Is this the best they can do? The weak case against $14 in Ontario

Today the libertarian Montreal Economic Institute think tank released a short report claiming that Ontario’s $14 minimum wage is costing thousands of young workers their jobs and raising prices for everyone else. These overblown claims, based on skewed and cherry-picked data, came out—purely coincidentally to be sure—on the same day that Doug Ford’s Conservatives were set to enact Bill 47, the law that will cancel the planned increase in Ontario’s minimum wage to $15 on January 1, 2019 and reserve many other gains for Ontario workers such as two paid sick days.

The MEI study makes three main points, (1) that Ontario’s $14 minimum wage has caused 56,000 youth jobs to be lost so far, (2) that it has raised prices at restaurants by 5.6% and (3) that it is ineffective at fighting poverty. (Although it is irresponsible to call what MEI released a study; it is essentially a 2-page brief with an appendix mostly comprised of a very selective bibliography.)

Each is a claim is highly problematic, based either on cherry-picked data, a misreading of the research or both. Let’s take a look at each in turn.

First, the MEI claims that employment for 15- to 24-year olds in Ontario fell by 56,000 since the introduction of the $14 minimum wage. Looking at the data, however, it’s plain that there has been a big increase in youth employment volatility and it’s much less clear what the ultimate impact on youth employment itself has been. The MEI essentially cherry-picked a difference between the highest (November 2017) and one of the lowest (October 2018) volatile monthly points to get the largest possible estimate of jobs lost.

To see how volatile the data is, let’s pick a couple other month pairs. Between November 2017 and March 2018, the change in 15- to 24-year old employment is zero. That’s between the date Bill 148 was announced and after one quarter of it being in effect! Between July 2017 and July 2018 there was a gain of 22,400 jobs for 15- to 24-year olds. In fact, looking at these year-over-year changes in employment, the more stable average year-over-year change in youth employment in the ten months between January and October 2018 has in fact been a 16,900 job gain.[1]

Meanwhile, the employment rate for 15- to 64-year olds, which is much less volatile and comprises a much larger number of workers, is nearly identical today to November 2017, unchanged since Bill 148 was enacted. This represents a year-over-year gain of 82,800 jobs.

Looking more broadly at the first three quarters or nine months of 2018 so far, employment in Ontario has been up 1.7% on average year-over-year, higher than the rest of the country at 1.4% on average. In six of the nine months so far in 2018, Ontario’s unemployment rate was over 0.5% lower than in had been a year previous.

Not only has Ontario’s jobs performance kept up with or outpaced Canada-wide trends, it has been disproportionately strong in low-wage sectors—those where you would most expect to see negative effects from a higher minimum wage. September’s year-over-year employment growth in each of the three service sectors where low wage work is most common beat Canada-wide figures by around 0.5%. At the same time, earnings for low-wage workers have seen a big boost. Total wages in accommodation and food services, the most low-wage-heavy sector of the economy, were 14% higher in September than they were one year earlier, increasing at double the Canada-wide rate. Little sign of existing or impending labour market doom.

Next, the MEI cherry picks price data to fear-monger about out-of-control price increases. While Ontario’s restaurant prices did jump somewhat right after the minimum wage increase, overall inflation is in line with the rest of Canada. In fact, Ontario’s CPI is 2.2% higher than it was a year ago, exactly the same as  Canadian CPI. In a meaningful, general sense, prices in Ontario are growing at the Canadian average. This is in line with most research, which finds very limited price effects from minimum wage increases.

The MEI is right, however, that restaurant prices did experience a bump. Between December 2017 and March 2018, they grew by 4.8% in Ontario; however, this has to be compared to overall price growth which was 2.1% over the same period—leaving a difference of 2.7%. Since then, however, restaurant prices have roughly kept pace with overall price growth and growth in restaurant prices across Canada (which Ontario has also tracked closely, with a very similar 2.6% shift upwards over the national average in early 2018). This relatively small, one-time bump in restaurant prices is not unexpected (and it is 27 cents on a $10 meal). In fact, it shows firms in industries with the very highest concentrations of minimum wage work finding avenues other than cutting jobs to absorb cost increases.

