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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Summer writing round-up

I know it’s been a bit quiet on the blog this summer, but that’s in part because I’ve been doing a bunch of writing elsewhere. Here is a quick summary of what I’ve been up to.

In the run-up to the UK election, I wrote a piece for Jacobin on one of the most important parts of the Labour manifesto: the pledge to pursue “alternative models of ownership“, including re-nationalization and co-ops. The entire manifesto was excellent and really shifted the momentum towards Labour, and even if this plank was less discussed, it will be crucial to building a 21st-century left economic policy. This article will be included in an upcoming free Verso e-book on the election and its aftermath; look out for that!

I also wrote a long-ish piece for the CCPA’s Monitor, exploring themes in In the Long Run We Are All Dead, Geoff Mann’s excellent new book on Keynesianism. The book itself is an extended mediation on themes of liberalism and revolution, tracing strands in Keynes back to Robespierre and Hegel (!). I try to situate this history of thought in the present moment and, in doing so, also draw on some examples from Three Worlds of Social Democracy, a collection of essays on the fate of social democracy across the globe, edited by my friend Ingo Schmidt. I highly recommend both books.

In other news, I now have a regular column in the venerable left publication, Canadian Dimension. The first one lays the ground for the themes I want to explore: “Questions of control and decision-making, the kinds of big questions Joan Robinson raised back in 1943, should be front and centre. A belief in democracy that extends to the economy and a readiness to popularize left economics — that’s my starting point for left economics and for this new column.” The second column, hitting newsstands this week, takes on some outdated economic myths of Canada in light of the 150th.

Finally, in more local news, I have helped launch a couple progressive economics initiatives around the big win by Ontario’s Fight for $15 and Fairness, which has successfully pressured the provincial government to introduce legislation raising the minimum wage to $15 and improving labour standards. The main piece was an open letter from economists in support of $15, signed by 52 colleagues across the country, including two past presidents of the Canadian Economics Association. It has been widely cited in the public debate, helping shift it away from business-led fear-mongering. Alongside the letter, Craig Riddell, Lars Osberg, Jim Stanford and I co-authored an op-ed for the Globe and Mail detailing the tectonic shift in the economics profession around the minimum wage.

Most recently, I have written two additional pieces pushing back on a flawed, skewed and irresponsible report on the minimum wage commissioned by the Ontario Chamber of Commerce and its allies. It makes the predictable claims using predictably inflated numbers based on predictably bad assumptions. It also appears to include an openly misleading claim around price increases to stoke additional fears. The first piece, co-written with Zohra Jamasi of the CCPA, is up on the CCPA’s Behind the Numbers blog; the second is a shorter follow-up of my own.

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What do we do when we Fight for $15

On this episode, three guests provide some perspective on the politics and the economics of the Fight for $15. First, I speak with Jonathan Rosenblum, campaign director at the first Fight for $15 at SeaTac Airport, just outside Seattle, Washington. Workers there won an immediate raise to $15 via a municipal ordinance in 2015. Jon is also an author and has recently published Beyond 15: Immigrant Workers, Faith Activists, and the Revival of the Labor Movement. Next, I move closer to home and talk to Sheila Block, economist at the Ontario office of the Canadian Centre for Policy Alternatives. Sheila lays out the context for the $15 and Fairness campaign in Ontario, one of changing work and a weaker labour movement. Rounding out the show, economics writer and researcher Nathan Tankus returns to the podcast to discuss the economic arguments in favour of raising the minimum wage. We go beyond the narrow issue of  minimum wages to broader challenges to “textbook economics.”

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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Canadian economists support $15, media round-up

53 Canadian economists, myself among them, have signed an open letter in support of the $15 per hour minimum wage. The letter follows on the immense bottom-up campaign in Ontario led by the Fight for $15 and Fairness, which has successfully pressured the provincial government to announce a move to $15 by 2019. It should also be a boost to movements in other provinces fighting for the same.

Here’s a key excerpt from the letter which outlines the now well-established economic case for $15:

But low wages are also bad for the economy. There are good economic reasons to raise the incomes of low-wage workers. Aggregate demand needs a boost. While Canada escaped the harshest impacts of the 2007-08 financial crisis, our country has also seen a slowdown in growth. We risk further stagnation without reinvigorated economic motors. As those with lower incomes spend more of what they earn than do those with higher incomes, raising the minimum wage could play a role in economic revival, improving macroeconomic conditions.

For years, we have heard that raising the minimum wage will kill jobs, raise prices and cause businesses to flee Ontario. This is fear-mongering that is out of line with the latest economic research. Using improved techniques that carefully isolate the effects of minimum wage increases from the remaining noise in economic data, the weight of evidence from the United States points to job loss effects that are statistically indistinguishable from zero. The few very recent studies from Canada that have used these new economic methods agree, finding job loss effects for teenagers smaller by half than those of earlier studies and no effect for workers over 25.

There are many possible reasons for minimum wage increases to lead to little or no job loss. Studies have found lower turnover, more on-the-job training, greater wage compression (smaller differences between higher- and lower-paid workers) and higher productivity after minimum wage increases. In short, raising the minimum wage makes for better, more productive workplaces.

The business lobby has also suggested that any minimum wage increases will simply be passed on as higher prices. First, the above-mentioned improvements will offset some part of the higher labour costs to business. Second, there is no instantaneous, automatic mechanism between higher labour costs and higher prices. Some of the costs not absorbed by increased efficiency may go to price increases, but these are likely to be small and, for low-wage workers, offset by higher incomes coming from rising wages. Furthermore, if we remember that over 1 in 4 workers in Ontario makes under $15 per hour, we should not treat slightly higher inflation as the main criterion of successful policy; instead we should focus on the substantial benefit to low-wage workers, their families and the economy as a whole.

