The Bank of Canada is warning minimum wage hikes across Canada this year could cost about 60,000 jobs by the end 2019, despite the benefits they would bring.
Researchers at the central bank published a research note over the winter break, attempting to calculate what sort of economic impact a series of minimum wage hikes set to come into force this year will have on Canada's economy.
As of Jan. 1, Ontario's minimum wage is now $14.00 an hour, up from $11.60. By the end of 2018, Alberta, Quebec and Prince Edward Island are also expected to hike their minimum wages.
Economists and business leaders have squabbled over the issue, with some of the former arguing higher wages boost the economy and help fight income inequality. Those on the other side, meanwhile, say the costs are too high and will come with a heavy toll on the job market.
Rising wages are certainly direct costs for small business owners. But the impact on workers is just as direct. A minimum wage worker in Ontario just got a raise of $2.40 an hour compared to what they were making last week -- an extra $96.00 a week for full-time work, or almost $5,000 a year, before taxes and other deductions.
That's real money in their pocket, but the job market isn't the only thing set to be impacted by a higher minimum wage.
According to the report, the official inflation rate is expected to get a boost of about 0.1 percentage points because of the hikes this year alone. And growth in the overall economy is expected to be held back by about the same amount.
But on the jobs front, the impact could be greater.
Based on one of the models the bank uses, Canada's economy could have roughly 60,000 fewer jobs by the end of 2019 than it would otherwise have seen. But other models the bank uses show a wider range of results, from as little as 30,000 to as many as 136,000 jobs lost.
