In the News at Fight for $15 and Fairness

Toronto Star: Why business and banks hate the minimum wage: Cohn

Posted on Media by · September 30, 2017 3:53 PM

By Martin Regg Cohn

Recycling outdated data and unreliable models, big bank and business researchers clash with professional economists on the minimum wage hike, Martin Regg Cohn writes.

A high-stakes dispute over the minimum wage is a testament to how our elites play policy games with the lives of working people.

The ideological divide is not just right versus left and business versus labour. At its core, the disagreement pits economists against themselves.

We have dialed up the minimum wage to maximum volume, leaving low-wage earners as a political afterthought. Dangling on the poverty line at $11.40 an hour.

On one side, big bank economists and business mouthpieces are warning of an economic cataclysm if Ontario hikes the minimum wage to $14 an hour next year, and by another $1 the year after that. TD Bank and the Ontario Chamber of Commerce are leading the charge, relying on muscular rhetoric disguised as rigorous research.

The chamber’s predilection for alarmist predictions is entirely predictable, coming from a group whose president is a former Progressive Conservative candidate, whose vice-president worked in the PC leader’s office, and whose members want to be dragged kicking and screaming into the age of the living wage. They joined up with other like-minded groups to hire a dubiously dismal economic forecasting group that claimed 185,000 jobs were “at risk.”

Business groups urge slowdown on Ontario’s $15 minimum wage hike

TD Bank came up with its own estimate of 50,000 to 150,000 jobs lost by the end of the decade, noting its own “rough estimates are consistent” with those of others — even though they aren’t. The impact will be “acerbated” by the speed of the wage hikes, the bank added gravely.

(That conclusion sent me speedily to my dictionary. Acerbated is defined as exasperated — not to be confused with exacerbated, which means worsen. This is why muddled bank economists leave me puzzled.)

On the other side, university economists and big labour have led a counterattack in defence of an increase. They point out that business is relying excessively on econometric modelling at a time when the model is badly broken.

Recent empirical research shows the impact of past wage hikes has been relatively neutral, retrospective proof that is surely more persuasive than speculative modelling that tries to predict the future with improbable precision.

Caught in the middle is the legislature’s Financial Accountability Office (FAO), which warned that 50,000 jobs could be at stake from paying poor people more. The FAO is supposed to keep a close eye on the government’s financial accounting and accountability — notably “the province’s finances, including the budget, and trends in the provincial and national economies.” Why the FAO, on its own initiative, opted to speculate on minimum-wage policy — as opposed to fiscal facts — is an interesting question for a fledgling organization that has repeatedly been proven wrong in its deficit predictions.

The bigger problem with the FAO and TD researchers is that they recycle outdated data and unreliable models to forecast typhoons on the horizon, ignoring the evidence in front of them. What does the rest of the economic world really think will happen, plus or minus?

“One constituency that has mostly declined to join this chorus of boos has been professional economists,” noted a distinguished group of them in a recent commentary (full disclosure — one of the authors, Lars Osberg, taught me labour economics at university). They cite recent hikes in the U.S. with “no credible evidence that this clear trend in labour policy is hurting job creation.”

The reason? It turns out that high-wage employers benefit from reduced turnover, lower recruitment costs, and greater productivity. That’s why more than 40 economists also signed an open letter cautioning against “fear-mongering that is out of line with the latest economic research” that shows a negligible “disemployment” effect.

“There is no consensus against raising the minimum wage among our profession; indeed, the emerging understanding is quite the opposite,” they conclude.

At a time when the provincial unemployment rate has plunged to the lowest level in 16 years — 5.8 per cent last month — business interests want us to believe that we can’t afford it? To put the doomsday scenarios in perspective, Statistics Canada reported Ontario has gained 154,000 jobs in the past year.

Another bank, RBC, predicts Ontario’s economy will expand “at a rapid clip” after years of strong growth that has led the country and much of the industrialized world. If not now on wages, when?

Target, the American retailing giant, announced Monday it will raise its base wage to $11 ($13.71 Canadian) next month, and $15 (Canadian $18.70) by 2020. What are we waiting for — Walmart?

A New York Times analysis speculated that Target may be “trying to convince consumers that it is a good corporate citizen before lawmakers try to push up the timeline for minimum wage increases.”

Would that our own business sector were wise to those prevailing winds.

Read the Toronto Star Story

CCPA: Don't bank on TD's $15 minimum wage impact forecast

Posted on Media by · September 29, 2017 3:59 PM

By Michal Rozworski

Business in skewed economic assessments of Ontario’s move to a $15 per hour minimum wage has been brisk this week.