Finally, the MEI is wrong to claim that most studies show no connection between higher minimum wages and lower poverty rates. The latest research states the exact opposite, finding a clear link between higher minimum wages and lower poverty. A very recent “meta-analysis”, or study of studies, took 12 of the most credible new research papers on the topic, even including those from well-known academic opponents of raising the minimum wage and found that for every 10% increase in the minimum wage, the number of non-seniors living in poverty decreased by 2% to 5%. It also found significant increases in household incomes for the bottom half of households, largest among those in the bottom quarter. (For a good, non-technical explanation, see this piece in the Washington Post.)

Past research, today’s jobs numbers, even initial reports from the big banks confirm that a higher minimum wage does not spell doom, either for Ontario’s economy or for low-wage workers. In fact, it appears to have been the boost from the bottom up that was needed. While there is certainly space to study the effects of increasing Ontario’s minimum wage to $14 (and the still, as of writing, planned increase to $15 on January 1, 2019) in more detail, the MEI is only muddying the waters with its simplistic, skewed analysis.

 

[1] The impact on teen (15- to 19-year olds) employment has long been a key feature of minimum wage research, with some earlier research showing statistically significant impacts. Some more sophisticated and more recent studies from the US have overturned these results, finding no significant effects on employment from raising the minimum wage,  even on teens. And even those still-significant estimates from recent Canadian research would find much smaller impacts (by a factor of more than two) than the crude calculations done by the MEI.

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Labour’s fate and revival in the US and Canada

This week, two labour historians talk about their new books on Canadian and US workers’ movements in the 20th century, books which offer important and practical lessons for unions today.

First up, I speak with Barry Eidlin, Assistant Professor of Sociology at McGill University, about his just-published book, Labor and the Class Idea in the United States and Canada. The book seeks to explain the divergence between the Canadian and US labour movements since the 1960s and we discuss everything from the recent Janus decision to how the US labour law regime obscures the fundamental power imbalances in the workplace to how Canadian unions still need internal revival despite their (somewhat) better position.

Next, I talk with Christo Aivalis, Postdoctoral Fellow in History at the University of Toronto, about his book, The Constant Liberal: Pierre Elliot Trudeau, Organized Labour and the Canadian Social Democratic Left. The title speaks for itself but the relationship between Trudeau and labour foreshadows how neoliberalism would be implemented in Canada in later decades and holds lessons for how labour should orient politically as well as fight Trudeau the younger today.

As always, remember to subscribe above to get new episodes as they appear, rate the show on iTunes and donate to help keep this good thing going. Thanks!

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How Doug Ford won and how to challenge him

Last Thursday was a dark day in Ontario as the Conservative Party led by businessman-bully-bullshitter Doug Ford won a majority in the provincial election. Two guests assess the factors behind the Ford’s win and the chances for building an effective opposition to the coming right-wing agenda for Canada’s most populous province.

First up, Doug Nesbitt, PhD student in history at Queen’s presently competing his dissertation on the Days of Action during the last Conservative government in Ontario under Mike Harris. He is also an editor at rankandfile.ca as well as an organizer with the Fight for 15 and Fairness in Kingston, where he lives. He analyzes this 2018 election drawing on links with the Harris years in the 90s, the opposition then and its lessons.

He leaves off exactly where my conversation my second guest, Deena Ladd, begins. Deena is the director of the Worker’s Action Centre in Toronto and one of the main organizers behind Ontario’s wildly successful Fight for $15 and Fairness. She discusses how Doug Ford’s win came about and what this tells us about the strategies that can challenge his government from below.

As always, remember to subscribe above to get new episodes as they appear, rate the show on iTunes and donate to help keep this good thing going. Thanks!

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The Ontario election isn’t about deficits—and that’s a good thing

How big is your deficit? This Ontario election, no one seems to care—and that’s a decisive positive to emerge from a campaign that’s too often been submerged in the politics of personality.

There is more and more light sneaking through the widening cracks in Canada’s austerity consensus. Hopefully, it will shine not only on the latest vote-buying scandal or bout of red-baiting but hit upon some of the big questions of economic policy. Here, the relevant question is not “how big is your deficit”, but “who will it benefit?” Or, put most expansively, “how are you going to transform the economy?”