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The $15 minimum wage is good: busting business lobby myths

With the Ontario government seriously considering raising the minimum wage thanks to the tireless organizing efforts of the $15 and Fairness campaign, the labour movement and thousands of supporters, the business lobby is out fear-mongering in force. Here is a tool for the rest of us to fight back. It’s a collection of 5 myths and facts about raising the minimum wage: clear arguments for why $15 an hour is right for Ontario workers and the Ontario economy. This is an edited version of a section prepared for the Rank and File $15 and Fairness Now! An Organizer’s Handbook for Building a Movement.

MYTH #1: Raising the minimum wage will cost low-wage workers their jobs.

FACT: There is resounding evidence that raising the minimum wage is not a job-killer. Economists doing cutting-edge studies have found that the typical minimum wage increase does not cause major overall job loss. “Job loss is more of a threat than a theory.” For instance, the threat that robots will take our jobs has been made for over 200 years and full-time work is still 40 hours a week or more! The argument that jobs will be shipped offshore fails similarly. As much as business tries, it’s not yet possible to move a barista job halfway around the world. There are still so many jobs that require human labour.

A $15 minimum wage would pump billions of dollars into the pockets of low-wage workers and thus the Ontario economy. Jobs would be created as a result of the new economic activity, compensating for losses incurred by businesses that can only function on poverty wages. As the minimum wage goes up, workers become more valuable to businesses and jobs generally get better. Economists have found that when the minimum wage rises workers get more training and there is less turnover. Businesses put more energy into raising efficiency rather than keeping tabs on workers in poverty. And wages tend to become more equal: wages for managers and other high-paid workers don’t go up as much and businesses spend proportionately more on the lowest-paid.

Most importantly, potential job losses are not the only thing we should care about when the minimum wage goes up. Less poverty, better jobs, higher incomes for the lowest-paid — all of these would far outweigh the impact of a minimal job loss.

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The case for a $15 minimum wage the NDP should make

Of all of the NDP’s campaign promises so far, one of the simplest has gotten the most press: the $15 minimum wage for workers in federally regulated sectors. This campaign plank should be an easy sell for the NDP, yet Conservative and Liberal attacks have managed to undermine it. The way it’s been presented has left it open to attack, but this needn’t be so. (more…)

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Nope, Alberta still needs to raise the minimum wage

Last night, Andrew Coyne published a column in which he champions introducing a minimum income over raising the minimum wage as a radical policy suggestion for Alberta’s new NDP government. Coyne couches the column in his typical pseudo-contrarianism. Here he is supposedly advocating socialism…gasp! In reality, however, Coyne gets it backwards: a minimum income in Alberta today would almost certainly be a dangerous neoliberal measure. It’s raising the minimum wage that can help open more space for progressive politics.

First, the basics. The $15 minimum wage was a key promise of the NDP campaign and increasingly being adopted across North America. A minimum income is a theoretical idea that’s never really been implemented and would essentially guarantee every citizen some basic level of cash income. As Coyne notes, it but remains mildly popular across the political spectrum; it was recently floated as a proposal by Calgary mayor Naheed Nenshi.

Coyne argues for the superiority of a minimum income as being solely focused on poverty reduction and redistribution, at the same time criticizing the minimum wage as too interventionist. As usual on the right, Coyne couches his opposition to hiking the minimum wage with an appeal to Economics 101: if the price of labour (the wage) goes up, the quantity demanded (employment) will go down. Simple: don’t mess with the market! (more…)

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Minimum wage workers not the only ones getting screwed

I have a populist piece in The Tyee this morning on how last week’s paltry $0.20 minimum wage increase in British Columbia actually reflects stagnant wages across the economy and why the Fight for 15 is everyone’s fight. Here it is in full.

Last week, the B.C. government reacted to the increasing push for a higher minimum wage… by giving minimum wage workers a 20 cent raise. Even Business in Vancouver magazine quoted UBC labour economist David Green calling the new higher wage “laughably low.” What perhaps hasn’t received enough attention is that the two-dime bump in the minimum wage — the first in three years — is not that far out of line with stagnant wages across the economy. For instance, the average wage in British Columbia grew by 14 cents in 2014! While 20 cents over three years doesn’t even allow minimum wage earners to account for inflation, the fact is most of us have been barely keeping up with price increases. Real wages, those adjusted for inflation, have been mostly stagnant.

While Canada-wide statistics paint a picture of modest wage growth since the end of the last recession in June 2009, much of this growth is due to the three oil boom provinces, Alberta, Saskatchewan and Newfoundland and Labrador. In fact, for the more than 80 per cent of workers outside the oil boom provinces, average real wages have grown just two per cent since that period. Median wages, which are not dragged upwards by the disproportionately large increases in wages for the wealthy, have seen just 0.4 per cent growth outside the oil provinces. This is stagnation loud and clear (see this earlier post for a closer look at the numbers). (more…)

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Kshama Sawant talks socialism in Seattle and beyond

Last year, Kshama Sawant shocked the continent by winning a seat on Seattle’s City Council. She defeated an incumbent Democrat to become the first openly socialist city councillor in Seattle in a century. Sawant, an immigrant from India with a background as a software engineer and an economics professor, is a militant socialist activist who played a major role in the 2011 Occupy protests. Not your typical politician to say the least.

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Sawant’s surprise electoral win in Seattle has sparked discussion across North America. Last week, she made her first speaking appearance in Canada, addressing a fundraising event organized by the Coalition of Progressive Electors in Vancouver. I sat down with her before the event for a wide-ranging discussion touching on everything from her background in economics to the minimum wage compromise in Seattle and the role of transitional demands in fighting climate change to the history of sectarianism and building today’s left.

Side note: you can now subscribe to Political Eh-conomy Radio on iTunes. Follow this link.

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