Only a day before the Chamber of Commerce released its full (of holes) study, the economics department of TD Bank published its own dire predictions about job losses. The gloomy prognosis discounts the weight of much recent research, which points in the opposite direction: substantial net benefit for low-wage workers.

On a positive note, the TD analysis is at least explicit about impacts of minimum wage increases on both sides of the cost-benefit ledger—unlike recent reports by the Fraser Institute and CANCEA.

Better jobs
The discussion of effects on business investment and the labour market is robust: TD correctly states that higher minimum wage can lead to lower turnover and more productive, better trained workers.

In fact, this analysis effectively summarizes why $15 is so important: “raising the minimum wage represents a direct transfer of income from businesses to low-wage earners.”

This is welcome, given that Ontario’s minimum wage has barely budged in inflation-adjusted terms since the 1970s, while income inequality has grown.

Outdated stereotypes
However, the discussion of big picture effects still relies on outdated stereotypes. For example, the analysis of the increase in consumer spending quickly reverts to the image of the minimum wage worker as middle class, usually associated with teenagers or young adults.

We know, however, that the profile of those making less than $15 (and not just minimum wage) has moved away from that stereotype. Indeed, about 80 per cent of Ontario workers making under $15 per hour are over the age of 20; groups like new immigrants are disproportionately represented.

This stereotype of the minimum wage teenager is at the centre of the biggest problem with the TD Bank analysis: predictions of large job losses that are out of line with the latest research.

It’s important to note that “job loss” does not mean TD expects mass layoffs. Instead, the bank admits that it expects continued job growth in Ontario, only potentially more slowly than before. Some workers may also see fewer hours. Economists call this disemployment—not job loss.

In general, it looks like the TD economists make the common mistake of misapplying potential higher disemployment effects for teenagers or young adults (20-24) to the entire workforce and choose to ignore the emerging consensus around negligible to small job impacts.

Exaggerated job loss
In the jargon of economics, this is an argument about elasticities of employment to the minimum wage. “Elasticity” in this case is a technical shorthand for expressing the percentage change in employment when there is a 10% increase in the minimum wage. So an elasticity of -0.05 means that a 10 per cent increase in the minimum wage generates a 0.5 per cent reduction in employment.

TD economists cite elasticities of employment in the range of -0.1 to -0.3 (a 10 per cent increase in the minimum wage leads to a 1-3 per cent reduction in employment). These numbers apply, if at all, to teenagers. Much of today’s best research consistently shows elasticities statistically indistinguishable from zero for adults.

This translates into, on average, little to no job loss in aggregate from moderate minimum wage increases. Meanwhile, there will be a significant boost to incomes among the lowest paid workers in Ontario.

One bone to pick with TD’s report: some well-regarded studies have even shown small job gains, so TD is wrong to say that the literature is purely concerned with the amount of disemployment.

Newer research supports a higher minimum wage
The authors of the TD analysis try to paint a picture of conflicting studies, but it is really the weight of evidence from multiple studies that has solidified this new consensus. The evidence includes “studies of studies” that synthesize results from multiple individual ones. The one study showing job loss in Seattle that TD mentions is so far an outlier in this trend and has been criticized widely, including in the Financial Times.

Using numbers from the most recent Canadian and U.S. research would produce job loss estimates between two and 10 times smaller than the low end of the TD Bank estimates. In fact, the high end number of 150,000 jobs provided by TD is similar to discredited reports from groups like the Fraser Institute or the CFIB.

The dire prediction of job loss offered by TD reflects a view from bygone days; one that has undergone a tectonic shift as a result of a more nuanced understanding of how the labour market works and more sophisticated statistical techniques.

A recent op-ed co-authored by two past presidents of the Canadian Economics Association, Jim Stanford and myself, makes this point forcefully:

‘High-wage’ and ‘low-wage’ firms can co-exist in the same sector, since high-wage employers benefit from lower recruitment costs, reduced turnover and perhaps more motivated employees. In this environment, economic theory implies that moderately higher minimum wages can increase or decrease employment (emphasis added).

In today’s new consensus, Nobel Prize winner Paul Krugman cites Mr. Card and Mr. Krueger with starting an “intellectual revolution” in economics. Seven other Nobel Prize winners endorse a 40 per cent increase in the U.S. minimum wage. And a former editor of The Economist, the world’s most influential free-market voice, recently called for big minimum wage hikes to help boost lacklustre purchasing power across the industrialized world.

