BC's minimum wage hike could cost more than 52,000 jobs

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Appeared in Huffington Post Canada

The first of three increases in B.C.’s minimum wage kicked in on May 1, and while it will undoubtedly be welcomed by workers currently earning the minimum, it’s too bad their raise comes at the expense of other workers, who will now be unable to find a job or will lose their job as a result of the wage hike. The unpleasant reality is, minimum wage hikes are a job killer that hurt the very people they are intended to help.

Shortly after taking over as premier, Christy Clark said her government would “focus on job creation in our province but the $2.25 (28.1 per cent) increase to B.C.’s current minimum wage will do the complete opposite. I don't think it will cost jobs, she said regarding the minimum wage hike. Premier Clark may indeed believe so but the hard facts tell a different story.

A voluminous body of academic research has found that minimum wage hikes increase labour costs for employers, who then respond by reducing the number of employees and/or the number of hours their employees work.

A comprehensive review of more than 100 academic studies on the effect of minimum wages in 20 countries-- conducted by internationally recognized minimum-wage experts Professor David Neumark of the University of California and Dr. William Wascher, a U.S. Federal Reserve Board economist—found that the “overwhelming majority” show that minimum wage increases have negative employment effects.

The evidence from Canada shows much of the same. Fifteen academic studies have examined the impact of minimum wage increases in Canadian provinces. Based on these studies, a 10 per cent increase in the minimum wage is likely to decrease employment by up to 20 per cent among young workers who, prior to the minimum wage hike, were paid between the existing level and the new higher minimum wage level.  

Based on the Canadian research, the planned increase in B.C.'s minimum wage to $10.25 per hour could result in more than 52,000 lost jobs for young workers (15-24 years olds). This is unfortunate given that the unemployment rate for these young workers is nearly double (at 15.2 per cent) the overall unemployment rate in British Columbia, at 8.1 per cent.

In addition, the phased-in increase (three 75-cent increases over the next year) will not reduce the adverse employment impact of the minimum wage hike. The overall increase is too large and the time period is too short for these effects to be mitigated.  A study by University of Toronto Professor Michele Campolieti published in the Canadian Journal of Economics examined the impact of minimum wage increases on jobs in the Canadian provinces from 1993 to 1999 and found that a 10 per cent increase in the minimum wage decreased employment for affected workers by 10 per cent to 20 per cent.  He then examined the impact of B.C.’s two 50-cent minimum wage increases in 1995 and found that these consecutive increases reduced employment among directly affected workers by between 20 per cent and 40 per cent, approximately twice the magnitude of his national findings.

Some advocates of the minimum wage increase claim that employers won’t reduce employment since the increase to $10.25 is simply an adjustment to reflect the inflation that has occurred since 2001. But that assumption is wrong. First, prices in B.C. have only increased by 16.5 per cent since 2001, while this minimum wage hike is a 28.1 per cent increase. Secondly, employers make decisions about how much labour to utilize based on current labour costs. If those costs increase, employers will reduce the number of employees they use and/or the number of hours their employees work.

Proponents of the minimum wage increase also ignore the fact that workers don’t earn the minimum wage for their entire working life; those currently earning the minimum wage aren’t the same workers who were earning the minimum wage 10 years ago. Research shows that after one year, approximately 60 per cent of minimum wage workers earn more than the minimum wage, with a typical wage gain of about 20 per cent. After two years, the percentage of workers earning more than the minimum wage increases to 80 per cent.

The B.C. government has indicated that it will focus on job creation in B.C. If that’s the goal, it should reconsider the recent minimum wage hikes. BC's New Policy Experiment|article|572|||Appeared in the Saint John Telegraph-Journal and the New Brunswick Telegraph-Journal||||||||||||175|||990666000|1|1|en|Over the past decade, BC’s government has grown steadily. It seemed to be reaching for the heroic type of big government common on the other coast, in Atlantic Canada where I grew up. The economic consequences have been dismal on both coasts.

British Columbia launched epic economic development projects. Today, BC’s government-built fast ferries – BC’s version of New Brunswick’s government-sponsored experiment with building winged cars, or Nova Scotia’s with heavy water, or Newfoundland’s with cucumber growing – sit in dock, not going anywhere at any speed.

BC’s economy plunged so quickly that British Columbia could soon become a “have-not” province. Yet, the other “have” provinces, Ontario and Alberta, speed ahead under very different policy regimes from British Columbia.

Now the experiment begins. If BC’s newly-elected government is good to its word, policy will change radically – from big government and big taxes to smaller government and reduced tax policies that typified Alberta and Ontario in recent years.

