Do Higher Minimum Wages Benefit Workers AND Employers?

higher-alberta-minimum-wage-benefits-both-workers-and-employers-_-andrew-jackson

Andrew Jackson, of the Broadbent Institute, argues in a Huffington Post article that the recent increase in Alberta’s minimum wage to $12.20 (on a path to $15 in 2018) not only benefits workers, but also employers.

He presents the cons and pros of minimum wages, including a claim by the Canadian Federation of Independent Business that these increases may cost 50,000 jobs. Jackson’s more interesting evidence is on the pro minimum wage increase side. A study by the Center for Economic Policy Research concludes that there are only small negative employment effects of modest minimum wage increases, and there is some evidence of a positive effect on employment due to greater purchasing power of low wage workers.

The other benefits to employers come from higher wages reducing turnover, recruitment and training costs and improving productivity.

For students, I talked through the issues in Jackson’s article in a short video.