It is interesting that the TD Bank report spends time quantifying only its chosen negative effects of minimum wage hikes, such as disemployment, while leaving out many other quantifiable effects on the positive side like poverty reduction.

Not once do we hear how many billions of dollars in extra wages will go into the pockets of low-wage workers. In general, job loss should not be our only, or even primary, concern when assessing the impacts of minimum wage increases: this policy makes the vast majority of low-wage workers better off.

Wage compression is good
The TD note’s authors also note that it is helpful to compare the minimum wage to the average or median wage. They state that Ontario’s minimum will rise to 63 per cent of the median and that this is a problem.

First, this number is inflated. TD repeats the Fraser Institute’s mistake of comparing the minimum wage to the median for all workers rather than the more frequently used median for full-time workers. For example, the OECD uses the full-time measure in its official statistics.

In 2019, Ontario’s $15 per hour minimum wage will be around 57 per cent of the full-time median wage, a figure not unheard of in other jurisdictions today or in the past and coming to others moving to $15 in the near future.

More importantly, this says something about wage growth in general: if the median wage is close to a poverty line wage, it is also, in part, because wages for many workers have been growing far too slowly for far too long.

A minimum wage that is a higher proportion of the median wage is an argument for the benefits of increasing the minimum wage: wage compression–less distance between those at the bottom and those at the top–is good.

Finally, the TD analysis states that the best time to raise the minimum wage is when the economy is strong. While its authors warn of a coming economic downturn, the Bank of Canada is confident enough in the strength of the economy to have started raising interest rates, with a second hike just recently. TD’s own forecasts for 2018 also foresee a healthy pace of growth.

The time for a bold, long overdue raise for the lowest paid is now.

Read the CCPA story

Nugget: Low-waged, precarious employment taking toll on our community

Posted on Media by · September 27, 2017 6:16 PM

By Stuart Bailey

Community legal clinic workers see everyday impacts that low-waged precarious employment have on the communities we serve.

Job insecurity, poverty-level wages and lack of benefits are the unfortunate new reality for many workers in Ontario. Over the past 20 years the number of low-waged jobs in the province has increased dramatically, with 1.5 million workers making less than $15 an hour. About 1.6 million Ontario workers are currently not entitled to even one job-protected sick day, let alone one paid sick day.

Legal clinics have spent years advocating for improvements to Ontario Works and Employment Insurance programs, which were not designed to respond to today’s labour market and often leave workers without any source of income. But while income maintenance benefits are critical supports where the labour market fails, they cannot be the only solution to create income security.

Employers must play their part.

The economy is growing and profits are up, but wages are being left behind.

Stronger employment standards and enforcement can go a long way in rectifying income insecurity in this province. The government is starting to address this by reforming the Employment Standards Act and the Labour Relations Act through Bill 148, to better reflect the realities of the modern workplace.

A $15 minimum wage, paid leave days, equal pay for equal work, and an advance notice for schedules are some positive steps the government is taking to raise the floor of working standards, reduce poverty and address growing inequality.

While these changes may seem sudden to some, they have been a long-time coming for workers.

Ontario’s low-wage workforce has grown by 94 per cent over the past two decades. From 1995 to 2003 the minimum wage was frozen in Ontario. The subsequent marginal increases to the minimum wage since 2003 have not allowed workers to catch up.

The long-overdue increase of the minimum wage to $15 by 2019 would have a clear and immediate impact, especially for the most marginalized sections of the workforce and their communities.

About 57 per cent of workers with part-time jobs would see a raise, the vast majority of workers in retail, food service and property service sectors would likewise see their pay go up. Immigrant workers, workers with disabilities and women, who are all disproportionately impacted by precarious employment, would benefit the most.

As the Canadian Centre for Policy Alternative’s recent study Ontario Needs a Raise notes, it is large profitable corporations that employ the vast majority of low-wage workers. It is unsustainable and unfair that the cost of low wages is downloaded onto the back’s workers and government programs, when we know employers can afford to pay their workers more.

In fact, there is a growing consensus, as shown by the open letter released by more than 50 Canadian economists, that a $15 minimum wage will not only improve workers’ lives, but will be a boon for the economy as a whole.

Those of us in the community legal clinic system understand that the price of inaction and delay in implementing a $15 minimum wage and strengthening employment standards means putting more strain on already stretched publicly-funded benefit programs to ensure income security for Ontarians.

It also means continuing the financial, emotional and physical burden on millions of working Ontarians and their families.

This is a price our province call ill-afford to pay.

