Ontario Moves to $15 per hour minimum wage

[Wesley Mouch]

...I do think the study you cite has a few problems w/it.

That's exactly what you are supposed to think.

The large employer one is a tremendous omission, one that baffles me as that by definition will skew the results; both because of the number of jobs literally taken out, but also because many large employers [[retail) are minimum wage employers.

They did not 'ignore' large employers. They decided that large-employer data hurt the results, since they were less location-specific, I believe.

They did a survey of large employers, and found that they reported MORE hour reductions that small employers, so if anything the exclusion strengthens, not weakens the study.

......Beyond that point, and in fairness these can be issues for all studies of this broad type, irrespective of the conclusions they draw.

True.

- The timeline is very short. I would expect the full-impact to be 18 months to 3 years after a minimum wage hike.

The jump to $13 was last year.

...snip...
Is this entirely a reflection of data for the exact same workers, in the exact same jobs?

If a worker has hours reduced at one employer, but boosted at another, in a higher-wage classification, how is that accounted for?

I'm not suggested this wasn't rigorous, but it strikes me as problematic.

As you said, every study is problematic. What's notable here is that they had access to both hours and wages. All previous studies only looked at aggregate wages. Never hours. With hours, and the ability to segment income by rate-of-pay, they were awfully close to worker-by-worker. Past studies were much cruder, but they had the advantage of agreeing with the 'feel-good' idea of higher MW.

I'm not an economist, but I've read the study. You should do so. Its not junk science. They explain things clearly. They clearly see that individual income went DOWN for low-wage workers because hours went down. Hourly wages did go UP. Just for fewer hours. And for the next step up the ladder [[$19ish), total compensation did increase. I suggest you read the study before discounting it because of what you've read. Or UofW's governance school's page on it.

This is such an important issue. We've got to push aside the partisan lines and do what's best for everyone. MW is a curse on the low-wage earner.

[archfan]

There's little doubt that the rise to $15 will continue. So we'll get to see the results.

Do you think we can agree on the results? Seattle asked for this impartial study. And when they got results they didn't like, they went to UC Berkely to get the results they wanted. We all get to pick who we believe.

I don't think Seattle did what you accuse them of. The Berkley study appears to be independent; they are tracking minimum wage raises in several other cities as the data become available.

[archfan]

That's exactly what you are supposed to think.
...
This is such an important issue. We've got to push aside the partisan lines and do what's best for everyone. MW is a curse on the low-wage earner.

It sounds like you believe MW is a curse, and you've found one study that supports your belief. I don't think we have enough data. Maybe this is an instance where experimentation is needed [[as you advocate for education).

[Wesley Mouch]

It sounds like you believe MW is a curse, and you've found one study that supports your belief. I don't think we have enough data. Maybe this is an instance where experimentation is needed [[as you advocate for education).

We all do like studies that support our POV, don't we?

Studies have been weaponized. Each side creates their own fuel for the fire.

This fuel was created by the City of Seattle.... from the UofWashington:

In December 2014, after issuing a public request for proposals, the City of Seattle contracted with our team to conduct this evaluation.

It appears the Mayor didn't like this study results, so he got one of his own to use. From the Berkely study [[see footer):

This report was prepared at the request of the Office of the Mayor of Seattle.

You may ask your self, why did the Mayor decide to request a second study after being briefed on the results of the first?

[Richard]

http://www.businessinsider.com/misso...um-wage-2017-7

https://www.forbes.com/sites/timwors.../#396259501a68

https://www.washingtonpost.com/news/...=.4358774ef763

http://libertyhangout.org/2017/07/st...-minimum-wage/

lots of info from a few different sources,raising the minimum wage does not seem to work so well,like it reads,at some point it becomes cheaper and more reliable to just go with automation.

[Canadian Visitor]

As per request.

I read the entire UW study w/footnotes and explainers.

I also read the Berkley study; and noted differences in methodology.

Then I consulted source materials.

I reviewed, the labour-force participation rates for Seattle/Washington and the United States.

As well as unemployment rates for same.

My observations are as follows:

1) Within the context of the two studies in question, they both drew the same conclusion on restaurant employment [[including full-service and fast food) which showed no material change in employment level in the aggregate.

