"The Minimum-Wage Law is a Monument to The Power of Superficial Thinking"
-By Sam B | [email protected]
That was an op-ed title coined by noted economist Milton Friedman in 1966 who argued against minimum wages. Kathleen Wynne, the Premier of Ontario, disagrees; she is making news this month with her government actions—including rent controls. Despite these actions, the latest polls suggest that her approval rating is hovering around 12%—though the poll was before Wynne's latest actions. On Tuesday, Wynn announced a large increase in minimum wage from $11.4 to $15 in 2019. According to the Wynne government, this will make a large difference for millions of people who live in Ontario. A reported 1.5 million people who work in Ontario earn less than $15 an hour.
The NDP leader, Andrea Horwath, is furious and called it an "election ploy."; she added "that's what we believe in," but she hopes voters will see it as a cynical ploy by Wynne to win the 2018 Ontario election. The Conservative leader was unwilling to take a stand on the law until he sees a cost benefit analysis.
Minimum wage laws according to economists often allow for more discrimination, reduced employment, and productivity. The effects of a minimum wage increase can cause a merchant to increase his sale price. This option could have consequences in the online world as goods made outside Ontario appear cheaper. Workers who make above minimum wage often benefit as very low skilled workers find it hard to keep jobs. With less employees working there could be lower output in Ontario.
Historically minimum wage laws have had large effects on unskilled youth employment. For instance in:
"1956, unemployment among black boys aged 14 to 19 was around 8 to 11%, about the same as among white boys. Within two years after the legal minimum was raised from 75 cents to $1 an hour in 1956, unemployment among black boys shot up to 24% and among white boys to 14%. Both figures have remained roughly the same ever since."
In Ontario, businesses will see a 23% increase in wages for minimum wage employees over the year and 32% by 2019.