FRASERRESEARCH

BULLETIN
2018

Increasing the Minimum
Wage in Ontario
A Flawed Anti-Poverty Policyby Charles Lammam and Hugh MacIntyre

MAIN CONCLUSIONS■As part of its Poverty Reduction Strategy, former Premier Kathleen Wynne’s government wasplanning to raise the minimum wage from $11.60
in 2017 to $15 per hour by 2019. But, raising theminimum wage is not an effective way to alleviate
poverty, primarily because the policy fails to provide help targeted to families living in poverty.

■

In 2015, the latest year of available data,
90.8% of workers earning minimum wage in
Ontario did not live in low income families.
Though counterintuitive, it makes sense once
we explore their age and family situation. In fact,
most of those earning minimum wage are not the
primary or sole income-earner in their family.

■

In 2017, the year before Ontario was toincrease the minimum wage, 59.2% of all minimum wage earners were under the age of 25 andthe vast majority of them (86.3%) lived with aparent or other relative.

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Moreover, 17.8% of all minimum wage earners had an employed spouse. Of these, 95.7%
had spouses that were either self-employed or
earning more than the minimum wage. Just 2.1%
of Ontario minimum wage earners were single
parents with young children.

■ In addition to ineffectively targeting theworking poor, raising the minimum wage also
produces several unintended economic consequences to the detriment of young andinexperienced workers. These include fewer job
opportunities, decreases in hours available forwork, reductions in non-wage benefits, more
automation, and higher consumer prices, whichdisproportionately hurt the working poor.

■ A work-based subsidy is a more effect-

ive policy since it better targets the benefits to
those in need without these negative economic
consequences.

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

Introduction
As part of its Poverty Reduction Strategy, former
Premier Kathleen Wynne’s government raised
the minimum wage on January 1, 2018 from $11.60
to $14.00 per hour, a 20.7% increase overnight.1
Another increase is scheduled on January 1, 2019that will raise it to $15; thereafter annual increases will be indexed to inflation.2
According to former Premier Wynne: “Millions
of workers in Ontario are finding it almost
impossible to support their families on a minimum wage that just doesn’t go far enough”(Government of Ontario, 2017a). Her rationale forsuch swift and dramatic hikes to the minimum
wage shows a fundamental lack of understanding
about who earns the minimum wage in Ontario
When she said this in 2017, 446,000 workers in
Ontario earned the minimum wage—representing
7.4% of Ontario workers—not millions. Second,raising the minimum wage is not an efficientmeans of providing help targeted to families living in poverty, contrary to what the former premier’s comments suggest. The inability to provide
help targeted at the working poor, coupled withthe associated negative unintended economic
consequences, is why raising the minimum wage
is not an effective way to alleviate poverty.
This publication evaluates increasing the minimum wage as a strategy for alleviating poverty
in Ontario. It is divided into four sections: thefirst presents the evolution of Ontario’s minimum

wage since 2003; the second discusses the characteristics of minimum wage earners in Ontario;
the third briefly discusses the unintended economic consequences of raising the minimum
wage; and the last points to an alternative policy
option—a work-based subsidy such as the Canada
Workers Benefit—that provides more focused
help for the working poor without causing thesame negative economic consequences.

Ontario’s minimum wage
increases in context
Before discussing the characteristics of thoseearning minimum wage, it is useful to give thebackground of the government’s plan to raise theminimum wage to $15 per hour by 2019. Startingin 2003, Ontario’s minimum wage began a period
of increases that outstripped inflation: overall
prices (inflation) have increased by 34% since2003, compared to a nominal increase of 119%in the minimum wage rate. Figure 1 displays theaverage minimum wage rates in Ontario for eachyear from 2003 to the planned rate in 2019.3 To
control for inflation, the rates are in constant2019 dollars.
From 2003 to 2010, the minimum wage raterose from $9.15 to $11.86 (2019 $), representing
growth of 30% after adjustment for inflation.
Subsequently, the minimum wage rate largely
stabilized and fluctuated between $11.44 and$11.91 until 2017. The rate is set to grow rapidly

1 For an overview of the Government of Ontario’s Poverty Reduction Strategy, see Government of Ontario, 2018.
2 The minimum wage per hour for students and liquor servers is lower: $13.15 and $12.20 in 2018, and $14.10 and $13.05 in2019 (Government of Ontario, 2017b).

