Canadian HR Reporter

CANADIAN HR REPORTER May 4, 2015 NEWS 3 Public pressure for pay hikes heats up Does a higher minimum wage really help workers or does it lead to lost jobs? BY LIZ BERNIER THERE ARE plenty of factors for employers to consider when setting wages — attracting top talent, profitability and retention perhaps chief among them. But another consideration has emerged in recent years: Public pressure for corporations, partic- ularly those in the services sector, to pay higher wages. WalMart recently raised its en- try-level wage to US$9 an hour in the United States — a move that will cost about US$1 billion, ac- cording to Reuters. McDonald's also announced it would raise its minimum by US$1 above the locally mandated minimum wage at all U.S. stores it operates directly. On this side of the border, nearly every province has seen a minimum wage increase in the past year — with the exception of British Columbia, said Nicole Troster, director of provincial affairs for Ontario at the Cana- dian Federation of Independent Business in Toronto. Ontario will raise its minimum wage to $11.25 in October — the second-highest wage in the country, after the Northwest Territories' $12.50. "It basically puts pressure on governments to raise minimum wage because nobody wants to have the lowest minimum wage," she said. Combined with the public pres- sure to increase minimum wages is the issue's political allure, said Morley Gunderson, a professor at the University of Toronto. "It is a politically appealing thing," he said. "at's what gets attention and that's what hooks people — and the protests and the signs are there." Helpful or hurtful? But how useful is a higher wage to workers — and does it carry ad- verse employment impacts such as lost jobs? "e bottom line is it really is a controversial issue," said Gunder- son. "e studies that have been done are done by good people, and in the U.S., at least, some tend to find no impact; others find a pretty substantial impact." ere have been studies done by top-rate labour economists that have found no adverse em- ployment impacts from a higher minimum wage, he said. "On the other side, there's a fair number (of studies) done by very good people finding pretty substantial impacts or at least a moderate impact." Studying the pros and cons is difficult because there are so many different factors at work that are tough to control for, ac- cording to Michal Rozworski, a Vancouver-based economist. "ere's lots of other factors that could be confounding your data. ere could be worse eco- nomic conditions (in one place), there could be a different mix of minimum wage jobs that wouldn't impact one place as much as an- other, et cetera." Some fairly recent research in the U.S. tried to factor those is- sues out by looking at neighbour- ing counties across state lines, he said. "So places that are basically as similar as possible — a couple of kilometres apart with a similar industrial basis and populations and all of that, but they're in two different states in the U.S.," he said. "Looking at thousands of these pairs, they basically found zero ef- fect on jobs after raising the mini- mum wage. "e Canadian studies that ex- ist so far, a lot of them find that there is an effect on jobs. But I think there's good reason to be- lieve that it's a similar problem to the older U.S. studies where the methodology just really isn't fined-tuned enough to really pick out what the impact is of an actual minimum wage change." Gunderson agreed that in Can- ada, there is more of a consensus in the research that minimum wage increases come with adverse employment effects. But it's pos- sible the studies tend toward that result because the Canadian data is better-equipped to detect the effects of minimum wage chang- es, he said. at's because in Canada, the wages are set at a provincial level and have varied quite a bit over time. "So you've got a lot of changes from which to identify an impact," he said. YOUNG > pg. 13 "e Canadian studies... find there is an effect on jobs but... the methodology just really isn't fine-tuned enough."

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