As of January 1, 2018, the minimum wage in Ontario has been raised from $11.60 to $14 per hour, temporarily becoming the highest in the country, with Alberta and Ontario planning to be at $15 by 2019. In the first weeks of the dramatic rise companies have been impacted almost instantly with benefits being cut, small businesses selling, and stores shutting down. Now, new research is coming out that show how things could get much worse before the year is out.
The Bank of Canada recently published a research note that attempts to estimate the potential economic impact that the wage hike will have across the country. The report calculates that the official inflation rate could rise by 0.1% and that there could be a staggering amount of fewer jobs by next year, roughly 60,000 positions.
The Bank of Canada did state that the report’s views belong solely to the author, and it is not the bank’s official opinion. Reports from other sources range in their estimation of job losses from 30,000 to 136,000 but, they all expect an extreme amount of positions to disappear. The Canadian Federation of Independent Business heeds their own warnings that 34% of the provinces small to medium businesses will consider selling, closing, or moving as a result of the increased wages.
Only time will tell how the $2.40 minimum wage increase will impact Canada’s economy but, hopefully, things settle down before we do it all over again next year.