If the fans of big government are right, then British Columbia should be in for a rough time. Government apologists have always blamed the Asian flu for BC’s troubles, never mind that the timber states to the south and Alberta to the east boomed while BC busted.

Now we get to see whether a change in policy makes a difference. Will lower taxes and smaller government bring British Columbia out of its economic tailspin? If the new government has the courage to cut spending, will government services suffer?

That’s a good point of comparison between different policy regimes. Let’s look at health care. The outgoing government in British Columbia likes to brag it was the only government in Canada which increased health spending every year for the past 10 years.

If more spending helps, health care in British Columbia must be in great shape. Instead, it’s in crisis. Doctor shortages and strikes have swept across the province. Emergency room line-ups and queues for important procedures endanger everyone’s health. Nurses and other hospital workers refuse overtime, making everything worse.

Alberta tackled it’s medicare crisis in the mid 1990s, not by pumping in more money but by cutting spending and reforming the delivery of services. Hospitals were closed, including half the full function hospitals in Edmonton and Calgary. Wards were shut down. Staff wheeled beds out of hospitals and tossed them on the garbage heap. Health workers were laid off across the province.

Public sector unions screamed blue murder. Fans of big government were outraged. The cuts dominated legislative debate. Angry demonstrations spread across the province. Union leaders demonized the government of Ralph Klein. They predicted dire consequences for the health of Albertans, particularly those needing major procedures at hospitals.

So, if British Columbia’s health care is in deep crisis despite increased government spending, Alberta must be an awful mess. Quite the reverse.

Earlier this month, the Canadian Medical Association Journal published a study about cardiac procedures in Alberta. Were the unions and opponents of cuts right? Well, the length of hospital stays has shortened. But Albertans are now more likely to survive heart attacks than before the cuts and they suffer fewer complications. Other studies have painted similar results for restructuring elsewhere. Centralization and consolidation improve health outcomes.

The quality of service in health care, or any other sector, is not determined by how much money is spend, but rather how well it is spent and whether government is willing to tackle special interest groups, like powerful unions, to undertake reform.

Sensible reform can improve the delivery of government services and save money. Tax cuts spur economic growth. Provincial governments, which have taken this approach, have won landslide re-elections. Their economies boom. BC’s government took the opposite approach. The economy tanked and the government suffered a landslide defeat.

If BC’s new government delivers on tax cuts and launches significant reform, British Columbia economy will turn around within a couple years. I wonder how fans of big government will explain that. BC's ‘Toked' Out Legislature|article|572|||Appeared in the Saint John Telegraph-Journal and the New Brunswick Telegraph-Journal||||||||||||3554|||986259600|1|1|en|In the normal world, government would crave an opposition that took a vow of silence. In many nations, governments go to extreme measures – imprisonment or worse – to shut up the opposition. And, in any normal world, you’d think the opposition was crazy to zip its lips as the government pushed through unpopular legislation.

But, this is British Columbia and that’s what’s happened in the legislature. The NDP government complains about the Liberal opposition’s silence while the opposition demands that the government pass its frigging legislation – and quickly.

What gives? The government wants to stretch its mandate to the last possible moment. It legally must call an election in weeks, and it wants to wait to the last minute. The Liberals’ took their vow of silence to speed passage of legislation and give the government as little excuse as possible for further delays.

The NDP is abysmally low in the polls. Aside from a fascinating assortment of scandals, the NDP’s popularity has been shattered by its economically disastrous decade in power.

Back in 1991, when the NDP was elected, British Columbia’s unemployment was below the Canadian average. The provincial economy was stronger than the national economy. The provincial government was smaller than the national average.

All that has reversed. The BC government’s been on the type of feeding frenzy that often follows a good toke. It is now well above the average size of a provincial government in Canada. Economic activity in this once rich province is below the Canadian average. Unemployment is above the national average.

Canada’s western-most most province is converging on Atlantic Province status, both in the huge size of its government and in the resulting economic stagnation.

Any number of economic studies show that large government crowds out economic growth. For example, the last few decades should have been miracle years for Atlantic Canada. All throughout the developed world, once lagging regions have been catching up and surpassing the old economic centres. Atlantic Canada has been cut off from that type of growth by heroically big governments.

The Atlantic ailment has jumped the Canadian hinterland and infected British Columbia. The opposite of this phenomenon is also easy to see. Two Canadian governments, Albert and Ontario, reversed course in recent years and took action to control government growth. Through most of the 1990s, the price of Alberta’s chief natural resource, oil, was at record lows, an even worse price slump than the one that affected BC’s forest industry. Yet, Alberta and Ontario have experienced accelerating growth and falling unemployment while BC’s economy has stagnated.

