LAU: Economically, Ford is the new Wynne

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Advocates claim minimum wage increases help workers, but evidence shows just the opposite

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Doug Ford’s transformation into Kathleen Wynne – at least in terms of economic policy – is finally over.

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Ford’s earlier promises to cut personal and corporate income taxes have not been kept.

Ford has said it will suppress corporate welfare, but even excluding pandemic relief, corporate welfare continues unabated and no real effort has ever been made to cut spending.

Ford and Wynne differed at least somewhat on labor policy. When it took office, Ford’s Progressive Conservative government, wisely and despite strong criticism from the left, put the brakes on some elements of the Liberals’ attempts to stack on labor regulations.

However, this distinction between PCs and liberals has now evaporated. Towards the end of October, the government introduced new “Work for Workers” regulations, which would impose more paperwork on businesses – essentially increasing the cost of labor for businesses and thus discouraging hiring.

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Then the PCs announced an increase in the minimum wage to $ 15 an hour.

The detrimental effects of the minimum wage on the least skilled and disadvantaged workers have been known for decades. In 1996, an enlightening article appeared in The Wall Street Journal under the heading “Minimum wage in relation to supply and demand”.

He asked some of America’s foremost minimum wage economists. Here is a sample of what they said:

William Poole: “Those who lose their jobs are the weakest and most vulnerable members of the workforce. I have a question for those who lose their jobs: Are you happy enough to sacrifice your job and hope for a better future so that middle-class teens can enjoy a higher salary?

Martin Feldstein: “An increase in the minimum wage would undoubtedly reduce employment and the total number of working hours. The decline in employment would be concentrated among the less qualified and the less educated. Minority youth are said to be the most seriously affected group of the population.

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Robert Barro: “The minimum wage prohibits people from working if their productivity does not reach the indicated level… The overall consequences on the distribution of income are negative because the increase in unemployment tends to be concentrated among the less privileged people , especially adolescents from minorities.

The idea that the minimum wage helps the most vulnerable members of the workforce is complete nonsense.

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

David Neumark and William Wascher reviewed 102 studies on the minimum wage in a 2006 literature review and found that most indicated negative effects on employment, including 85% of the studies they considered the most credible.

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Moreover, they write, when researchers focus on the less skilled groups most likely to be affected by the minimum wage, the evidence for the effects of unemployment seems particularly strong.

Likewise, an article 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” – this that is, negative effects of the minimum wage on employment – and that the evidence for lost jobs was stronger among less educated workers.

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

The facts show that for many of them, the minimum wage instead destroys their jobs and thus reduces their income and seriously harms their career prospects.

– Matthew Lau is a fellow at the Montreal Economic Institute

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