Business
Do Minimum Wage Laws Accomplish Anything?
David Clinton
All the smart people tell us that, one way or another, increasing the minimum wage will change society. Proponents claim raising pay at the low end of the economy will help low-income working families survive in hyper-expensive communities. Opponents claim that artificially increasing employment costs will either drive employers towards adopting innovative automation integrations or to shut down their businesses altogether. Either way, goes the anti-intervention narrative, there will be fewer jobs available.
Well, what’ll it be? Canadian provinces have been experimenting with minimum wage laws for many years. And since 2021, the federal government has imposed its own rate for employees of all federally regulated industries. There should be plenty of good data out there by now indicating who was right.
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Historical records on provincial rates going back decades is available from Statistics Canada. For this research, I used data starting in 2011. Since new rates often come into effect mid-year, I only applied a year’s latest rate to the start of the following year. 2022 itself, for simplicity, was measured by the new federal rate, with the exception of British Columbia who’s rate was $0.10 higher than the federal rate.
My goal was to look for evidence that increasing statutory wage rates impacted these areas:
- Earnings among workers in full-service restaurants
- Operating profit margins for full-service restaurants
- Total numbers of active businesses in the accommodation and food services industries
I chose to focus on the food service industry because it’s particularly dependent on low-wage workers and particularly sensitive to labour costs. Outcomes here should tell us a lot about the impact such government policies are having.
Restaurant worker income is reported as total numbers. In other words, we can see how much all of, say, Manitoba’s workers combined took home in a given year. For those numbers to make sense, I adjusted them using overall provincial populations.
Income in British Columbia and PEI showed a strong correlation to increasing minimum wages. Interestingly, BC has consistently had the highest of all provinces’ minimum wage while PEI’s has mostly hung around the middle of the pack. Besides a weak negative correlation in Saskatchewan, there was no indication that income in other provinces either dropped or grew in sync with increases to the minimum wage.
Nation-wide, by weighting results by population numbers, we got a Pearson coefficient 0.30. That means it’s unlikely that wage rate changes had any impact on take-home income.
Did increases harm restaurants? It doesn’t look like it. I used data measuring active employer businesses in the accommodation and food services industries. No provinces showed any impact on business startups and exits that could be connected to minimum wage laws. Overall, Canada’s coefficient value was 0.29 – again a very weak positive relationship.
So restaurants haven’t been collapsing at epic, extinction-level rates. But do government minimums cause a reduction in their operating profit margins? Apparently not. If anything, they’ve become more profitable!
The nation-wide coefficient between minimum wages and restaurant profitability was 0.88 – suggesting a strong correlation. But how could that be happening? Don’t labour costs make up a major chunk of food service operating expenses? Here are a few possible explanations:
- Perhaps many restaurants respond to rising costs by increasing their menu prices. This can work out well if market demand turns out to be relatively inelastic and people continue eating out despite higher prices.
- Higher wages might lead to lower employee turnover, reducing hiring and training costs.
- A higher minimum wage boosts worker incomes, leading to more disposable income in the economy. Although the flip-side is that we can’t see strong evidence of higher worker income.
- Higher wages can force unprofitable, inefficient restaurants to close, leaving stronger businesses with higher market share.
In any case, my big-picture verdict on government intervention into private sector wage rates is: thanks but don’t bother. All that effort doesn’t seem to have improved actual incomes on a population scale. At the same time, it also hasn’t driven industries with workers at the low-end of the pay scale to devastating collapse.
But I’m sure it has taken up enormous amounts of public service time and resources that could undoubtedly have been more gainfully spent elsewhere. More important, as the economist Alex Tabarrok recently pointed out, minimum wage laws have been shown to reduce employment for the disabled and measurably increase both consumer prices and workplace injuries.
From The Center Square
By Casey Harper
The U.S. Agency for International Development is facing criticism after news broke that federal employees were reportedly told to burn or shred classified documents.
