More than 90 percent of minimum wage earners do not live in poor households: new study

The data raises questions about whether raising the minimum wage really helps the working poor, says the study authors.

According to a new study by the Fraser Institute, the majority of Canada’s minimum wages do not live in low-income households, most are teenage or young adults living with their families, reducing poverty.

NS study, “Canada’s Minimum Wage Earners,” found that 92.3% of Canada’s minimum wage earners live in households that exceed Statistics Canada’s low-income cut-off line. In 2019, the latest year of data available, more than half (53%) are between the ages of 15 and 24, and 84.1% of this group live with their parents and other relatives.

“Increasing the minimum wage is often presented as a strategy to support the working poor, but these data are just because most minimum wage earners do not live in low-income families. , Asking questions about its effectiveness in achieving this goal, “said Ben Eisen, senior fellow at the Fraser Institute, on October 28. Press release..

The study explained that most of these minimum wage earners are actually secondary or tertiary earners rather than primary earners in the household.

The authors noticed that between 2009 and 2019, all states showed a “strong” tendency to raise the minimum wage. Among them, BC, Alberta, Ontario, Quebec and Prince Edward Island have raised the minimum wage by more than 20 percent. Alberta achieved the largest increases in both dollars and percentages, at $ 4.75 and 46.4 percent, respectively, followed by BC at $ 3.99 and 42.6 percent.

However, the survey found that only 7.7% of the minimum wage earners actually live in low-income households, a relatively small percentage of those who do not.

Of the eight states for which statistics were available in 2018, Alberta had the lowest percentage of minimum wages in low-income households, at 6.6%, while Prince Edward Island was 18.2. Most in%, the author wrote. The larger states of Ontario, Quebec, and British Columbia were 7.2 percent, 9.4 percent, and 7.9 percent, respectively.

The data also show that only 2.2 percent of the country’s minimum wage employees are single parents with children or children under the age of 18.

previous study According to the Institute, released in 2016, raising the minimum wage does “significant harm”, especially to unskilled workers, rather than “raising the wages of poor workers” as is commonly believed. It turns out that there is a possibility.

“Increasing the minimum wage by artificially increasing the workforce can significantly reduce the employment of groups of teenagers and other unskilled workers,” said “Increasing the Minimum Wage: False Policy, unintended consequences, says the author.

“In addition to reducing employment altogether, raising the minimum wage can save time for workers who continue to work and other benefits (such as on-the-job training).”

According to Canadian empirical data, a 2016 study found that a 10% increase in the minimum wage would reduce the employment of teens and young adults aged 15-24 by 3-6%. We conclude that the “sparse” connection between minimum wage earners and poor households has made this policy a “very crude way” to reach those who really need help.

NS Bank of CanadaThe 2017 analysis said changes in the minimum wage could have long-term impacts on employment and investment. The long-term impact may be “substantially greater” than the short-term impact, as raising the minimum wage affects the choices companies make in terms of worker employment and training rather than investing in automation. Cited a study claiming to be.

“As the minimum wage goes up, companies may decide to use the workforce instead of capital by investing more in automation, and this is even what type of company goes in and out of the market. It may affect, “the central bank said in a report.

Isaac Theo


Isaac Teo is a Toronto-based Epoch Times reporter.

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