In a move that will surprise nobody except zealots of the dismal science, Increasing minimum wages in Canada has been found to have no negative effect on unemployment whatsoever.
This shouldn’t be news to anyone, because in multiple natural experiments like this, introducing or increasing minimum wages has been seen to have no negative effects, but facts are alien to those who treat politics like theology.
It also shouldn’t be a surprise because the mechanism for the economists lie about minimum wages is completely divorced from reality- the propose that if wages go down, people work less, as they see that their leisure time is more valuable than work. What a load of nonsense. Anyone who has ever worked a minimum wage job knows that no matter how highly you value time off, you have fixed expenses to stay alive.
Zealots indeed. The point at which increasing wages causes significant problems is definitely not $15/hr. Something might begin happening at twice that, because that is actually close to the inflection point that happens around the level of income that begins to give people some measure of happiness.
Zealots yes, but not of economic analysis except the kind that results from a motivated source of funding. Zealots with a dose of disingenuous bullshit, like any other kind of reactionary idiocy that is attempting to infiltrate conversations between adults.
Economics is a social science strongly vulnerable to the prejudices of people in power and generational attitudes. Still, the reason we know that the minimum wage canard and the comparative advantage canard are just two hundred fifty year old suppositions that didn’t pan out is that econ looks at the data and there are still a lot of people doing academic studies and getting access to BLS data and other public sources to prove it.
It isn’t economists who are advocating the shutting off of studies of the world we live in, “science”, that kind of thing. It’s the people in power. The rich.
I don’t understand that argument. I thought their proposal was that if wages increase companies would lay people off and hire less and therefore increase unemployment. That’s what seems to be divorced from reality here.
Your statement, that lower wages result in fewer people working, does have some evidence behind it (at least in the U.S., I don’t know about Canada.) After the Great Recession, the news was quick to cheer that unemployment levels were dropping and the economy was recovering. But they quietly glossed over the fact that tons of people were going on disability, dropping out of the workforce entirely, going through long-term instead of short-term unemployment, or taking up much more precarious jobs (gig economy, unpaid internships) for lack of anything better - and the official unemployment numbers don’t count any of those people.
This is reinforced by the way social benefits programs are set up in the U.S. They typically give a consistent, steady amount. Until you get a job (even a part-time, minimum-wage job), when you lose almost everything.
Those low-paying jobs are often unpredictable ones where ‘managers’ randomly change the schedule every week, sometimes several times a week (and threaten to fire people who don’t show up for shifts that they weren’t scheduled for). They demand the employees work overtime because the regional manager is coming and then threaten to fire them for violating the ‘no-overtime’ policy. It’s tenuous employment. Wages fluctuate wildly from week to week and if minimum wage is low, can be less than the benefits that were received while unemployed.
Aside from rent and maybe groceries if you budget, many expenses that minimum wage workers have, and have the most difficulty with, are the non-fixed ones - fluctuating electrical bills, unexpected car repairs, health care costs determined by the wheel of fortune. When you combine those with the fluctuating income of a minimum wage job, it breaks people down. While the steady income from benefits may not be great, the steadiness on that end is one less point of fluctuation to worry about, it at least gives them a way to plan longer-term than a week.
In short, there are multiple rather obvious reasons why increasing minimum wage would actually decrease unemployment. The most obvious is that it makes the bad jobs more worthwhile, gives people a chance to earn more than they would receive from benefits, giving them the potential for a bit of stability, and makes it somewhat plausible that one could actually survive while working only 1-3 jobs. (Because if working 3 jobs still can’t cover the bills, what’s the point of all that hard work?)