By Stephen Gordon - Tuesday, February 19, 2013 - 0 Comments
Barack Obama has proposed increasing the U.S. minimum wage, and the discussion is spilling over to Canada. There are two things one needs to know about the minimum wage, employment and poverty in Canada:
1. In Canada the link between minimum wage increases and lower employment levels is stronger than in the U.S. The famous Card-Krueger study of events along the Pennsylvania-New Jersey border in 1992 found that an increase in the minimum wage actually led to an increase in employment. Subsequent work has challenged that conclusion, but as far as I can tell, U.S. studies generally find that the link between (small) changes in the minimum wage and changes in employment has been fairly weak.
The Canadian literature on the link between minimum wages and employment looks very different. For one thing, empirical studies that use Canadian data are able to exploit variations in the minimum wage both across time and across provinces (in the U.S., on the other hand, the minimum wage is largely driven by changes at the federal level). Estimates for the effect of minimum wage are generally stronger than those in the U.S., and as Morley Gunderson notes in his 2005 survey of the literature:
While there are substantial differences across the different Canadian studies, the following generalisations emerge:
- The earlier Canadian studies (based on data prior to the 1980s) tended to find adverse employment effects that were in the range of US consensus estimates, and sometimes higher, where a 10% increase in the minimum wage would give rise to a 1-3% reduction in employment.
- Studies based on data to include the 1980s tended to find smaller effects that were at the lower end of the consensus range, and possibly zero, as was often also the case in the US.
- However, some more recent studies using different and more sophisticated methodologies as well as more recent data (e.g., Baker, Benjamin and Stanger 1999, Yeun 2003, Baker 2005, Campolieti, Fang and Gunderson 2005a, b, Campolieti, Gunderson and Riddell, forthcoming) find larger adverse employment effects at the higher end and beyond the consensus range, especially in the longer run. The elasticities typically range from -0.3 to -0.6 for teens (slightly lower for young adults), implying that at 10 percent increase in the minimum wage would lead to a 3 to 6 percent reduction in the employment of teens. The fact that they use different data sets and methodologies suggest that these results are robust.
- Overall it appears that the Canadian studies tend to find adverse employment effects that are at least as large and likely larger than US studies; certainly none find positive employment effects as occasionally occurs in the US.
Using Card-Krueger to support calls for a minimum wage increase in Canada isn’t just cherry-picking: it’s cherry-picking from an entirely different orchard.
By Aaron Wherry - Wednesday, February 22, 2012 at 12:50 PM - 0 Comments
Paul Dewar details his labour policy, including a ban on replacement workers and a promise to reinstate the federal minimum wage and gradually raise it to a living wage.
A government led by Paul Dewar will legislate, at the federal level, Manitoba’s innovative “60 day rule,” to enable either party involved in an impasse to ask the Canada Industrial Relations Board to impose binding arbitration and end the strike or lockout. Since this rule was implemented in 2000, it has brought several protracted disputes to a fair and neutral resolution while creating a strong incentive for employers and workers to negotiate in good faith. Since its implementation, the number of days lost to strikes and lockouts in Manitoba has fallen by more than 2/3 compared to the previous decade.
This morning, the Communications, Energy and Paperworkers Union of Canada announced its endorsement of Brian Topp. I confess I’m not well-versed in union politics, but this is apparently significant. Mr. Topp has also been endorsed by the United Steelworkers. (Though the Toronto Area Council of the United Steelworkers went with Peggy Nash.)
By Josh Dehaas - Wednesday, February 9, 2011 at 8:51 AM - 30 Comments
Unpaid interns are illegal and yet ubiquitous
When Michael graduated with a fine arts degree from the University of Toronto last spring to a tough job market, he was thrilled to be offered the position of marketing assistant for a festival. The posting said “compensation to be determined,” which he thought meant minimum wage or more. At the interview, he learned it was an unpaid internship with a $50-per-week stipend. He took it anyway, hoping it would give him “a foot in the door.” He’d live with his parents and get a part-time retail gig to pay the bills. But there was no time for a retail gig. Every evening was eaten up on the phone for work or driving around (in his own car, paying his own gas) putting up posters for the festival.
Laura was similarly disillusioned with her experience. She got no orientation and no training on her first day of work at a big-city daily newspaper. Instead, she was handed a press pass and told to laminate it on her way to the first of that day’s press conferences. She too paid for her own gas, her own parking, her own cellphone bill. The University of Alberta graduate was treated as a member of the full-time reporting staff—except she got paid nothing. At the end of the internship, instead of offering her a paid position, they brought in another intern. They do that every month. “Why hire me when they could just get another unpaid intern?” she says.
It turns out her internship was illegal, considering she was working at a for-profit business, wasn’t in school, and was doing work normally done by a paid employee. But Laura hesitated to complain, for fear of being blacklisted. (Like Michael, she still doesn’t want her real name used for this article.)