USAID has been the center of controversy since President Donald Trump took office, and billionaire Elon Musk directed the Department of Government Efficiency to expose a slew of spending items widely mocked and criticized, from transgender operas to propaganda overseas and more.
A senior USAID official reportedly sent a memo to employees directing them to destroy the documents, raising questions about legality and transparency at the embattled agency.
“Shred as many documents first, and reserve the burn bags for when the shredder becomes unavailable or needs a break,” reads the email obtained by Politico.
Hans von Spakovsky, a legal expert at the conservative Heritage Foundation, wrote on X that “these employees are committing felonies under 18 USC 1519 in destroying Gov documents,” arguing that they “should all be criminally prosecuted especially acting director of USAID.”
Secretary of State Marco Rubio announced last week that 83% of of USAID contracts were terminated, though a federal judge has limited the federal government’s ability to stop paying out at least some contracts. Where this lands legally remains unclear as it works its way through the courts.
“In consultation with Congress, we intend for the remaining 18% of programs we are keeping (approximately 1000) to now be administered more effectively under the State Department,” Rubio said.
Casey Harper
D.C. Bureau Reporter
Business
Ontario Premier Doug Ford Apologizes To Americans After Threatening Energy Price Hike For Millions
From the Daily Caller News Foundation
By
Ontario Premier Doug Ford apologized to Americans Tuesday after he suspended a 25% electricity surcharge that he initially said he would be “relentless” in pursuing.
Ford implemented a 25% surcharge on electricity to New York, Michigan and Minnesota on Monday, but quickly rescinded the policy and apologized to Americans on WABC’s “Cats & Cosby” radio show the following day. The tariffs were initially a retaliatory measure against President Donald Trump’s flurry of tariffs against Canada since he assumed office.
Canada is highly dependent on U.S. exports, economists told CNN, and the planned electricity surcharge would likely hurt Canada’s energy industry much more than it would the U.S., although an estimated 1.5 million homes and businesses would have been affected.
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“I want to apologize to the American people. I spent 20 years of my life in the US, in New Jersey, in Chicago. I love the American people,” Ford said. “I absolutely love them … Secretary Lutnick and President Trump are brilliant businesspeople. They are hard negotiators. We need to put this behind us and move forward and build the two strongest countries in the world.”
Initially, Ford had a much more aggressive tone when he instituted the tariffs.
“We will not back down. We will be relentless. I apologize to the American people that President Trump decided to have an unprovoked attack on our country, on families, on jobs, and it’s unacceptable,” Ford said on MSNBC in response to Trump’s hiking of steel and aluminum tariffs.
Trump, in turn, threatened to increase the steel and aluminum tariffs on Canada to 50%, with the increase going into effect the next day.
Ford then talked with Secretary of Commerce Howard Lutnick, with the premier describing the call as “productive.” Once Ford backed down on his plan to implement the export fees, Trump reversed his planned hike to 50% on steel and aluminum tariffs. Ford is expected to meet with Lutnick Thursday in Washington, D.C.
If a deal is not reached by the April 2 deadline, the tariffs will resume.
Ontario sold around 12 terawatt hours of electricity to America in 2023, with the U.S. being Ontario’s largest energy customer outside Canada. The tariff would have likely added “100$ a month” to the bill of Americans in the affected states, Ford claimed according to CNN.
The U.S. and Canada have entered into a contested debate over trade policies, with Canada announcing an additional $20 billion in retaliatory tariffs on American goods in response to Trump’s initial 25% steel and aluminum tariffs.
Trump initially gained concessions from Canada in February, forcing them to aid in curtailing the illegal fentanyl trade in exchange for a pause on a 25% general goods tariff enacted Feb. 1. However, Trump eventually let the pause expire, with the tariff resuming in March.
“Canada is a tariff abuser, and always has been, but the United States is not going to be subsidizing Canada any longer,” Trump said on Truth Social Mar. 10.
The Ontario Premier’s office did not immediately respond to the Daily Caller News Foundation’s request for comment.
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