British Columbia’s performance also looks dismal when compared to the province’s pre-1991 economic performance. It looks equally dismal compared to the economic record of the timber states to the south, which suffered the same price slump as BC.

The NDP wants to continue building the size of government, even if it takes miracle accounting. The recent budget spending by 7.4 per cent, three times the rate of economic growth.

Yet, the government projects a surplus. Through an agreement with the public employees union, the government transferred a $1 billion liability to another account to give it an extra billion to play around with. Then the government ordered BC Hydro to transfer $300 million to it in the coming fiscal year, despite Hydro’s warning it will generate only a $100 million profit to remit to government.

The budget will become meaningless after the election. But it’ll leave the new government a pile of headaches. The new government will have won a platform of reducing government and cutting taxes. But, BC special interest groups, particularly public sector unions, have come to expect special treatment. With so many entrenched and privileged interests dependent on government extravagance, expect open warfare against any attempt to cut back on the size of government.

That’ll create of howls of protest and riots in the street. Perhaps, after all, it’s the Liberals who are stoned out. Why else would they want to get into government quickly? Beer with your popcorn? Not in British Columbia|article|724|||||||||||||||3562|||1325815200|1|1|en|BC's dated liquor laws make it impossible for revenues such as movie theatres to obtain a liquor license. Free Download(s):

Beer with your popcorn? Not in BC Bill C-323: Another threat to Canada's mining industry|article|572|||Appeared in Republic of Mining||||||||||||171|||1334710800|1|1|en|

Canadian politicians like to beat their chests about creating world-class centres of industrial and technological excellence. So why then, do some appear intent on destroying our mining industry, the one area where Canada is not simply a world leader but THE world leader?

Mining has deep historical roots in Canada. It was a growth engine that elevated us from a developing economy to one of the world’s richest nations. But now the mining sector is facing a threat posed by Private Member’s Bill C-323, the stepchild of C-300 which was narrowly defeated in 2010.

Bill C-323, which appears to be aimed primarily at resource companies, would give Canadian courts jurisdiction in all civil cases from anywhere in the world that involve a violation of international law or a treaty to which Canada is party. The idea is to hold companies responsible in countries where the court system is corrupt, an idea that has merit.

But typically, bias in many countries is against foreign companies. For example, in 2001, Chevron bought Texaco, which once had operations in Ecuador. Now, Ecuadorian courts have fined Chevron $18 billion for dumping waste in the Lago Agrio area, never mind that Petroecuador, Ecuador’s state-owned oil company, has had a controlling interest in the area since 1977 and took over the full operation in 1992 (meaning neither Chevron nor Texaco has had any presence for the past 20 years). Never mind that Texaco paid $40 million for clean-up with a successful completion signed off by the Ecuadorian government in 1998 releasing Texaco from all liability; or that government-owned Petroecuador not only failed to clean up the pits assigned to it but continued using  them; and that impartial court documents recite verbatim pages of plaintiff documents. The list goes on.

C-323 could be used mercilessly by anti-mining, anti-development NGOs to tie up companies in huge costs and red tape anytime they felt like it. Imagine the costs of dealing with frivolous lawsuits launched every other day from a far off country.

C-323 also adds a lengthy list of other offences that seem to stop short only of spitting out gum. Here’s an example. A company with direct knowledge of an impending environmental emergency which fails to provide adequate warnings could be subject to Canada’s civil law. What does this mean? What is direct knowledge or environmental emergency or adequate warnings? Well, just about anything, in the view of radical NGOs these days. Thus, off to Canadian courts under C-323.

Does C-323 provide evidentiary or other safeguards against abuse? Quite the opposite. C-323 abolishes all time limits, so you could literally be sued for an environmental accident from 100 years ago. Additionally, the burden of proof is placed on the defendant to clearly, cogently and convincingly establish that Canadian courts should not accept the case. So a Canadian company facing a frivolous lawsuit could face a multi-million-dollar bill for the costs of dealing with evidence from a distant land, lawyers, and procedures. And even if the action is dismissed, the plaintiff is free to start all over again.

Introducing the bill, Peter Julien, NDP MP for Burnaby-New Westminster, claimed it mirrors the U.S. alien torts claim act. False.

That act, passed in 1789 as part of the original Judiciary Act, simply says district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.

No long list of additional areas of jurisdiction, no lifting of time limits, no burden of proof reversal. The act was ignored for 200 years and has rarely been used since with few applicants and fewer successful applicants.

Instead C-323 leaves Canadian firms vulnerable to huge risks and costs. One blog supporting the bill notes that Canadian companies are risk adverse, so the law will be effective.

This is likely right. Companies are risk adverse. In the face of a bill as reckless as C-323, they will flee to nations with sensible legal codes. And for some anti-development types, that would be success.

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