Ontario's move to jack up the minimum wage by nearly one-third will either kill jobs or spring the economy to life as low-paid workers spend more.
But the huge body of research into the economic impact of minimum wage hikes does not definitively support either conclusion.
A report by the Centre for Economic and Policy Research in Washington, D.C. refers to hundreds of individual studies on minimum wage hikes and takes a detailed look at several meta-studies (which analyze data from multiple research projects). Its conclusion: "The minimum wage has little or no discernible effect on the employment prospects of low-wage workers."
The critics of minimum wage hikes will certainly be able to point to individual studies that show a significant negative effect on jobs. But measured against the bulk of the evidence, these studies are either outliers or unscientifically designed.
The report also stresses that no one should draw broad conclusions based on a single study when "the cumulative experience of scores of studies" shows minimum wage increases have not proved to be big job-killers.
But ultimately, it is believed, businesses do what they do best, adapting to the new market forces.
Yes, some employers will cut jobs, hours or benefits. Others push prices up, and some absorb the wage hikes with lower profits. The centre's review of the research found that the most common ways that businesses adjust are by increasing productivity and reducing employee turnover, something that is a hidden but significant cost to employers.
The research into one particular result of raising the minimum wage is definitive: it puts more money in the pocket of minimum wage workers.
The research on the broader economic impact, however, is inconclusive.
Another report by the U.S. Congressional Budget Office looked at the effect of boosting the federal minimum wage to $10.10 per hour from the current $7.25 per hour, proportionately a larger increase than Ontario is planning.
Its report concluded that the increase would provide $31 billion more in wages for the lowest-paid workers, but the economic impact would be largely offset by some workers losing their jobs, lower business profits and higher prices.