Stuart Bailey is a lawyer and director of Nipissing Community Legal Clinic in North Bay

Read the Nugget Story

Toronto Star: Ontario is complicit in precarious employment: Cohn

Posted on Media by · September 27, 2017 4:03 PM

By Martin Regg Cohn

Temp agencies are now temporary, too, and the government plays whack-a-mole while precarious workers feel they must keep their heads down.

The perils of precarious work are often discussed, but rarely documented.

That changed this month when my colleague Sara Mojtehedzadeh took the extra risk of going undercover to write about precisely those perilous working conditions in a Toronto factory.

Now no one can say they didn’t know enough to finally do something about her revelations. Notably our lawmakers at Queen’s Park.

The most compelling finding in the Toronto Star’s investigation, co-authored with reporter Brendan Kennedy: It’s not that the problem is so complicated, but that the province is so complicit in the explosive rise of temp agencies, the biggest profiteers from precarity.

Thanks to a complex web of loopholes, employers have offloaded much of the liability and risk of maintaining permanent staff to these temp agencies, which insulate them from the financial consequences of workplace accidents.

Rather than accepting responsibility as the true employer of their factory staff, and paying the higher WSIB premiums pegged to blue collar work, they rely on temp agencies as phantom employers paying a lower, white-collar rate for accident insurance.

If one of those poorly trained temporary hires should suffer a workplace accident — the statistics show a higher rate of injury — the temp agency bears the brunt on the WSIB’s books, cushioning the impact on the factory where it happened.

But higher premiums have no lasting consequences for a temp agency that can disappear with the click of a mouse and rebrand itself the next day.

In the digital age, these Potemkin temp agencies are themselves temporary, coming and going just as fake email addresses do. They can close up shop only to start up again under another name on another website with a new post office box, or in another strip mall storefront.

The result is double jeopardy; it’s not just precarious workers who face extra peril, but all taxpayers and businesses who pay a price for this sleight of hand by the unseen hand of temporary agencies.

The Star identified 2,588 temp agency accounts registered at the WSIB and found many were residential addresses in condos or the suburbs. Some were virtual offices — one was on an empty plot of land — and without assets to seize, the authorities lose their leverage in enforcing the law.

Traditionally, temp agencies filled temporary gaps, acting as employment brokers until companies could plug any gaps in their office staff.

Now, they are repositioning themselves to offer revolving-door substitutes on the factory floor, workers who are permanently precarious instead of permanent.

Temporary staff are rarely unionized, can be terminated without notice and are traditionally paid less than permanent workers, while the temp agency pockets an undisclosed markup in their wages. They are, in essence, surrogate employers, as Mojtehedzadeh discovered when she was hired by an agency without ever meeting anyone, at an office that does not even exist.

The provincial government is promising to address the problems of precarious work.

New legislation, now being debated, would require companies to offer wage parity to temporary workers performing “substantially” similar work to that performed by permanent staff, and this would reduce one of the key financial incentives for contracting out.

Labour Minister Kevin Flynn deserves credit for advancing workplace reforms.

But he appears oddly reluctant to take the necessary next steps to protect precarious workers.

Flynn acknowledged that the Star’s investigation revealed “there’s a problem out there that needs to be solved” and credited Mojtehedzadeh for going undercover “in a way that we (inspectors) couldn’t do at the Ministry of Labour.

“Reading it on the front page of a large newspaper I think really did help.”

But he has rejected caps on temporary workers and is in no hurry to close the loophole of lower WSIB rates; no changes are contemplated until 2019 at the earliest.

Nor is he taking legal action to hold de facto employers to account, eliminating the temp agency dodge.

Instead, the Liberal government is opting for half-measures that rely on exhortation, incentives and the goodwill of employers to remedy deep-rooted problems.

Their approach is to rely on wage parity to fix precarity, rather than delving deeper to ensure WSIB premium parity.

The underlying problem is that temp agencies are themselves temporary.

This forces the authorities to play whack-a-mole while workers keep their heads down.

The best way to prod employers to recognize their responsibilities is not merely through moral suasion in a competitive marketplace, but by legislating a level playing field so that all rivals are bound by the same fair practices.

The problem of precarious work has been discussed long enough, and now documented well enough.

Why is this government still not doing enough?

Read the Toronto Star Story

Weston Web: Why a minimum wage of $15 will be good for Weston/ Mount Dennis

Posted on Media by · September 27, 2017 1:17 PM

By Roy Murray

The chart above shows the modest proposal to boost the Ontario minimum wage as put forward by the Liberals:

$11.40: today’s minimum wage
$11.60: Oct. 1, 2017
$14: Jan. 1, 2018
$15: Jan. 1, 2019

How much would a $15 hourly wage be as an annual salary? Just under $29,000 for someone working an 8-hour day, 20 days a month for 12 months a year. It’s not exactly high living.