3 The minimum wage rate is presented in figure 1 as an annual average to account for the fact that the rate oftenchanges during the year. For instance, Ontario changed its minimum wage from $11.40 to $11.60 on October 1, 2017. Since
there were multiple rates in the year, an average is calculated weighted by the time period that each rate was in force.
This means that the average for 2017 is $10.45 (in nominal dollars).

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

Figure 1: Minimum wage rates (2019 $) in Ontario, 2003–201916$15.00

Minimum wage (2019 $)14
12
10 $9.15
8
6
4
2
0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Notes: [1] The minimum wage rates are pro-rated averages of the legislated minimum wage rates. For example, Ontario changed its minimum
wage from $11.40 to $11.60 on October 1, 2017, resulting in an average rate of $10.45 for 2017. [2] Inflation rates for 2018 and 2019 areprojections from the Ontario government’s 2017 budget.
Sources: Canada.ca, 2017; Statistics Canada, 2018b; Ontario, Ministry of Finance, 2017.

from $11.91 to $15.00 by 2019. That amounts to a
26% increase in the inflation-adjusted minimum
wage in two years. In other words, the increaseover just two years is almost as large proportionally as the eight-year increase during the midto-late 2000s. Over the entire period in the chart,
Ontario’s inflation-adjusted minimum wage will
increase 64%.
The $15 minimum wage will put Ontario out ofstep with most other Canadian and international
jurisdictions. A typical way to compare minimum
wage rates across jurisdictions is relative to themedian hourly wage. Generally, industrializedcountries have a minimum-to-median wage ratio
of about 0.50, meaning that the minimum wage is
generally half the median wage (Eisen, Lammam,
and Watson, 2017). As of 2017, Ontario approximately conformed to this norm with a minimumto-median wage ratio of 51.3.
However, just two years later in 2019, Ontario’s
minimum-to-median wage ratio is projectedfraserinstitute.org

to be 0.64, well above the typical ratio of 0.50.
Ontario is also expected to have the highest
minimum wage rate relative to the median wage
in Canada. This is a concern because, as Eisen,
Lammam, and Watson explain, “the move to amuch higher minimum-to-median wage ratioheightens the probabilities of substantial adverse
employment effects” (2017: 1). Put simply, thespeed of the increase and the level of the minimum wage will likely worsen the unintended
consequences of an increased minimum wage.

Minimum wage fails to give help
targeted at the working poor
To assess the minimum wage as a strategy foralleviating poverty, it is important to measure
how well the program helps those living inpoverty. If Ontario’s minimum wage earners are
not typically living in poverty, then many of thepoor would not benefit and much of the benefit
would go instead to the those who are not poor.

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

An anti-poverty policy that does not provide help
targeted at the poor is not an efficient way ofproviding assistance to those in need.
This section discusses the latest available dataon the characteristics of minimum wage earners. Most of this data is for 2017, the year before
Ontario began to implement the rapid increase of
the minimum wage to $15 per hour and so reveals
how well that policy was targeted at families inpoverty at the time it was announced. The groupof primary interest is those earning minimum
wage at the time of the policy announcement.
Knowing who earns the minimum wage is criticalfor an evidence-based understanding of why
raising the minimum wage does not effectively
target the working poor.