In part, deficit panic has taken a back seat this election season because of an uncomfortable fact for those on the right usually most eager to stir it up. Mike Moffatt, economist at the centrist Canada 2020 think tank, has very roughly costed out the Conservatives’ platform (something the party has so far steadfastly refused to do) and found that their deficits would most likely be the largest among the three major parties. That’s the result of promising big tax cuts for companies large and small, car drivers, the wealthy, the upper middle class and other core Tory constituencies alongside insubstantial changes to spending. It is transformation biased towards the wealthy.

Doug Ford will protest that he will be able to generate “efficiencies”. These, however, will be either extremely painful cuts—think lay-offs for thousands of public sector workers like teachers, nurses, long-term care support staff or park rangers alongside fewer services—or an unkept promise. Decades of neoliberalism have created a lean public administration as much as the right won’t admit it in public. Anyone claiming to easily find $6 billion in efficiencies, or nearly 5% of Ontario’s budget, without shedding jobs or cutting services is simply lying.

The Ontario Liberals, surely emboldened by Justin Trudeau’s deficit-embracing, progressive neoliberalism, have also settled on steady, modest deficit spending. Deficits allow them to avoid raising taxes (the provincial corporate tax rate has kept falling on their watch) while continuing down the road of slow-motion austerity whose defining features are cost control and welfare state rationalization. Nothing to worry the financial markets and bond raters here. No real transformation either—the cuts of the Harris years are further baked in, only their rough edges softened.

Chastised by their loss in 2014 and emboldened by deficits from everyone else, the NDP is also projecting modest deficits every year of its mandate if elected. These however are due to more substantial increases in both revenues and expenditures than the other two parties, with deficits generated by raising expenditures more than revenues. The important piece is not the deficit but what’s happening with the two components that produce it: expenditures and revenues. On the latter, the Ontario NDP have finally injected the smallest pinch of class politics into their policy, promising to raise taxes on both corporations and the wealthiest.

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West Virginia teachers strike to win

This episode is dedicated to the recent, inspiring and victorious teachers’ strike in West Virginia. West Virginia teachers went out on strike in late February over low pay and continued attacks on the health insurance plan they share with all other state workers. They stayed out despite an initial deal signed by the Governor and their leadership and ultimately won a 5% raise not just for themselves but for all public employees in West Virginia as well as promised reforms to their insurance plan, known as the PEIA. I spoke with two teacher leaders from West Virginia and an expert on teacher unionism to get some perspective on how this strike came about, how it won and what others can learn from its example.

My first guest is Emily Comer, a high school Spanish teacher in South Charleston, West Virginia; she is a rank-and-file activist in her local of the AFT, the American Federation of Teachers and co-author of this excellent piece on the strike. I next speak with Lois Weiner, professor in the Department of Elementary and Secondary Education at New Jersey City University and a specialist in urban teacher education and teacher unionism. Her research actively supports teachers who want to transform their unions; she wrote this piece on the strike that I reference in my interview. My final guest is Brandon Wolford, local president of the WVEA in Mingo Country. The WVEA is the West Virginia Education Association and alongside the AFT it is one of the two big teachers’ unions in West Virginia; Mingo County has a storied place in labour history as an epicentre in the Mine Wars and mining struggles throughout the 20th century.

As always, remember to subscribe above to get new episodes as they appear, rate the show on iTunes and donate to help keep this good thing going. Thanks!

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Jobs data doesn’t say much about the minimum wage (yet) but lots about growing inequality

We’ve had two months of jobs data in Canada since Ontario increased it’s minimum wage from $11.60 to $14 on January 1, 2017. When January’s Labour Force Survey numbers came out and showed some of the biggest month-over-month losses in years, there was a slew of predictable, reflexive commentary blaming Ontario’s minimum wage hike. Now that we have a second month of data that show modest job gains as well as falling unemployment, down to 5.8% nation-wide and 5.5% in Ontario, the same critics are silent. The lesson is that they should have also been silent about January’s numbers.