2)The UW study, while comprehensive in many senses and I heretofore state I am not accusing the authors of any bias, does have a couple of very clear shortcomings.

The most glaring, as I read it from their own notes was that employment data was only considered through Q1 2016.

This is a glaring problem, which the authors acknowledge in their notes, because retail employment traditionally peaks in Q4 with Thanksgiving/Christmas sales season, and traditionally dips w/layoffs/reductions in January/Q1 as its low-point.

Any data that fails to include all 4 quarters of a year where much employment is seasonally variable is going to be highly problematic. [[as would be the case if Q4 were included but not Q1).

3) The Berkley study only looked at the restaurant sector arguing it was the best proxy for minimum wage impact. I think there is a very strong case for that, while conceding that including a range of other employers will show variable impacts. I offer it here to point out one way in which the studies differed.

4)The Seattle minimum wage is not currently universally $13 or higher and wasn't on Jan 1, 2016. Seattle created 4 different classifications based on employer size and based on whether benefits were provided. There are arguments for against this but it does make studying the impact more complex. So far as I can tell, the UW study didn't separately track employers with or without benefits.

5) The overall unemployment rate in Seattle is actually down in 2017 vs 2016 and is below 4% and at historic lows. At first blush this would seem to indicate no adverse impact on employment.

6) In fairness, one should consider the labour-force participation rate as workers who vanished from actively seeking work might skew the above. So...
The LFPR for Seattle is just over 72%, at a record high, 5 points above the all-time national high for the U.S. and 10 points above the current U.S. national LFPR of 62.5%

Conclusion:

While there is certainly a need to gather more evidence and review it carefully, the flaws in the UW study are troublesome and preclude it from being considered definitive at the very least.

This work may be amended as the team conducting the study is doing on-going research and I look forward to updated results.

The Berkley study can only be applied to one-sector for now [[Food service) but can be said to support past min. wage related studies and is in fact corroborated by the UW study in respect of that specific sector.

Objective, raw-source employment data does not show ANY evidence of a downturn in overall employment, and shows no material evidence of underemployment when compared with historic norms or current national U.S. statistics.

It also shows no evidence of significant inflationary impacts.

***

Something I haven't found yet, perhaps someone could point me to a good source. I'd like to see what SNAP benefit #s looking like Washington over the affected period.

I think they might be a good marker to consider as rising incomes disqualify those who previously received said benefit.

Couldn't find a source for that applied to Seattle.

[Richard]

I think it is all subjective to local economics.

There is a set minimum wage according to the lowest paid position,I employ in the restaurant aspect and even there it contains subsets,would I pay a dishwasher $15 per hour? No,our line cooks start out at $15 per hour probation period,if you have nothing to offer an employer how do you demand a minimum that has no realitive bearing on the whole supply and demand labor aspect.

I employ in the skills trade and would never entertain the idea of offer a $15 minimum because the skill required garners more income.

$15 per hour is placating voters instead of fixing the real problems,every city is a micro economy that dictates what the minimum is,$15 per hour is skilled trade labor in Mississippi and considered good money,because it is a low cost of living.

$15 per hour in California or New York City is nothing or most likely barely surviving.

That is why there will always be conflicting studies if you are setting a basic minimum country wide then in some states it removes the incentives to get a higher education or move up because you can be comfortable while doing the bare minimum to survive.

Labor rates are dictated by the labor supply and demand,we have become a service economy and flooding the market with an over supply of unskilled labor with few options for employment.

Before I pay a dishwasher $15 per hour,I will buy an automatic dishwasher and pay the waitresses and extra $1 an hour to load it or spread the responsibility across the rest of the crews.

The big fast chains and even places like WaWa have all switched to order kiosk now,that is now 3 less x 2 shifts per store,so now 6 total jobs lost per store. Times hundreds of stores.

[Wesley Mouch]

As per request.

I read the entire UW study w/footnotes and explainers.

I also read the Berkley study; and noted differences in methodology.

Then I consulted source materials.

I reviewed, the labour-force participation rates for Seattle/Washington and the United States.

As well as unemployment rates for same.

My observations are as follows:

1) Within the context of the two studies in question, they both drew the same conclusion on restaurant employment [[including full-service and fast food) which showed no material change in employment level in the aggregate.

