To free-market purists, the 19th century was a golden age. Back then the size of government was miniscule. The rich paid ultralow taxes. Regulations were little to nonexistent. There were no worker benefits, either private or public. There was no overtime pay, vacation pay, 40-hour work week or minimum wage.
So it’s not surprising to find these market fundamentalists waging a war against minimum wage increases in Canada and the US.
Using flaky math to massage the statistics, Gordon claims a 13% rise in Canada's real minimum wage (adjusted for inflation) from 2008 to 2013 killed “between 70,000 and 164,000 jobs” among young Canadians.
Here’s Gordon’s graph showing the difference between what happened — and what could’ve been — if only we had left minimum wage alone:
Of course, Gordon's weaselnomics leave out the fact that the Great Recession — which all Western economies have yet to recover from 6 years and counting — is the actual cause of the drastic drop in youth employment.
Canada’s minimum wage not high
When compared to other Anglo-Saxon countries, our minimum wage is far from the maximum.
According to Gordon’s hypothesis, Australia should’ve suffered the worst losses in youth employment because they have the highest minimum wage, by far.
But the evidence doesn’t support this self-serving claim. In fact, all countries faced similar drops in youth employment:
Peak to 2013 levels
Canada and Australia fared better because they didn’t have financial meltdowns and their economies were boosted by resource exports.
Krugman on young workers
In Paul Krugman’s book, End this Depression Now! he talks about the terrible toll the Great Recession has had on workers, especially the young:
Not since the 1930s have so many Americans found themselves seemingly trapped in a permanent state of joblessness. …
Meanwhile, there’s the plight of those who don’t have a job yet, because they’re entering the working world for the first time. Truly, this is a terrible time to be young.
Unemployment among young workers, like unemployment for just about every demographic group, roughly doubled in the immediate aftermath of the crisis, then drifted down a bit. But because young workers have a much higher unemployment rate than their elders even in good times, this meant a much larger rise in unemployment relative to the workforce.
Stephen Gordon exemplifies why economics is dismal, but doesn’t remotely resemble a science. In the hands of market fundamentalists, economics is nothing more than politics with math thrown in to lend authority to political agendas.
A higher minimum wage could cause a drop in employment, or it could create jobs as people spend and save more boosting the economy.
There are too many factors involved to calculate its precise affect. All that can be said with certainly is that it hasn’t had a pronounced effect either way — not in Canada, and not in Australia where the minimum wage is currently $16.50 CAD (and unemployment is 6.1%.)
Given we have returned to Gilded Age levels of inequality, it’s better to err on the side of social justice than the plutocrats’ bottom line.