Canadian HR Reporter

CANADIAN HR REPORTER May 4, 2015 NEWS 13 "ere's five or six studies that have been done in Canada using different data sets and different methodologies, so they're not just updating a single data set or single methodology." Three of those studies were done by Gunderson himself, along with colleagues. "We're all finding pretty sub- stantial adverse employment ef- fects for youth, in the neighbour- hood of a 10 per cent increase in minimum wage giving rise to a three to six per cent reduction in the employment of youths. And that's not humongous but it's not inconsequential... espe- cially when you consider that young people now are having more difficulty finding jobs," said Gunderson. Adjustment process Once a minimum wage increase is put in place, there will natu- rally be an adjustment period. Rozworski postulates that ad- justment period will be a positive one, with employers seeing lower turnover and greater employee satisfaction. "People aren't working for pov- erty wages so they're more likely to stick around. You have com- panies more willing to invest in productivity because they're pay- ing their workers more, so they do want to get more out of them," he said. "You can actually also see bet- ter wage compression, so you ac- tually see the top wages actually potentially going down a little bit. In the workplaces where there's higher minimum wages… they'll tend to pay lower wages (on the higher end)." Many business groups take a different view of the adjustment process, predicting layoffs and lost jobs if employers can't cope with cost increases, said Troster. "When there are minimum wage increases, businesses are basically forced to cut hours or positions altogether in order to cope with the increased costs. So minimum wage policies actually end up hurting the very people that they're supposed to help," she said. But Gunderson said it's un- likely that most of the impacts come about it such an obvious or straightforward way. "People look at this and say, 'Well, I can't imagine an employer laying off a young worker because their wage went from $9 an hour to $10 an hour.' But that's not the adjustment process. e adjust- ment process is if you've got a lot of minimum wage workers, you may do things like the next time you have an opportunity to in- stall some equipment, instead of hiring more workers, you do it; if you're running a car wash, in- stead of having five people outside you install equipment that works faster; at a restaurant, instead of having waiters and waitresses all the time, you have some cafeteria type thing… it's those slow, subtle adjustments," he said. "And one of the things that we found… was that the impact of minimum wage increases in Canada tended to fall on what we labelled as permanent mini- mum wage workers, as opposed to temporary minimum wage workers. "In other words, you'll have a lot of people who are students or young people who are at a job for a short period of time, a summer, whatever, and it doesn't matter to them. ey're on the minimum wage for a very short period of time and they didn't have any ad- verse employment impact." But it's the people who work for minimum wage over the long term who bear the disproportion- ate brunt of the adverse employ- ment effects of wage increases, he said. "ose are the people that tend to be adversely effected." e sky doesn't fall in because of minimum wage increases but it probably has an adverse effect on the employment opportu- nities of young people, and we have to worry about that, said Gunderson. "At best, it's an exceedingly blunt instrument for dealing with poverty and, at worst, it could exacerbate poverty. It just is not a good tool for dealing with pov- erty in part because of the adverse employment effect. A minimum wage increase is not going to knock a person out of poverty or deal with it that much," he said. "It's not the most disastrous policy in the world but I don't think it makes good economics." WalMart workers participate in a march and rally for US$15 minimum wage in Boston, Mass., on April 14, 2015. The company has announced it will institute a nationwide US$9 per hour minimum wage. Credit: Brian Snyder (Reuters) Young 'adversely affected' PRESSURE < pg. 3

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