Article content continued

Steep minimum-wage hikes like Ontario’s are likely to lead to more unemployed immigrants and more poverty

A substantial number of Canadian studies contradict the claims that higher wages lead to more employment. One robust finding that emerges is that minimum-wage hikes result in lower employment for teens. This is of concern as entry-level jobs help young people develop time-management skills in balancing school and work and help them gain valuable professional experience.

In a research paper I co-authored with Kathleen Rybczynski that will soon be published in the journal Contemporary Economic Policy, we found that a higher minimum wage may possibly be linked to employment reductions among another key vulnerable demographic ignored by previous studies. Based on 185 minimum-wage hikes implemented by Canadian provinces from 1981–2011, we find that increasing minimum wages led to a reduction in employment rates of not just teenagers, but also immigrants. Specifically, a 10-per-cent increase in the minimum wage can be linked to an approximately two-per-cent decline in employment rates of immigrants aged 25 to 54 years old.

From one perspective, this result should not be surprising: Roughly 19 per cent of immigrants are minimum-wage employees. Why might a minimum-wage hike hurt immigrants most? If businesses are hiring less, with no change in the supply of available workers, then they may prefer Canadian-born applicants whose experience and qualifications are more easily relatable to Canadian business owners. Whatever the reason, the presence of negative employment impacts on immigrants should be of significant policy concern, especially given the well-documented problems of labour-market assimilation that new immigrants face.