The increasingly socialist Canadian province of Ontario is again proving how the shortsighted “kindness” of progressives hurts workers and the unemployed.

On Monday they raised the minimum wage – a job killing concept at even modest levels – by more than 20% in one go, from $11.60 per hour to $14 per hour. It’ll go up again next year to $15.

Canada’s central bank, the Bank of Canada, has warned that this will cost 60,000 people their jobs by next year. Those people are not in the least bit helped by forbidding them to work for $12 or even $13 an hour.

Of course, it’s not illegal to work for free and volunteer, now the only option for people not worth the minimum wage due to lack of skills, experience or qualification, combined with the fact that businesses aren’t charities.

Of course, with the price of labour artificially inflated, this will also hurt small business owners badly. Bank of Canada also predicts 1.5 billion dollars could be wiped off Canada’s GDP (gross domestic product), a reduction of 0.1%.

Taxes and wages are usually the biggest costs for any business, and so when their costs of doing business changes, business owners have to respond and raise their prices. The silliness of this is that the gains for those lucky enough to still have a minimum wage job this year are eroded by the inevitable inflationary pressure caused by them. Pizza and Subway have already announced price rises to cope with the unprecedented rise in the minimum wage. Everybody loses!

Aaron Aerts and Laura Jones of the Canadian Federation of Independent Business (CFIB) observe, “The negative impacts will ripple throughout the economy: layoffs, reduced hours and fewer opportunities for young workers; higher prices for consumers; increased automation; and reduced investment. Pretending these impacts don’t exist is fa-la-la-la-la economics.”

Here’s what some small business owners had to say about the impacts the unprecedented mandated wage hike will have on them.

  • We won’t be able to hire the same number of students next year — we normally hire eight or more; this year we are thinking maybe two.
  • We have decided not to hire students coming out of university or college but focus more on experienced workers over the age of 40.
  • We will be shortening our hours of operation and decreasing the number of student workers. There will be less customer service available.

Economic value is not intrinsic to humanity. That’s why celebrity actors and athletes make more than the minimum wage. They’re not compensated for their human value, but their economic value. If the government suddenly mandated a minimum price of $14 for Mars Bars, there would also be a corresponding drop in demand, and nobody would be surprised. The people buying the Mars Bar, or employee’s time, need to agree it’s worth that much, or they will simply buy less.

What’s immoral and unfair is denying individuals the liberty to negotiate their own wages.

When governments interfere with the minimum price for any product or service, there is always a reduction in the number of transactions. When the thing with prices artificially above market value is labour, there will always be a corresponding reduction in employment. Sadly, this most affects the people it was intended to help. This is the reality of higher than average youth unemployment – minimum wages.

A survey by the CFIB revealed the predictably negative consequences of this “government-knows-best” interference in the economy.

  • 54% of businesses have already reduced or eliminated plans to hire new workers
  • 51% have raised prices
  • 50% have eliminated plans to hire young workers
  • 31% have reduced overall staffing hours
  • 28% have reduced the number of employees
  • 20% have replaced workers with technology

I want to know what you think as either an employee or business owner, and what you’ve experienced. Leave your thoughts in the comments below.

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