Ontario’s plan to hike minimum wage to $15 an hour will cost the province’s economy as many as 90,000 jobs by 2020, according to a new report from TD Bank.
The findings come in an economic analysis released Tuesday by the bank that says that despite the job losses, Ontario’s economy will continue to grow but at a slower rate of 0.5 per cent annually. The report says raising the minimum wage can potentially generate more benefits to society than costs but the rapid speed of implementation will increase the negative hit to employment.
TD senior economist Michael Dolega said the job forecasts don’t reflect layoffs the proposed policy would cause, but jobs which won’t be created because the minimum wage hike will slow economic growth in Ontario.
Earlier this month, Ontario’s Financial Accountability Office warned the move could wind up resulting in an estimated net loss of 50,000 jobs. The watchdog said the losses would be concentrated among teens and young adults.
“It’s not that come Jan. 1 that there’s going to be 90,000 people laid off,” he said. “It’s that there would have been more jobs created had the economy expanded. Now, these jobs are potentially going to be taken by automation or there’s just going to be less impetus for hiring.”
The provincial Liberal government has announced it will increase the minimum wage to $15 an hour by Jan. 1, 2019 — with the increase phased in gradually and rising with inflation, as scheduled, from $11.40 currently to $11.60 in October, to $14 an hour on Jan. 1, 2018 and $15 the following year.
The proposed changes are in response to a government-commissioned report released last week that included 173 recommendations addressing precarious work. The Changing Workplaces review concluded that new technology, a shrinking manufacturing sector and fewer union jobs, among other factors, have left approximately one-third of Ontario’s 6.6 million workers vulnerable.
The TD analysis makes a number of suggestions to help mitigate the impact of the increase, including establishing different minimum wages for different cities in the province and doubling the phase-in period from two to four years.
“Our main concern is the speed in which it’s being implemented,” Dolega said. “We do suggest the government potentially extend the timeline … that allows businesses time to prepare for…