2)The UW study, while comprehensive in many senses and I heretofore state I am not accusing the authors of any bias, does have a couple of very clear shortcomings.

The most glaring, as I read it from their own notes was that employment data was only considered through Q1 2016.

This is a glaring problem, which the authors acknowledge in their notes, because retail employment traditionally peaks in Q4 with Thanksgiving/Christmas sales season, and traditionally dips w/layoffs/reductions in January/Q1 as its low-point.

Any data that fails to include all 4 quarters of a year where much employment is seasonally variable is going to be highly problematic. [[as would be the case if Q4 were included but not Q1).

3) The Berkley study only looked at the restaurant sector arguing it was the best proxy for minimum wage impact. I think there is a very strong case for that, while conceding that including a range of other employers will show variable impacts. I offer it here to point out one way in which the studies differed.

4)The Seattle minimum wage is not currently universally $13 or higher and wasn't on Jan 1, 2016. Seattle created 4 different classifications based on employer size and based on whether benefits were provided. There are arguments for against this but it does make studying the impact more complex. So far as I can tell, the UW study didn't separately track employers with or without benefits.

5) The overall unemployment rate in Seattle is actually down in 2017 vs 2016 and is below 4% and at historic lows. At first blush this would seem to indicate no adverse impact on employment.

6) In fairness, one should consider the labour-force participation rate as workers who vanished from actively seeking work might skew the above. So...
The LFPR for Seattle is just over 72%, at a record high, 5 points above the all-time national high for the U.S. and 10 points above the current U.S. national LFPR of 62.5%

Conclusion:

While there is certainly a need to gather more evidence and review it carefully, the flaws in the UW study are troublesome and preclude it from being considered definitive at the very least.

This work may be amended as the team conducting the study is doing on-going research and I look forward to updated results.

The Berkley study can only be applied to one-sector for now [[Food service) but can be said to support past min. wage related studies and is in fact corroborated by the UW study in respect of that specific sector.

Objective, raw-source employment data does not show ANY evidence of a downturn in overall employment, and shows no material evidence of underemployment when compared with historic norms or current national U.S. statistics.

It also shows no evidence of significant inflationary impacts.

***

Something I haven't found yet, perhaps someone could point me to a good source. I'd like to see what SNAP benefit #s looking like Washington over the affected period.

I think they might be a good marker to consider as rising incomes disqualify those who previously received said benefit.

Couldn't find a source for that applied to Seattle.

Great comments.

As to Q1 2016 being used, I get your point. I believe UofW didn't use multi-site employers, since they may spill over boundaries. And much retail would be multi-site -- so that may mute any retail seasonality. But good point.

If I recall correctly, UofW mostly spoke not to unemployment, but to reduced income. The actual wages of the bottom rung did increase [[duh)... but the hours decreased enough to result in a decrease in overall income. This isn't unemployment. Its income reduction.

SNAP might be a great indicator. I don't know anything about how they track SNAP, or how the benefit is calculated from wages... but it might be a very interesting data point.

Carry on, brother. In the end, we should remember that we all want the same thing. Opportunity, and success in life for poor Americans. We just differ on how we get there. For the record, I'm a fan of the EITC. Unlike MW, it doesn't distort labor markets, and doesn't give unfair advantage to moderate-wage workers. It leaves full room for new job entrants. Doesn't raise the bar on new hires. Allows for any-wage part-time work that might be just what a family needs.

[archfan]

It appears the Mayor didn't like this study results, so he got one of his own to use. From the Berkely study [[see footer)

Whoops, missed that!

[Wesley Mouch]

...
That any upward impact on retail sales or services purchased from higher wages also lags, as many purchases require savings. You can finally afford a new couch but you're making $80 per week extra, that means if you save 100% you can get the couch after 10 weeks, for a new car, maybe its a year.
...

Unrelated, I think the Alberta comparison isn't very valuable. Alberta has been severely rocked by commodity prices, as they jump around. Any short-term changes to unemployment would be hard to credit to a higher MW. Per the logic below.

Me thinks you are putting a lot of weight into the logic that a MW increase helps the economy. It makes no sense.

Sure, the guy who gets $125 more each month spends more. But that $125 wasn't created by pulling Potash out of the ground. It was taken from his employer. So you have to think about how the employer reacts.