Simply put, we don’t know enough to lay the blame for good or bad jobs numbers at the feet of a minimum wage hike in Ontario. Both January’s negative data and February’s positive data should give us pause. The monthly jobs data are volatile. The drop in January was so out of line with long-term trends that it raised the eyebrows of nearly all economists. Part of January’s losses are due to the typical rash of post-holiday lay-offs. But these numbers also seem at least in part statistical error rather than a reflection of something happening in the real world, especially when compared with February’s return to the trend of consistent, if modest, job growth.

Unemployment rates across Canada; Ontario is second lowest at 5.5%. Source: Statistics Canada, The Daily for March 9, 2018.

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The problems with progressive free trade and a divided labour movement

…And we’re back to regularly-scheduled programming. Apologies for the podcasting hiatus to (now really faithful) listeners; I hope to be back to regular episodes once again. I’m restarting the show this week with two great guests. First up, I speak with Angella MacEwen about the on-going NAFTA re-negotiations and whether Trudeau’s much-vaunted “progressive free trade” holds water. Angella has been a guest on the show before and is an economist at the Canadian Labour Congress. Speaking of the Labour Congress, my second guest, David Bush, looks at the turmoil that led up and has resulted from Unifor leaving Canada’s house of labour. Dave is an editor at Rankandfile.ca; he writes frequently and incisively on the Canadian labour movement.

As always, remember to subscribe above to get new episodes as they appear, rate the show on iTunes and donate to help keep this good thing going. Thanks!

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Media get it wrong on Bank of Canada minimum wage study

Over a million workers in Ontario just got a big raise thanks to tireless, bottom-up orgainizing, but if you look to the media it’s a bad news story. The same, tired headlines are back. Yesterday, the CBC ran a story titled, “Minimum wage hikes could cost Canada’s economy 60,000 jobs by 2019”. Today, the Toronto Star’s front page blared, “Wage hike could cost 60,000 jobs, Bank of Canada says”.

Reading either of these headlines or the stories that follow, you could be forgiven for not knowing that the cited Bank of Canada research note had a positive conclusion about the effect of minimum wage increases on workers. A major claim of the Bank’s note is that, for workers, the benefits of increasing the minimum wage outweigh the costs in terms of labour income. First of all, the Bank is not predicting 60,000 pink slips but merely a slowdown in continued job growth. The 60,000 figure is a national, annual one and represents just 0.3% of total employment. Monthly job growth has at times exceeded this number.

More importantly, the Bank found that the costs of projected (remember these are still only projections) lower employment are outweighed by the benefits from higher economy-wide wage income stemming directly from the minimum wage increase. The authors write, “On net, however, real labour income should be higher following the implementation of these measures relative to otherwise. This is because the 0.7 per cent increase in the level of aggregate real wages more than offsets the 0.3 per cent decrease in total hours worked.” (more…)

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Site C, Reconciliation and a Green New Deal

Reconciliation is not just about rhetoric, it is material. It is about how economic costs and benefits are shared. If we are to be serious about it, we have to be ready to take on costs that are both political and economic. The sunk and termination costs of Site C are substantial and so are the foregone benefits of reliable baseload power. If we want our governments to take on these costs in our name without fear, we have to make it a common sense proposition that they are worth taking on to forge a new relationship with First Nations.

The BCNDP is trying to have it both ways — support UNDRIP in principle but make hard decisions that contradict it. Horgan was visibly pained today in announcing his decision; it seemed honest and honestly conflicted. But it should be clear that saying sorry nicely isn’t good enough. There was little in what he said that touched on the concrete aspects of either going back to the table to get consent before making this decision or a different framework for proceeding in the future. (more…)

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Minimum wage whack-a-mole

Minimum-wage whack-a-mole is the best way to describe what I’ve been up to the past couple months. It seems like every week or so in August and September, the business lobby in Ontario was serving up a plate of inaccurate yet headline-grabbing predictions for consumption in the public debate.

Going against the grain of the best academic research and recent experience elsewhere, these reports have attempted to scare Ontarians into thinking that the costs of raising the minimum wage outweigh the benefits. As 53 Canadian economists, including myself, outlined in an open letter published earlier in the summer, new research is clear: raising the minimum wage is good for workers and the economy.

Here’s a quick list of pieces I’ve written over the past months countering the inflated, sometimes heavily so, predictions of minimum wage opponents. (more…)

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