Alleged think-tanks like the Fraser Institute claim that as many as 50,000 people will lose their jobs if the MW is elevated to such lofty heights. The Fraser Institute BTW, is one of the many propaganda arms of big business, generously supported by all of us because it has been allowed to call itself a charity. There are also claims that prices will rise as a result. Even the media seems to be repeating (many false) claims of impending doom without checking the facts.

In 2015 about 1.7 million people in Ontario earned less than $15.00 hourly. Incredibly, that’s just under 30% of the workforce. In Weston / Mount Dennis that percentage is likely considerably higher since we are one of the poorest areas of the city.

What we do know is that unlike the rich, poor people don’t send their money to tax havens. They spend it when they get it and largely on local goods and services. Income and sales tax revenues will actually rise as workers will pay more income tax and many may not need to apply for tax credits – a form of government wage subsidy for employers.

A study done last year, reported in the Huffington Post investigated the effects of raising Wal-Mart wages in the U.S. from $10 an hour to $15. The study concluded that revenue for the giant chain would be reduced by $5 Billion annually. Compared to the total annual revenue of $482 Billion, that works out to a hit of about 1%. In other words, raising wages 33% would increase costs less than 1%. Why then doesn’t Wal Mart raise wages? Share prices and dividends might go down.

From: http://www.canadiansocialresearch.net/minwage.htm

Australia has a similar economy to ours and currently mandates a minimum wage of $18.29 – somehow, the universe has managed to stay in one piece. Perhaps Australians believe in fairness more than we do.

Our readers might want to tell local MPP Laura Albanese that they support increasing the minimum wage.

Reading the Weston Web Story

Toronto Observer: 15 and Fairness leader: fight not over for minimum wage in Ontario

Posted on Media by · September 25, 2017 1:57 PM

By Zaid Noorsumar

Critical to win the public debate about minimum wage, says Deena Ladd

Long-time activist Deena Ladd cautioned her cohorts in the Fight for 15 and Fairness movement against complacency even as they appear to be achieving their objectives.

The Ontario Liberal government has promised to bring in a $15 minimum wage, as well as better benefits and protections for workers. As the provincial legislative assembly deliberates Bill 148 – Fair Workplaces, Better Jobs Act, Ladd urged her comrades Friday night to step up their activism.

Ladd, coordinator for the Workers’ Action Centre in Toronto, was addressing a packed meeting hall at the University of Toronto, as part of the 15 and Fairness campaign, a broad coalition of trade unions, workers and activists.

“This is the time to get our communities organized, we need to be working every day, every weekend, until we win these changes,” she said, calling on her comrades to organize and spread their message through real life engagement, social media conversations, letters to community newspapers and calls to local radio channels.

Defending workers’ power

Even if Bill 148 passes, as expected – it is currently in its second reading – the movement could be derailed by a new government repealing the act after provincial elections in June 2018, Ladd warned.

“Whoever comes into office on June 8th, let them know that they cannot touch this legislation, they cannot touch the minimum wage, it will be political suicide for them,” she said.

Ladd said that it was critical to win the public debate about minimum wage now and send a message to the business community and the politicians, and prevent their movement from being derailed.

The challenge from the business community

Ladd castigated the business community, exemplified by the Ontario Chamber of Commerce, which has been vocal in its opposition to the proposed minimum wage hike.

Ladd cited research including the endorsement by 53 economists in Canada, who said in June that raising the minimum wage “makes good economic sense.”

A broad range of issues

Aside from the public event on Friday, the events at the U of T over the weekend included workshops and meetings that discussed a wide range of issues related to The Fight for 15 and Fairness.

“This has never been about one piece of legislation,” Ladd said. “This is about building a strong social justice movement, that can take on the issues that our communities face whether it’s racism, Islamophobia, wage theft, temp agency work, discrimination because of how you are hired.”

Read the Toronto Observer Story

Toronto Star: Recycling plant ordered to pay $1.33M in fines, back wages

Posted on Media by · September 25, 2017 1:22 PM

By Sara Mojtehedzadeh

Factory with two municipal contracts found in violation of City of Toronto's fair wage policy.

A North York recycling plant that employed low-wage temporary job agency workers for years has been ordered to pay $1.33 million in fines and back pay to workers for violating the City of Toronto’s fair wage policy.