Defining poverty or “low-income”
While Canada does not have an official poverty
line, Statistics Canada’s low income cut-off(LICO) is often used as a proxy for measuring
absolute poverty.4 There are other measures of
low income in Canada, namely the low income
measure (LIM) and the market basket measure(MBM). However, the advantage of LICO is that
it is closely tied to the share of family incomethat is used to pay for necessities relative to theaverage. Specifically, a family would be at thethreshold if it is expected to spend 20 percentage points more of its family income on necessities than the average family. This connection
to spending on necessities is important because
poverty is often defined as a lack of adequate
basic necessities to sustain long-term health andwell-being (Lammam and MacIntyre, 2016).

Most workers earning minimum wage in Ontario
do not live in low-income families
Based on data from a special tabulation by
Statistics Canada using the Canadian Income
Survey (Statistics Canada, 2018c), in 2015, thelatest year of available income data, 9.2% ofminimum wage earners in Ontario lived in a lowincome family.5 In other words, more than nine of
10 Ontario minimum wage workers did not live in
low-income families. Interestingly, the rate of low
income for the general population in Ontario was
9.3% in 2015 (Statistics Canada, 2018a), virtually
identical to the 9.2% rate for those earning minimum wage. This means that a minimum wage
earner in Ontario was just as likely to live in low
income as someone from the general population.
The fact that most Ontarians earning minimum
wage do not live in low income families is a criticalinsight. It helps explain why the two academic
studies measuring the effect of raising the minimum wage on poverty in Canada both found thatit did not reduce poverty. Campolieti, Gunderson,and Lee (2012)—using multiple measures of low
income (including LICO) as proxies for poverty—
measured the impact on poverty of increases in
the minimum wage in Canada from 1997 to 2007,
controlling for other economic factors. They foundthat the minimum wage had no effect on poverty
and that 70% of the benefits of an increased minimum wage go to those who are not poor.
The other Canadian study measured the impactof minimum wage increases from 1981 to 2004
and found that a 10% increase in the minimum
wage is associated with a 4% to 6% increase

4 A key distinction between “poverty and low income is that poverty is the deprivation of necessities and is not dependent on the condition of others, while low income is well-being relative to other members of society. For more discussion, see Lammam and MacIntyre, 2016.

5 The low income rates under alternative measures of low income are 10.5% for the low income measure and 13.4% for
the market basket measure (Statistics Canada, 2018c).

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policyin the percentage of families falling below the
LICO threshold (Sen, Rybczynski and Van De
Waal, 2011). The authors explained the increase
in relative poverty by noting that a reductionin employment (and thus income) as a consequence of an increase in the minimum wage
results in some families falling below the low
income threshold.

Most workers earning minimum wage in Ontario
are not the primary or sole earner in their family
It is certainly counterintuitive that virtually all
Ontarians earning minimum wage do not live in
low-income families. This result begins to makesense once we explore their age and family situation.6 The following data is based on a special

tabulation of the Labour Force Survey provided
by Statistics Canada (2018d) for 2017, the latest
year of data available and the year before Ontario
began its rapidly increase in the minimum wage.7
The data show that most of those earning minimum wage are not the primary or sole incomeearner in their family. This is consistent with thefindings of past research (Murphy, Lammam, and
MacIntyre, 2016; Ontario, Ministry of Labour, 2014).
First, consider that most minimum wage earners in Ontario were young.8 Figure 2 displays the
distribution of those earning minimum wage by
age group. Those under the age of 25 constituted
59.2% of all minimum wage earners, by far thelargest group. Another 12.7% of minimum wage

Figure 2: Shares (%) of workers earning minimum wage in Ontario, by age group, 2017
60

59.2%

Percentage

50
40
30
20

12.7%

0

8.8%

8.2%

10
15–24

25–34

35–44

Age group

45–54

7.9%
55–64

3.3%
65+

Source: Statistics Canada, 2018c.

6 For a complete breakdown of the characteristics of workers earning minimum wage in Canada and Ontario in 2017, see
Appendix 1 and Appendix 2 (pp. 11–12).

7 Note that the share of those in low-income families who are earning minimum wage is for the year 2015 and data on othercharacteristics of minimum wage earners is for 2017 because the data come from two different Statistics Canada surveys: thelow income statistics come from the Canadian Income Survey and the rest of the data come from the Labour Force Survey.