If the employer had a 10% margin, the might accept 7% with zero change in his operation... but more likely he increases his prices to maintain his margins. That's what businesses do every day [[and what I did for years when I worked in Corporate America). Watch costs, and maintain margins -- with occasional nods to market taste shifts. So the purchaser of streetcorner hot dogs in Seattle will probably pay 25 cents more per dog.

Money isn't created nor destroyed by MW increases. Its just moved around. And I can pretty much guarantee that greedy business owners aren't eating cost increases out of their own pocket.

So there cannot be a logical argument for MW stimulating the economy. It appears to be a talking point to me. [[It would succeed, of course as an net income redistribution as the Amazon executive loses $0.25 and the MW worker gains $0.25 per hour -- as long as his hours don't change.

[Richard]

Or they spread the increased expense but useing the same 12 oz package but with 8 oz of product but at the 12 oz price.

It is the general public as a whole that is absorbing the cost of wage increases,by paying more for less,it is not persay hurting the business owner aspect because they can adjust until it no longer becomes profitable then they just close the doors and people lose jobs.

Large corporate franchises can absorb losses to an extent countrywide because they have market share,it is the little mom n pop or smaller companies that end up shut down.

[Canadian Visitor]

Me thinks you are putting a lot of weight into the logic that a MW increase helps the economy. It makes no sense.

Sure, the guy who gets $125 more each month spends more. But that $125 wasn't created by pulling Potash out of the ground. It was taken from his employer. So you have to think about how the employer reacts.

If the employer had a 10% margin, the might accept 7% with zero change in his operation... but more likely he increases his prices to maintain his margins. That's what businesses do every day [[and what I did for years when I worked in Corporate America). Watch costs, and maintain margins -- with occasional nods to market taste shifts. So the purchaser of streetcorner hot dogs in Seattle will probably pay 25 cents more per dog.

Money isn't created nor destroyed by MW increases. Its just moved around. And I can pretty much guarantee that greedy business owners aren't eating cost increases out of their own pocket.

So there cannot be a logical argument for MW stimulating the economy. It appears to be a talking point to me. [[It would succeed, of course as an net income redistribution as the Amazon executive loses $0.25 and the MW worker gains $0.25 per hour -- as long as his hours don't change.

We don't disagree that some mixture of price increases and/or margin hits occur, at least initially, on average when there's a minimum wage increase.

This point of distinction is whether this trade-off is ultimately beneficial.

I would argue that to use your example, in the case of a small business that is only marginally profitable, your quite right, that there is not likely a material economic benefit.

However, when shifting money from a business that has a large accumulated surplus [[more money than it can intelligently spend), there is a benefit.

Even if a price hike occurs to recover a portion of said cost.

First off GDP is a measure of $ spent, at its basic level.

If money is going unspent, then GDP is depressed.

Of course a savings rate for business and individuals is desirable.

But not one that depresses the whole economy.

That transfer is stimulative in some cases [[not all).

But the some, matters.

Keep in mind as well, that corporate taxes help pay for SNAP and Medicaid etc. When employee wages rise and people no longer qualify for these benefits, gov't costs decline, and some portion of this could be put to corporate or individual tax reduction.

Moreover, 'new money' is created every time a bank lends. But in order to lend it must find borrowers who are acceptable credit risks.

There are an awful lot Americans banks can't [[or shouldn't) lend to.

Raise the wages of those workers by $3 per hour, they qualify for car financing.

Allow for the knock-on increases that takes someone from $14 to $17 per hour and you moving someone into mortgage territory in many parts of the U.S.

All of which is highly stimulative.

No argument that that has its limits.

Nor that reasonable phase-ins can be discussed.

But I do believe there is a sound argument for the stimulative effect of increases from inordinately low levels of wage.

*****

I'll add here, that I've been an employer and never paid anyone such a lousy wage. [[as minimum here, or where you are)

I can't imagine paying someone less than $20 an hour in Toronto.....

[Bham1982]

The MW debate isn't only centered around economic issues, so don't see why that's the only discussion.

It's an equity issue, and one of minimum standards in a civilized, prosperous society. Even if it could be proven that MW harms the economy, that, by itself, wouldn't be a strong argument.