Canada Fibers Ltd. has two seven-year contracts to process blue bin recyclables for the city, worth a combined total of more than $264 million. Their contracts stipulated that all workers, including temp agency employees, were to be paid $12.34 an hour with pay increases tied to inflation, according to Fair Wage Office manager Mark Piplica.

In 2015, a series of Star reports highlighted the story of “perma-temp” Angel Reyes, then a 61-year-old father of three who worked at the company for years at minimum wage — which at the time was $11 an hour.

The city’s Fair Wage Office subsequently launched a two-year investigation into Canada Fibers and found that some 1,600 workers were owed money for being paid below agreed-upon rates.

“We’re actually really close to finalizing all of the distribution (to workers),” said Piplica, who told the Star most employees owed money were hired through temp agencies.

“Many workers, they’re going to get some money,” said Reyes. “That’s a beautiful thing.”

Piplica said the investigation was complex because Canada Fibers has multiple locations, but said the company co-operated fully and will now be using directly-hired employees to process city recycling.

“To their credit, they’ve stepped up,” Piplica said.

A spokesperson for Canada Fibers said in a statement to the Star that the company was “pleased that it has now reached a fair and reasonable resolution with the city on the applicability of wage regulations to its Arrow Road facility.

“Specifically, Canada Fibers has agreed to pay approximately $1.2 million in good faith payments to employees, with approximately $135,000 as an administration fee to the City of Toronto,” the statement said.

“Canada Fibers continues to believe it has been in full compliance with all city regulations in the work that it does for the City of Toronto. In the interest of the company’s long-term relationship with its business partner, the city, and to stop analyzing and reanalyzing the facts of the dispute, Canada Fibers has agreed to conclude the review and make good faith retroactive payments to applicable employees,” it added.

“We’re glad to see the Fair Wages Office investigated and temp agency workers hopefully will be able to recoup their lost wages,” said Mary Gellatly of Parkdale Community Legal Services.

“But we have concerns about Canada Fibers’ use of temp agency workers when it was in a long-term contract with the city to do Toronto’s curbside recycling.”

After speaking out to the Star, Reyes lost his temp job at Canada Fibers — but was subsequently offered a permanent job by a reader.

Ontario employers cashing in on temporary workers

Temp work growth is ‘alarming’ and changes are coming, says Ontario labour minister

The Star has reported extensively on the growth of the temp agency industry, and statistics show there are now more temp agencies operating in the GTA than seven Canadian provinces combined.

The city investigation found Canada Fibers was using five different temp agencies to staff its facilities. Businesses with municipal contracts are responsible for ensuring all subcontractors — including temp agencies — abide by the city’s fair wage guidelines.

Gellatly said the investigation highlights why proposed provincial legislation to make it illegal to pay temporary or part-time employees less for doing the same work as permanent counterparts is so important.

“This is why the Bill 148 provision for equal work for equal pay for temp agency workers is so important — for workers not covered by fair wages policy at the City of Toronto,” she said.

“We need to see improvements so the equal pay provisions really can be enforced,” she added.

Piplica said temps who worked at Canada Fibers could contact his office directly if they believe they might be eligible for back wages.

“It’s a good news story all around,” he said.

Read the Toronto Star Story

CCPA: Fraser Institute cries wolf over Ontario's $15 minimum wage

Posted on Media by · September 19, 2017 4:10 PM

By Sheila Block and Michal Rozworski

Each week, it seems, we see a new report that exaggerates the potential negative impact of Ontario’s plan to get to a $15 minimum wage by 2019.

Using a selective reading of the economic research and ignoring the more recent consensus in the profession, the authors of these reports cry wolf over Ontario’s move to increase the minimum wage and reduce income inequality.

The latest in this line of attack comes from the Fraser Institute and, like the other reports, this one relies on a selective reading of the research.

The Fraser Institute’s latest missive differs from others in that it doesn’t have concrete job loss numbers to feed headlines. Instead, it warns that the impacts of a $15 minimum wage will be unprecedented and especially detrimental to younger workers in regions where wage rates are lower.

Rather than fear-mongering about job losses, they are fear-mongering about the Kaitz index. This index is most often constructed comparing the minimum wage to the median wage of full-time workers. This is the metric that the OECD uses, as does much of the research cited in the Fraser Institute report.

However, the Fraser Institute used the ratio of the minimum wage to the median wage for all workers.

Reliance on this calculation has resulted in problematic math mistakes for other business lobby groups.