8 This is not to trivialize the importance of a youth’s contribution to the income of a low income family. However, thevast majority of minimum wage earners are not part of a low income family and such families are less likely to rely heavily
on a youth’s contribution.

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

earners were in the group aged 25 to 34 years old.
Small shares belonged to older age groups. In fact,
the smallest group was also the oldest, with 3.3%of those earning minimum wage being 65 or over.
For many youths, a minimum wage job is their first,
and often a stepping stone to higher paid employment. In fact, typically minimum wage earners
do not remain such for long but increase theirincomes as they gain experience (Long, 1999).9
Notably, the vast majority of youths earning minimum wage lived with a parent or other relative.
Specifically, 86.3% of minimum wage earners in
Ontario aged 15 to 24 lived with family. Among
this group of youths, most (58.5%) are attending
school while living at home.
The share of young minimum wage earners livingwith family is even larger for the younger members of this age group. Almost all (94.5%) of theminimum wage earners aged 15 to 19 lived with aparent or other relative. In short, minimum wage
earners in 2017 tended to be teenagers or youths
living with family.
Moreover, many older minimum wage earners in
Ontario were also not the prime or sole income
earner in their family: 17.8% of minimum wage
earners had an employed spouse. Of these, 95.7%
had spouses who were either self-employedor earning more than the minimum wage. This
reinforces the point that many minimum wage
earners are not actually supporting a family on asingle minimum wage income alone.
Thankfully, it is quite rare for a single parent
with a young child to be working at a minimum

wage job. In 2017, only 2.1% of Ontarians earning minimum wage were single parents withyoung children. While proponents of increasing the minimum wage often give the impression that many of those earning the minimum
wage are single parents struggling to support
a family, the reality is different as only a small
share of minimum wage earners are in thiscircumstance.
The weakness of the connection between earning
the minimum wage and living in low income families is not news to the Ontario government. In
2014, the government commissioned an advisory
panel on the minimum wage to provide recommendations on future increases. Like this publication, the report of the Minimum Wage Advisory
Panel examined the characteristics of Ontarians
earning the minimum wage in 2012 and concluded: “Many minimum wage workers are youth
who live in non-poor families, or are persons in
multiple earner families where the combined
earnings takes them out of poverty” (Ontario,
Ministry of Labour, 2014: 36). A later study thatexamined the characteristics of Canadian minimum wage earners in 2014 also found similar
results (Murphy, Lammam, and MacIntyre, 2016).
Indeed, the weak connection between minimum
wage earners and living in low income has been
consistent over time.

Workers earning minimum wage in Ontario tend
to be less educated and work part-time
Proponents of raising the minimum wage havesometimes voiced a concern that there is a widespread problem of minimum wage earners being
skilled workers with university degrees (e.g., Van
Santvoort, 2017). In reality, and consistent with

9 Additional Canadian research has shown the transience of minimum wage work. Battle (2003) found that of Canadiansthat have held their position for five years, only 1% were minimum wage earners. Gunderson (2007) found that nearly half
(46.4%) of minimum wage earners in Ontario had been at their position for less than a year.

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

their young age profile, Ontarians earning minimum wage in 2017 were usually less educatedthan the general population of workers. Table 1
compares the share of minimum wage workers
who attained various levels of education to thegeneral population of workers.
In 2017, 55.6% of those earning the minimum
wage had a high school diploma or less. In contrast, the share of workers in Ontario’s general
population with only this level of education is
27.9%. In other words, a minimum wage worker
was much more likely to have completed only
high school or less than Ontario workers ingeneral. The difference between the general
population of workers and minimum wage
workers is even more stark when looking at
those who obtained less than high school diploma: 27.0% of minimum wage earners had lessthan a high school diploma compared to 7.6% ofworkers overall.
Moreover, a minimum wage worker was muchless likely (13.0%) to have a university degree
than workers in general (33.0%). For those minimum wage workers who did have a university
degree, the job was likely a stepping stone toa more highly paid position, as it is rare forsomeone with a university degree to be earning
minimum wage. In fact, of the nearly two million
Ontario workers with a university degree in 2017,
only 2.9% had a minimum wage job.
In addition to being young and generally lesseducated, minimum wage earners are more likely
to work part-time. In 2017, 60.5% of Ontario
minimum wage earners worked part-time. By
comparison only 18% of all workers worked parttime. It is rare for full-time workers to earn theminimum wage—only 3.6% do. The data clearly
does not support the notion of a large cadre offull-time workers earning the minimum wage.

