B.C.’s 28.1% minimum wage increase, the first phase of which takes effect Sunday, could cost the province more than 52,000 jobs for young people aged 15 to 24, a new Fraser Institute report warns.
The minimum wage will rise to $10.25 from $8 per hour over the next year.
“We have a government and a premier who have stated that jobs are their number one priority and then the first policy they implement is a policy that kills jobs,” said Fraser Institute vice-president of Canadian policy research Niels Veldhuis.
The report assesses academic research from Canada and beyond that measures the effect of raising minimum wages and applies it to B.C.’s hike, which will be phased in. The first increase – to $8.75 – goes into effect Sunday and will rise to $10.25 by May 1, 2012.
The report finds that, for teens and youth, anywhere between 26,097 and 52,194 jobs will be lost as a result of the minimum wage increase.
Veldhuis notes that the report focuses on the 15 to 24 age group, which represents just over half of B.C.’s minimum wage earners, as that’s the demographic available to researchers. Total job losses, he said, would also affect older demographics.
The phased-in approach, he said, has done little to mitigate the impact of the wage increase due to its short timeline.
“The phase-in, where you have three $0.75 increases over the course of a year, doesn’t allow businesses to adjust to the impact,” he said. “In reality, what you’re doing is increasing it by almost 30% within a year.”
Veldhuis said the Fraser Institute hopes the report will “educate” both British Columbians and politicians about the effect of the increase.
“Despite what people think, and despite all of the good intentions, minimum wage increases have a serious negative impact,” he said. “My hope would be that British Columbians come to understand this and also that politicians have a rethink of what they’ve done.”
While little can likely be done about the first wage hike taking place on Sunday, he said politicians could still reverse course on the next two incremental hikes.
“The minimum that they should do is extend the phase-in.”