Using this measure, the ratio of Ontario’s minimum wage to the median wage will be 57 per cent, not 64 per cent, in 2019. This is important because a 57 per cent ratio is not the unprecedented “uncharted waters” that the Fraser Institute claims it to be.

For example, 57 per cent is nowhere near as far from the OECD average of 52 per cent as is the Fraser Institute’s apples-to-oranges comparator of 64 per cent.

And it is important to emphasize that, in reality, this ratio will not be unprecedented moving forward. Many cities and states will reach an index higher than 57 per cent in the near future, including neighbouring New York, whose minimum wage is set to rise to 59 per cent of the full-time median by 2021.

Let’s not forget the big picture. A minimum wage that is a higher proportion of the median or average wage is in itself not a bad thing: wage compression–less distance between those at the bottom and those closer to the top–is good!”

Like the other anti-minimum wage hike reports it has released, the Fraser Institute glosses over or ignores the positive local economic impacts a $15 minimum wage will have on household incomes and consumption—which will be good for local economies.

The Fraser report also hones in on the fate of teenaged workers. It neglects, however, to acknowledge that the vast majority workers who will benefit from the increase to $15 an hour are over the age of 20: 82 per cent.

The truth is there is so little substance in this Fraser Institute’s report that there is little to analyze by way of fact-checking. It’s really just a long op-ed rehashing the same arguments this business-backed organization has been waging for decades.

Because it’s a rehash of old warnings, it’s important to look back at the Fraser Institute’s previous warnings to see if any of them held true.

First, there was the Fraser Institute response to the British Columbia increase in the minimum wage. Starting in May 2011, the B.C. government raised the minimum wage from $8 to $10.25 over the course of a year.

In relative terms, this boost was almost exactly the same as today’s proposed increase to $15 in Ontario (28 per cent in B.C. versus 29 per cent in Ontario, with a year-long phase in for both in order to give businesses time to adjust).

In the lead-up to B.C.’s change, the Fraser Institute produced a report that also predicted massive job losses—52,000 in total—which it claimed would disproportionately hit teenaged workers.

In fact, over the course of the year that British Columbia’s minimum wage was increasing and in the following year, the province added nearly 50,000 jobs—contrary to what Fraser predicted—and the unemployment rate dropped by 0.7 per cent.

The job losses for teenagers were a mere tenth of what the Fraser Institute had estimated, and even those likely had more to do with a surge in post-secondary education than the minimum wage increase.

Then there was the Fraser Institute’s response to Alberta’s increase in the minimum wage. It predicted similar negative impacts but what happened in reality? Employment in minimum wage-sensitive industries in Alberta actually increased.

The Fraser Institute is adding little credible substance to the debate in Ontario and it has a history of making alarmist predictions that don’t pan out.

Ontario’s minimum wage hike is not wading into uncharted waters, as the Fraser Institute is claiming. It is a clear win for workers in Ontario who need and deserve $15 and Fairness.

Sheila Block is a senior economist with the Canadian Centre for Policy Alternatives (CCPA). Michal Rozworski is an economist with the Ontario Confederation of University Faculty Associations and a CCPA research associate.

Read the CCPA Story

Toronto Star: Good jobs improve health and profits

Posted on Media by · September 14, 2017 4:13 PM

By Ritika Goel

Employers have seen a decrease in absenteeism, lower safety risks, as well as higher productivity rates at their workplaces as a result of providing fair wages, decent schedules and paid sick days to their employees.

As a family doctor, I know that having a good job is good for your health. I see the health impacts of precarious work on a daily basis, but this week, I was pleased to attend an event that brought together employers who are making this connection too.

The link between decent work and good health reminds me of Michael, whom I met a few years ago when he had recently arrived in Canada from the Caribbean. Michael had just fled a dangerous situation leaving his wife and children behind, and come to Canada to claim refugee status. He came to see me regularly, but whether the issue at hand was headaches, dizziness or loss of appetite, I could never find a physical root cause.

Michael was working at a fast-food restaurant despite being a highly trained professional in his home country. His low wages meant he could only afford rent in the inner suburbs so he spent long hours commuting. He felt unsupported at work and was worried he would be fired if he asked for a sick day.

Michael also needed to save money to send to his family and to eventually sponsor them, but found himself stuck living paycheck to paycheck, too exhausted to make new friends, and without financial reserve to engage in training programs. I became convinced his symptoms were in fact due to his poor mental health resulting from his social situation, including that of precarious work.

We are in a time of increasing part-time, casual, temporary and contract work, with less access to benefits, insurance and pensions. Women, racialized people, single parents and immigrants like Michael are more likely to be in these positions of precarious work, which we know are bad for your health.