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Table 1: Educational attainment of the general
population of workers and workers earning
minimum wage in Ontario
Educational
level

Generalpopulationof workers

Workers
earningminimum
wage

High school diploma or less

27.9%

55.6%

Some post-secondary

6.4%

13.2%

Post-secondary diploma or certificate

32.7%

18.2%

University degree

33.0%

13.0%

Source: Statistics Canada, 2018d.

Minimum wage increases produce
negative economic consequences
Raising the minimum wage does not efficiently target assistance to the working poor. But it also produces several unintended economic consequences
to the detriment of young and inexperienced workers. Increasing the minimum wage is a governmentmandated rise in the price of low-skilled labour.
This artificially raises the cost of labour and, in
absence of productivity gains, businesses respondin a myriad of ways to offset this increase, producing several negative unintended consequences.
Just as consumers purchase less of a good if theprice rises with no corresponding increase inquality, businesses often respond to an increasein the minimum wage by purchasing less labour.
The result is fewer job opportunities for workers,
particularly young and inexperienced workers.
Canadian empirical research has generally foundthat a 10% increase in the minimum wage rate
reduces employment among teens by 3% to 6%(Godin and Veldhuis, 2009; Gunderson, 2014;
Ontario, Ministry of Labour, 2014). In fact, afteran extensive search, we identified 20 Canadianstudies of the minimum wage published in academic journals between 1979 and 2017 (table 2).

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

Table 2: Twenty Canadian studies of the minimum wage from academic journals
Year

Author(s)Title

Journal

1979

Cousineau

Impact du salaire minimum sur le chômage des jeunes et desfemmes au Québec.

Industrial Relations

1979

FortinL’effet du salaire minimum sur les prix, l’emploi et la répartition
des revenus : le cas du Québec.

Industrial Relations

1979

Maki

The Effect of Changes in Minimum Wage Rates on Provincial
Unemployment Rates, 1970–77.

Industrial Relations

1980

Swidinsky

Minimum Wages and Teenage Unemployment.

Canadian Journal of
Economics

1983

Schaafsma and Walsh

Employment and Labour Supply Effects of the Minimum Wage:
Some Pooled Time-Series Estimates from Canadian Provincial Data.

Canadian Journal of
Economics

1984

McKee and West

Minimum Wage Effects on Part-Time Employment.

Economic Inquiry

1985

Mercier

Les effets du salarie minimum sur l’emploi des jeunes au Québec.

Industrial Relations

1992

Cousineau, Tessier, and Vaillancourt

The Impact of the Ontario Minimum Wage on the Unemployment
of Women and the Young in Ontario: A Note.

Industrial Relations

1996

Kan and Sharir

Minimum-Wage and Probability-of-Getting-a-Job Effects in a
Simultaneous Equations Model of Employment and Participation:
Canada 1975–1991.

Canadian Journal of
Economics

1999

Baker, Benjamin, and Stanger

The Highs and Lows of the Minimum Wage Effect: A Time-Series
Cross-Section Study of the Canadian Law.

Journal of Labor
Economics

2003

Yuen

The Effect of Minimum Wages on Youth Employment in Canada:
A Panel Study.

The Journal of
Human Resources

2005

Campolieti, Fang, and Gunderson

How Minimum Wages Affect Schooling-Employment Outcomesin Canada, 1993–1999.

