On economics, Ford is the new Wynne

His transformation – at least on economic policy –  is finally complete

Matthew LauThe transformation of Doug Ford into Kathleen Wynne – at least on economic policy –  is finally complete.

Ford’s earlier promises to cut personal and corporate income taxes have gone unfulfilled.

Ford said he would scrap corporate welfare, but even excluding pandemic-related relief, corporate welfare continues unabated, and no real effort was ever made to curtail spending.

Ford and Wynne once differed at least somewhat on labour policy. When it took power, Ford’s Progressive Conservative government wisely, and despite loud criticism from the left, put the brakes on some elements of the Liberals’ attempts to pile on employment regulations.

However, this distinction between the PCs and the Liberals has now evaporated. Near the end of October, the government introduced new “Working for Workers” regulations, which would impose more red tape on businesses –  essentially raising the labour cost for firms and so discouraging hiring.

Then the PCs announced a minimum wage increase to $15 per hour.

The harmful effects of the minimum wage on the lowest-skilled, most disadvantaged workers have been known for decades. In 1996, an illuminating article appeared in The Wall Street Journal under the heading “Minimum Wage vs. Supply and Demand.”

It surveyed some of America’s most distinguished economists about the minimum wage. Here is a sampling of what they said:

William Poole: “Those who will lose their jobs are the weakest and most vulnerable members of the labor force. I have a question for those who lose their jobs: Are you quite happy to sacrifice your job and hope for a better future so middle-class teenagers can enjoy a higher wage?”

Martin Feldstein: “An increase in the minimum wage would undoubtedly reduce employment and total working hours. The decline in employment would be concentrated among the least skilled and least educated. Minority youth would be the most seriously affected group in the population.”

Robert Barro: “The minimum wage prohibits people from working if their productivity falls short of the stated level… The overall consequences for income distribution are adverse because the increased joblessness tends to be concentrated among the least advantaged persons, notably minority teenagers.”

The notion that the minimum wage helps the most vulnerable members of the labour force is complete nonsense.

Politicians and activists often like to say that recent evidence proves that the minimum wage can be raised without killing jobs, but that is not what the evidence says at all.

David Neumark and William Wascher surveyed 102 minimum wage studies in a 2006 literature review and found that most indicated negative employment effects –  including 85 per cent of the studies they considered to be the most credible.

“Moreover,” they wrote, “when researchers focus on the least-skilled groups most likely to be adversely affected by minimum wages, the evidence for disemployment effects seems especially strong.”

Similarly, a paper by Neumark and Peter Shirley last year reviewed American studies since the early 1990s and concluded that there was “a clear preponderance of negative estimates in the literature” – that is, negative effects of minimum wages on employment – and that the evidence for lost jobs was stronger among the least-educated workers.

Minimum wage advocates like Kathleen Wynne and the NDP, and now Doug Ford, like to pretend that it helps vulnerable workers.

The evidence shows that for many of them, the minimum wage instead destroys their jobs and so reduces their income and significantly harms their career development prospects.

Matthew Lau is a fellow at the Montreal Economic Institute.

Matthew is a Troy Media Thought Leader. For interview requests, click here.


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