An increase in minimum wage may not accomplish the predicted outcome

The people defending a big jump in the minimum wage in Ontario claim that businesses will just absorb the extra cost and that it will be good for the economy because people will have more money to spend.

That’s a nice notion, but if it were true, then why stop at 15 dollars an hour? Why not boost the economy even further by raising it to 20 or 30 or even 50 dollars an hour, so everyone has even more cash? The government’s proposal is even more surprising because only a couple of years ago, they tied minimum wage to inflation, which seemed fair. Now, they’re proposing to artificially boost it by more than 30 per cent over 18 months.

We must ensure that everyone has a reasonable income and the threshold for minimum wage is certainly up for debate. But it’s hard to imagine businesses will just absorb millions of dollars in extra wages without increasing their prices or cutting jobs. A big hike in the minimum wage may not accomplish the economic boost the government predicts and it could end up hurting as many people as it helps.

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