it possible to  compare unemployment trends  and minimum wage trends over the past 3 decades. So we did just that and produced the chart below overlaying the two data sets.

So does higher minimum wage kill jobs? Does a  lower minimum wage  encourage employers to create more jobs?  Look at the evidence and decide for yourself.

Unemployment Rate vs Real Minimum Wage 1975 to 2013


Written by Strac Ivanov, MBA, PMP
Strac Ivanov is president of Vicinity Jobs Inc, a Canadian economic development and business intelligence technology company with presence in Toronto and Vancouver. Vicinity Jobs operates a network of specialized search engines and a hiring demand analytics service, and was among North America`s first companies to launch an Internet search engine for jobs. Strac holds a Master`s degree in Business Administration from Vienna University of Economics and Business. He lives in Vancouver, BC with his wife, daughter, and son. You can follow him on Twitter, at @stracivanov