In another month or so the new minimum wage will kick in and we will see if the impact as stated by the Fraser Institute comes into play. We heard through telephone conference calls by the BC Chamber of Commerce with different segments of the small business community how they felt.
It is interesting to hear that in some areas adjustments to staffing and hiring are already happening. The Fraser Institute report tell us there was only about two per cent of the workforce that actually received the minimum wage, while the overwhelming majority earns more. Fifteen separate academic studies in the last 30 years examined the impact of increases of the minimum wage on employment. Accordingly a 10 per cent increase in the minimum wage will decrease employment among young workers by between three and six per cent. It apparently affects those who were earning somewhere between the old and the new by an even greater loss of 4.5 to 20 per cent.
Now the new minimum wage to affect B.C. is a 28.1 per cent increase so that may have an even more profound effect. It is estimated there will be between 9,391 and 41,738 jobs lost with this increase on the overall workforce. The Fraser Institute says the effect for all teen- and youth- or entry-job workers will range between 26,097 and 52,194 jobs. That would leave about 11,000 jobs to be picked up by someone who is not a newcomer or first-time job seeker.
Minimum wage advocates claim higher minimum wages decrease poverty. According to a Labour Economics study published earlier this year, a 10 per cent increase in the minimum wage increases poverty rates by four to six per cent.
I am not sure if anyone has calculated what the difference in payroll deductions like EI, compensation, plus income tax will have on the take-home pay. I recall in my early working years I was so happy I received a 50-cent-an-hour raise, and at the end of the day my take home pay was $5 less at the end of the month with all the added deductions. So did we really do the right thing?
Walt Cobb is a freelance columnist for the Tribune. He is a former Liberal MLA, former Williams Lake mayor, and current president of the Williams Lake and District Chamber of Commerce.