Journal of Labor
Research

2005

Campolieti, Fang, and Gunderson

Minimum Wage Impacts on Youth Employment Transitions,
1993–1999.

Canadian Journal of
Economics

2006

Campolieti, Gunderson, and Riddell

Minimum Wage Impacts from a Prespecified Research Design:
Canada 1981–1997.

Industrial Relations

2009

Fang and Gunderson

Minimum Wage Impacts on Older Workers: Longitudinal
Estimates from Canada.

British Journal ofIndustrial Relations

2010

Myatt and McDonald

The Robustness of Provincial Panel-Data Studies of Minimum
Wages in Canada.

Canadian Journal of
Regional Science

2011

Sen, Rybczynski, van de Waal

Teen Employment, Poverty, and the Minimum Wage: Evidence
from Canada.

Labour Economics

2013

Brochu and GreenThe Impact of Minimum Wages on Labour Market Transitions.

Economic Journal

2014

Campolieti, Gunderson, and Lee

Minimum Wage Effects on Permanent versus Temporary
Minimum Wage Employment.

Contemporary
Economic Policy

2017

Rybczynski and Sen

Employment Effects of the Minimum Wage: Panel Data Evidence
from Canadian Provinces.

Contemporary
Economic Policy

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The consensus among them is that increases ofthe minimum wage reduce employment opportunities for young (under 25) workers.10 Not oneof these Canadian studies contradicts this conclusion. While research from the United States
similarly finds declines in youth employment asa result of increasing the minimum wage, unlike
the Canadian research, there is more disagreement among researchers. For a detailed discussion of the state of the US research, see Murphy,
Lammam, and MacIntyre (2016).
The minimum wage can affect workers in more
subtle ways as well. For example, businesses can
reduce their labour costs by decreasing hours
available for work. A review of the literature by
the advisory panel on minimum wages established by the Ontario government highlights
evidence that raising the minimum wage is associated with a reduction in hours worked. As theadvisory panel’s final report points out, focusing
on employment reductions alone understates
the total effect of the minimum wage on workers(Ontario, Ministry of Labour, 2014: 35). A reduction in hours means minimum wage hikes could
leave some workers earning less overall even if
their hourly wage increased.11 This is because
total earnings are determined by hourly rates
multiplied by hours worked. If the increase inhourly rate is not sufficient to offset the reduction in hours, then the worker will have lower
overall earnings.

Besides reducing employment and work hours,
businesses can respond in other ways to offset
government-mandated wage increases. For
instance, employers can reduce non-wagecompensation (fringe benefits) such as on-thejob training (Ontario, Ministry of Labour, 2014).
Businesses may also respond by moving towards
more automation in providing products and services (Lordan and Neumark, 2018). Finally, businesses may pass costs on to customers throughhigher prices.12 Perversely, this most negatively
affects low-income customers, who, with lessdisposable income, can least afford price increases (Macurdy, 2015).
Given the fast pace of the increases of the minimum wage in 2018 and 2019, the adverse consequences could be exacerbated as businesses
struggle to adjust to rapid government-mandated increases in labour costs. In fact, the Ontario
government’s panel on minimum wage pointed
out that the adverse effects are larger if done
rapidly rather than spread over a long period(Ontario, Ministry of Labour, 2014: 34).

A more effective policy to help theworking poor—a work-based subsidy
Fortunately, another policy option is available
to help the working poor that provides targeted
benefits to those in need without producing the

10 Interestingly, Fang and Gunderson (2009) found that raising the minimum wage increased employment for older
workers (aged 50 and over). The authors’ preferred explanation is that, in the event of a minimum wage increase, employers substitute away from inexperienced younger workers to more experienced older workers.

11 A study examining recent minimum wage increases in the City of Seattle found that low-wage workers (defined as
those earning under $19 per hour) were made worse off on average as a result of the reduction in hours (Jardim et al.,2017). Specifically, raising the minimum wage from $11 to $13 in Seattle led to an average net reduction in earnings of $125
per month for low-wage workers. For a summary of Jardim et al., 2017, see Lammam, MacIntyre, and Hunt, 2017.

