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.

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Employment Remained Steady in October but Job Quality May Have Declined

Written by Strac Ivanov, MBA, President and Co-Founder of Vicinity Jobs Inc

Economically and politically, October 2013 was a tough month, mired in uncertainty. The US government was shut down for more than half of it, as media was discussing the potential consequences of something most considered unimaginable until only a couple of months ago: A default by the US government. All this uncertainty seemed guaranteed to take its toll on the job market in both Canada and the US: Businesses tend to delay hiring when they are uncertain about where the economy is going.

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Is Canada’s Job Market Stuck in Neutral?

At first glance, StatCan’s Labour Market survey from August paints a pretty rosy picture: Canada’s economy created 59,000 new jobs, and unemployment dropped 0.1 percentage point to 7.1%. But a more detailed look reveals some less encouraging details.

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July’s Unemployment Growth May Signal More Trouble Ahead

Canada’s economy lost 30,000 jobs in in July 2012, pushing the unemployment rate up 0.1% to 7.3%. The Statistics Canada labour survey report for July shows that most of the jobs lost were part-time, and among women aged 55 and over. The losses were concentrated in a handful of provinces, including BC, Quebec, and Manitoba, while employment remained unchanged in most other provinces, including Ontario and Nova Scotia.

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December Report Paints Mixed Picture of the Health of Canada’s Job Market

by Strac Ivanov

Canada’s economy created 18,000 new jobs in the month of December. The unemployment rate edged up to 7.5% (from 7.4% in November) – but only because more people joined the labour force. Ironically, this is actually good news: It indicates that more unemployed people feel that they have decent enough chances to find work. But there is less to December’s employment growth numbers than meets the eye.
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Employment Growth Stalled for a Second Consecutive Month in August

From Brittney Windatt

Employment was little changed for the second consecutive month in August but the unemployment rate rose 0.1 percent to 7.3 percent.   This comes in a month in which the stock markets went through a wild roller coaster ride and we found that GDP growth in the second quarter of this year had turned negative (making it quite likely that we may be in a new recession).   The details do give some reasons for concern.
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Surprisingly Strong Job Market Performance in June 2011

from Brittney Windatt

Employment in Canada grew by 28,000 in June, continuing its rise for the third consecutive month.   According to June’s labour market survey report from Statistics Canada, the unemployment rate remains at 7.4 percent as the number of people participating in the labour market increased; however, since mid-2009, the unemployment rate has declined.

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Canadian Unemployment Rate Declines in May Mask Job Market Weakness

from Brittney Windatt

The month of May brought a 1.6 percent increase in total employment over the previous 12 months, causing unemployment to drop 0.2 percent to 7.4 percent.   But a closer look paints a less optimistic picture: The increase in employment for the month of May was driven largely by a decline in the number of people looking for work and by more people becoming self-employed.   Private sector jobs growth remains weak.
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Canadian Job Market Showed Good Overall Performance in March 2011

March 2011 was largely dominated by bad news for the economy: Most notably the earthquake and tsunami in Japan and the deepening of the Libyan conflict. The disaster in Japan hit Canada’s local economy by disrupting the supply chains of local manufacturers. In Ontario, the impact on the automotive sector was particularly severe. The Honda plant in Alliston, for example, cut production by more than 50% indefinitely, apparently because the Japanese disaster made it impossible for it to source electrical parts that go into vehicles it assembles. The Libyan crisis also lead to some (potential as well as real) disruptions in the oil supply.   Employers typically respond to such signs of uncertainty by placing hiring decision on the backburner until the future becomes more clear (and brighter). So it was quite refreshing to see that Canada’s job market did actually quite well in March.
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