VANCOUVER, BC-Raising BC's minimum wage to $10 per hour
could result in a loss of as many as 52,000 jobs, concludes a
new peer-reviewed study from independent research organization
the Fraser Institute.
The study, The Economic Effects of Increasing BC's Minimum Wage, examines the research on the effects of increases to minimum
wages in Canada and around the world and calculates that an
increase in BC's minimum wage to $10 per hour from $8 per hour
will result in job losses ranging from 10,898 jobs to 52,200
"This is a conservative estimate that only looks at the
impact on teen and youth workers," said Niels Veldhuis, Fraser
Institute director of fiscal studies and co-author of the
"Increasing BC's minimum wage to $10 per hour will have a
profoundly negative effect on employment opportunities for
young and low-skill workers, and will have almost no effect on
those most in need of income and a job."
Unions and other activists have been lobbying the BC
government over the past year to increase the province's
minimum wage to $10 per hour. But while the campaign has been
high on emotional appeal, it lacks facts and data to support
The Fraser Institute study examines existing academic
research from Canada and around the world that studied the
effects of increases to minimum wages and finds the
overwhelming consensus is that increasing the minimum wage has
a significant negative impact on employment, particularly for
Past experience across Canada showed that a 10 per cent
increase in the minimum wage is likely to decrease employment
by three to six per cent among all young workers aged 15 to 24.
For those young workers most directly affected - earning
between the current $8 per hour wage and the new $10 per hour
wage - the impact is more acute, leading to employment losses
of 4.5 to 20 per cent.
The report also points out that higher minimum wages have
other negative effects, including fewer benefits and less
training for workers. Higher minimum wages can also induce high
school students to drop out of school and search for
"Fewer employment opportunities and less education and
training are particularly harmful, given that experience and
skill development are important drivers of higher wages," said
Keith Godin, co-author and a Fraser Institute senior policy
Who earns minimum wage?
Veldhuis and Godin note that the most commonly cited purpose
of minimum wages is to increase the incomes of society's
low-income workers. But at the same time, there is a general
misunderstanding of who actually earns the minimum wage.
Based on data from Statistics Canada, the authors found that
62,600 BC workers earned the minimum wage in 2007, representing
3.4 per cent of total employment in the province. The majority
of these people were young workers between the ages of 15 and
24 (56 per cent), with 87 per cent of them living at home with
family. More than half of these young workers were also
attending school, while many of the remaining individuals
earning minimum wages are adults supplementing their family
income with part-time work during child-rearing years or after
"The typical minimum wage worker in BC -and across Canada-
is a young person, often a student, who is living at home. This
means any changes to the minimum wage will mainly affect
younger workers and have negligible impacts on working adults
or those supporting families," Godin said.
Veldhuis and Godin also point out that earning the minimum
wage is largely a temporary experience, as the vast majority of
workers who earn the minimum wage today will earn more than the
minimum wage in the near future.
They conclude that any increase to BC's minimum wage results
in a loss of jobs and opportunities for young workers and will
have no appreciable effect on low income workers or those
living in poverty.
"While implemented with the best of intentions, the economic
reality is that minimum wages likely do much more harm than
good. Minimum wages are simply incapable of achieving the
intended results and can actually worsen the situation of the
people minimum wage laws are intended to help," Veldhuis
"If the government wishes to raise the incomes of and
improve economic opportunities for British Columbia's low
income earners, they would be wise to steer clear of increasing
the minimum wage."