Society, and by extension elected leaders, advocate for many things that aren't peak economic efficiency. It would be much more economically advantageous to just kill all elderly people as they exit the workforce, as they are burdens on society until they pass. But we don't do this because it would obviously violate our minimum standards of decency.

[Canadian Visitor]

The MW debate isn't only centered around economic issues, so don't see why that's the only discussion.

It's an equity issue, and one of minimum standards in a civilized, prosperous society. Even if it could be proven that MW harms the economy, that, by itself, wouldn't be a strong argument.

Society, and by extension elected leaders, advocate for many things that aren't peak economic efficiency. It would be much more economically advantageous to just kill all elderly people as they exit the workforce, as they are burdens on society until they pass. But we don't do this because it would obviously violate our minimum standards of decency.

What is it with you lately? You keep saying sensible stuff; its so darned reasonable sounding. Not like you at all, LOL

[ABetterDetroit]

What is it with you lately? You keep saying sensible stuff; its so darned reasonable sounding. Not like you at all, LOL

Lol. I was thinking the same exact thing. I agree completely and it was a decent analogy as well to illustrate the point.

There are people working for minimum wage trying to feed and house their children. That is what's most important. Not some economic ideology.

People working jobs and being able to take care of themselves and their families is the goal of a reasonable minimum wage. 18k doesn't cut it, and that's 40 hours, part time is even worse. Ridiculous to think that it is enough in 2017. Points that someone else got it done in 1980 at $3.35 a hour are irrelevant. The reality is damn near everything is a whole lot more expensive now than then.

[Wesley Mouch]

The MW debate isn't only centered around economic issues, so don't see why that's the only discussion.

It's an equity issue, and one of minimum standards in a civilized, prosperous society. Even if it could be proven that MW harms the economy, that, by itself, wouldn't be a strong argument.

Society, and by extension elected leaders, advocate for many things that aren't peak economic efficiency. It would be much more economically advantageous to just kill all elderly people as they exit the workforce, as they are burdens on society until they pass. But we don't do this because it would obviously violate our minimum standards of decency.

I quite agree. We should be willing to accept broad economic harm in the interest of helping people.

We want to increase their income, not limit it. The idea that everyone should be able to earn a decent wage is something we agree on. Decreasing the income of the poor is not something we want to do, but that's what MW does. It harms the poor.

You carry the torch of righteousness. That there's somebody claiming that MW has economic costs to society. I don't think its shown that it does.

What it does have is costs to the poor. Reduced hours. Less opportunity. Inability to get a small second income when that might matter to you. Options for employment are removed. Instead, you get more automation. Better qualified workers getting MW jobs instead of the poor. You get fewer hours per worker. Doesn't harm the economy. Just the poor you say you want to help.

[Canadian Visitor]

Time for a thread update.

Minimum wage in Ontario rose to $14 per hour CAD on January 1, 2018.

The December unemployment rate [[pre-hike, and at Q4 peak employment in retail) was 5.5%

Drumroll.....

The March unemployment figures for Ontario at the end of Q1, typically a normal low-point for retail employment show an unemployment rate of..... 5.5%, no change, and in fact an increase in Labour Force Participation and in full-time employment.

Remember as well, because of different calculation methods, 5.5% in Canada is 4.5% in US terms. This remains the lowest unemployment rate since 2000.

While data-driven, science-based decision making is the way to go, I will tack on anecdotally that the big box retailers nearest my home are all hiring currently as well.

Average hourly wages are up 3.3% [[nationally, year over year), manufacturing utilization rates are also up.

I dare say, its early days yet, and I wouldn't credit the minimum wage for the good economic news.

What I would say, is that the predicted apocalypse by some has not arrived.

[Bham1982]

Me thinks you are putting a lot of weight into the logic that a MW increase helps the economy. It makes no sense.

Over 600 of the nation's top economists would disagree with you. They're signatories to the higher minimum wage drive.

A higher minimum wage is generally considered a blunt but effective tool for lowering inequality and increasing buying power. It has its drawbacks, of course, like all wage policies, but it succeeds at those two aims.

[Bham1982]

Time for a thread update.

Minimum wage in Ontario rose to $14 per hour CAD on January 1, 2018.

