The Financial Accountability Office of Ontario (FAO), a non-partisan arm of the Legislative Assembly of Ontario released a report today that verified there will be a negative effect because of the Ontario Government’s massive increase to the minimum wage.
“Restaurants Canada and independent economists have said there will be a negative effect to jobs and the economy,” said James Rilett, Vice President Central Canada at Restaurants Canada. “Now the government’s own economists have confirmed that this policy will cost the Ontario economy jobs”.
The FAO report, Assessing the Economic Impact of Ontario’s Proposed Minimum Wage Increase concludes that the proposed minimum wage increase will cost the Ontario economy 50,000 jobs. These job losses would be especially felt by youth and lower income workers.
The FAO notes that this is a conservative estimate as they did not take into account the speed at which the increase is being implemented. They also did not take into account the suite of other changes in Bill 148 or the issue of wage compression which forces all wages up when minimum wage rises.
“The government claims that the economy is doing well so these losses will not be felt. That is cold comfort for the youth who cannot get their first job, the new Canadian looking for an opportunity or the worker that needs job flexibility to balance their family responsibilities,” explained Rilett.
The report also casts doubt on the government’s claims that they are trying to help low-income families. While the job losses disproportionately affect the poor, almost 40% of the income gain will be in high-income households. The report states that “raising the minimum wage would be an inefficient policy tool for reducing overall poverty.”
“Restaurants Canada has always agreed with raising the minimum wage, but it must be done in a responsible manner taking all factors into account,” said Rilett. “A dramatic increase to turn around political fortunes is not an economic policy, it is a crass political ploy. There is still an opportunity for this government to take the advice of their own advisors and slow down the timeframe.”
Restaurants Canada is a growing community of 30,000 foodservice businesses, including restaurants, bars, caterers, institutions and suppliers. We connect our members from coast to coast, through services, research and advocacy for a strong and vibrant restaurant industry. Ontario’s $32-billion restaurant industry directly employs nearly 473,000 Ontarians, representing almost 7% of the province’s workforce.