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Minimum wage hike to hurt the North more, says Fraser study

Young, low-skilled workers outside Toronto will face more job losses
Minimum wage photo

Job losses, especially among young and low-skilled workers in Northern Ontario, will be the result of Ontario raising the minimum wage to $15 an hour, a “staggering 32 per cent increase over the current minimum wage,” said a new study released by the Fraser Institute, Sept. 19.

“Economic conditions are not the same across Ontario, so the negative effects of a $15 minimum wage -- namely job losses for young and low-skilled workers -- will be more severe in some areas of the province," said Ben Eisen, director of the Fraser Institute's Ontario Prosperity Initiative and co-author of Ontario Enters Uncharted Waters with a $15 Minimum Wage.

The study said when the minimum wage is low relative to the average wage, there is a small effect on job loss.

But as the minimum wage increases relative to the average wage, it affects more workers.

Research shows that when the minimum wage passes 45 per cent of the average wage, the negative economic effects grow more severe, resulting in job losses for the young and less skilled.

Across Ontario, a $15 an hour minimum wage will be well above the 45 per cent threshold.

The average wage differs by region and so will the severity of the job losses, forecasts the Fraser study. In Toronto, a $15 minimum wage will be 47 per cent of the city's average wage, but the ratio will be much higher due in other places in Ontario due to lower average wages. In Hamilton, London and Windsor-Sarnia, it will be 56 per cent of the average hourly wage there.

In Northern cities like Thunder Bay and Sault Ste. Marie, the $15 minimum wage will be 53 per cent of the average hourly wage and will be 51 per cent in North Bay and Sudbury, well above the 45 per cent threshold with more negative economic effects.

"Young people and low-skilled workers will suffer job losses across Ontario, but the costs could be especially high in regions of the province where the average wage is lower than in Toronto," said study co-author Charles Lammam, director of fiscal studies at the Fraser Institute.