Good news, but that's not really different from the U.S. That's around $10.90 in USD, which is lower than most higher-cost U.S. states. Given most Ontarians live in the GTA, with extreme housing costs, it's a modest measure.

[Richard]

How did this actually improve ones quality of life?

Can somebody making 10 per hour afford a one bedroom in Ontario?

Maybe buy a better brand of scotch to drown the sorrows.

[Canadian Visitor]

Good news, but that's not really different from the U.S. That's around $10.90 in USD, which is lower than most higher-cost U.S. states. Given most Ontarians live in the GTA, with extreme housing costs, it's a modest measure.

True.

Though, for those that live outside the GTA, particularly in Central or Eastern Ontario or rural South-Western Ontario it begins to verge on a living wage.

Not so for the GTA, K-W or Ottawa.

But, if either the Libs or the NDP end up in gov't the wage will rise to at least $15CAD next year [[11.70USD). After which I think there will need to be a 2-tier minimum wage in Ontario to address the higher costs in the GTA, similar to what was done in Oregon with a higher minimum wage in Portland.

Should the buffoon the Conservatives are running get in [[ugh) he is tentatively proposing a complete income tax exemption [[provincial) for those earning under 30k which would be equivalent to between .50c per hour .80c per hour in relief. So there is that, maybe.

[Canadian Visitor]

How did this actually improve ones quality of life?

Can somebody making 10 per hour afford a one bedroom in Ontario?

Maybe buy a better brand of scotch to drown the sorrows.

Actually, I know someone personally, an older woman, retirement age, who still cleans apartment complexes.

Her raise was $2.40CAD per hour which is an extra $4,680 per year gross [[37.5 paid hours a week). Of which she will net about $3,800.

That's extremely helpful to her.

She actually owns her house, but had to work to ensure she had enough for food, property taxes, utilities etc.

She will be much more comfortable now.

An extra $300 CAD a month and some change.The idea that that is not helpful is just bizarre.

[oladub]

Other reasons to support a $15/hour minimum wage include:
1) A higher minimum wage will jump start automation. ATMs, robotization, self service kiosks, self scanning checkouts, and self driving trucks, taxis, busses are and will eliminate jobs and increase productivity. Increased productivity eventually results in a higher standard of living.
2) Small family owned businesses can cook their books, e.g. Asian restaurants, to pay whatever they choose to family members while their mid sized larger competitors will choke on higher labor costs. The largest competitors will be able to afford to automate their way out of higher wages.
3) In the short run, before automation catches up, higher wages will disqualify many low income earners from supplemental government assistance resulting in fewer government workers administering aid and reducing taxes to pay for them. How can conservatives object to that?
4) Some Americans who won't work for $8/hour will probably line up for $15/hour thereby reducing the employer demand for lower paid illegal non-citizen caste workers.
5) Someone has to create and service the automation equipment needed to replace higher wage workers. To the extent this is not imported equipment, such jobs will be higher paid than the service jobs replaced.
6) Those who support and implement large increases in the minimum wage can bask in a deserved feeling of virtue for increasing wages for some of the people they intend to help short term and by increasing productivity by reducing jobs in the long term.

To accompany a higher wage, some curbs such as tariffs should be placed on imports to avoid sending formerly low paid work abroad. Also, students should have a lower wage to get some job experience and help pay for their tuition. I support higher minimum wages for reasons given.

[Bham1982]

How did this actually improve ones quality of life?

Can somebody making 10 per hour afford a one bedroom in Ontario?

Higher buying power obviously helps. Are you arguing for even higher minimum wages? We're in agreement, for once.

And even at the current wage, yes, most Ontarians could probably afford to cover basic living costs, in most parts of the province, especially considering many households have multiple earners.

[SammyS]

Higher buying power obviously helps. Are you arguing for even higher minimum wages? We're in agreement, for once.

And even at the current wage, yes, most Ontarians could probably afford to cover basic living costs, in most parts of the province, especially considering many households have multiple earners.

Hang on. How does minimum wage increase but never have an effect on consumer goods prices? The days of importing deflation from abroad is over. China can no longer peg the Yuan and besides, they’re having their own issues with labor cost.

As mentioned before, you can’t mandate a minimum wage without the market reacting accordingly otherwise, why stop at $15? Why not $100/hr?