Precarious work is linked to higher rates of repetitive strain muscular and joint conditions, as well as worse mental health. We also know that food-handling workers, like Michael, who have an infectious stomach illness cite not being able to afford taking a day off as the reason to come into work sick, potentially passing on their sickness.

A decent wage would allow Michael to contribute to his local economy by meeting his basic needs, save money to send to his family, perhaps move closer to this workplace, have time to build social connections and improve his mental health. Having paid sick days would allow him to recover when needed and not put the public at risk by handling food when unwell. In fact, having these measures implemented would allow Michael to better do his job. A study looking at employers who provide paid sick leave found that doing so was associated with fewer workplace injuries benefitting employers with a healthier workforce.

There is no doubt that the strong connection between good jobs and good health is widely proven in research. It thrills me to see that this is now also becoming a common perspective in the business world. At the Smart Employers Talk conference I attended this week, I got to hear directly from business owners who understand the importance of investing in their staff, so much that one employer referred to his workers as his company’s greatest asset.

These employers talked about the decrease in absenteeism, lower safety risks, as well as higher productivity rates they are witnessing at their workplaces as a result of providing fair wages, decent schedules and paid sick days to their employees.

While I know some businesses have raised concerns about not being able to afford a $15 minimum wage, it gave me confidence to meet businesses owners from a variety of sectors who are already implementing and benefiting from these higher labour standards. They are proof that this can be done, and will benefit businesses on top of the health of workers and public health.

Bill 148 plans to increase the minimum wage to $15/hour and guarantees 10 personal emergency leave days a year (of which two are paid) for all Ontario workers, among other measures. These are exactly the types of policies we need to start seeing more of, and it is wonderful to see businesses also advocating for a healthy workforce and a healthier Ontario.

Ritika Goel is a family physician in Toronto and a member of the Decent Work and Health Network.

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The Progressive Economics Forum: The headline you didn't see: $15 per hour will have a big net effect

Posted on Media by · September 12, 2017 2:05 PM

By Michal Rozworski

You wouldn’t know it from today’s headlines about impending job losses, but an analysis of the impact of Ontario’s move to a $15 minimum wage from the province’s Financial Accountability Office shows a net benefit for Ontario workers.

Overall, this is a much more cautious report than what the Ontario Chamber of Commerce and its allies had furnished, noting both the costs and benefits of $15. While the media is focusing on job loss figures (more on this below), the report predicts a big overall rise in incomes. Even if we assume its job loss estimates come true, the FAO says real labour income will go up by 1.3% after taking into account any negative effects, with over 60% of that going to the bottom 50% of households.

Anything raising wages (*cough* CEO pay) will create impacts elsewhere. The important point here is that this report admits that $15 is a poverty- and inequality-fighting shift. Some jobs will be lost, but others will be created. (Lagging) productivity will rise. Even a very modest bump in inflation could push growth upwards. Today’s growing but imbalanced economy is well-placed for a boost for low-wage workers.

Returning to the job loss figure, the FAO report is another in a long line to present a skewed picture of minimum wage research, relying exclusively on the old view that features high estimates of job losses focused on teens. The recent, landmark Canadian study from David Green and Pierre Brochu (2013) is not mentioned — using modern methods, the pair found lower elasticity estimates (the percentage effect on employment for every 10% increase in the minimum wage) that would predict far lower job loss. Nor do the FAO economists mention the extensive work of Arin Dube and colleagues from the US, today’s leading minimum wage researchers. Dube and co. reevaluated US teen studies and found employment effects either effectively zero or very, very small — even among teens!

(It’s surprising, given the FAO’s focus on poverty, that they ignore Dube’s recent work on this issue as well, which found substantial decreases in the number of people living in poverty coming from minimum wage increases. In fact, it will be very interesting how the FAO calculated the distribution of income impacts and what they imply about poverty rates.)

Today’s new minimum wage research, if applied to Ontario would predict job losses anywhere from half of what the FAO is putting out to ten times smaller to nil (some studies, including well-known papers, have even shown small but positive aggregate employment effects). In short, there has been a tectonic shift in the economic consensus towards negligible job loss. This leads one to wonder how 50,000 jobs lost is to be a mid-point estimate.

Here is my main take-away: the FAO shows a $15 per hour minimum wage having a net benefit for Ontario workers and reducing inequality; that it ignores new minimum wage research only means that its already positive conclusions should be much stronger and job loss estimates lower.

Read the Progressive Economics Forum

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