12 A review of almost 30 studies show that, on balance, research finds that increasing the minimum wage raises prices(Lemos, 2008).

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

same negative economic consequences. A workbased subsidy, which is a cash transfer directlyfrom governments to low-income workers, isworthy of consideration.13
An example of such a program in Canada is thefederal government’s Canada Workers Benefit(CWB)—formerly the Working Income Tax
Benefit. This program, first created in 2007, wasrecently enhanced in the 2018 federal budget.
With the enhancements announced in thebudget, couples or single parents with family
incomes below $36,483 will receive a maximum
benefit of $2,335 while single workers making
less than $24,111 will receive a maximum of $1,355(Canada, Department of Finance, 2018). Since
the program is based on family income, it ismore efficient than a minimum wage in directing
benefits to lower-income Canadians who are inneed of assistance.
Moreover, unlike the minimum wage, a workbased subsidy does not artificially increase thecost of employing low-skilled workers. Whileraising the minimum wage reduces job opportunities, a work-based subsidy encourages employment. This is because a potential recipient musthave some employment income to receive any
benefits from the CWB and so are encouraged toenter the work force. Empirical evidence on similar programs in the United States and the United
Kingdom has found that this type of program
does indeed encourage employment, particularly
among single mothers (Chan and Moffitt, 2018).

Conclusion
In an effort to alleviate poverty among workers,
the Ontario government is raising the minimum
wage to $15 per hour at the beginning of 2019.
However, this is not an efficient strategy forassisting the working poor for two reasons. First,
it poorly targets those in need of help. Second, theminimum wage produces unintended economic

consequences that harm young and inexperienced workers, including fewer job opportunities,
decreased hours, reduced benefits, more automation, and higher prices. Instead of pursuing theflawed policy of raising the minimum wage, theOntario government should consider more effective alternatives such as a work-based subsidy.

13 For a fuller discussion on work-based subsidies, see Lammam and MacIntyre, 2015.

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Appendix 1: Characteristics of workers earning minimum wage, Ontario, 2017
Total employees
Total
Age
15–19
20–24
25–34
35–44
45–54
55–64

Minimum wage

Total (000s)

Share (%)

Total (000s)

Incidence (%)

Share (%)

6,019.7

100.0

445.5

7.4

100.0

307.0
612.1
1,396.6
1,252.9
1,318.0
945.4

5.1
10.2
23.2
20.8
21.9
15.7

168.5
95.1
56.6
36.5
39.1
35.0

54.9
15.5
4.1
2.9
3.0
3.7

37.8
21.3
12.7
8.2
8.8
7.9

460.0
1,218.1
4,341.5
385.0
1,969.3
1,987.2

7.6
20.2
72.1
6.4
32.7
33.0

120.5
127.1
197.9
58.8
81.0
58.1

26.2
10.4
4.6
15.3
4.1
2.9

27.0
28.5
44.4
13.2
18.2
13.0

4,935.6
1,084.0

82.0
18.0

176.2
269.4

3.6
24.9

39.6
60.5

3,412.6
627.4
247.2
380.2
2,774.3
65.0
2,324.7
384.5
463.8
181.5
282.3
1,296.0
173.7
113.6
107.1
310.2
28.4
563.0
833.6
585.7
36.4
399.1
150.2
247.8
63.2
164.2
20.4
243

56.7
10.4
4.1
6.3
46.1
1.1
38.6
6.4
7.7
3.0
4.7
21.5
2.9
1.9
1.8
5.2
0.5
9.4
13.8
9.7
0.6
6.6
2.5
4.1
1.0
2.7
0.3
4.3

104.0
24.8
8.1
16.7
79.1
3.4
61.6
14.1
31.5
9.2
22.3
264.2
107.4
51.8
25.6
42.6
3.0
33.7
44.3
23.3
4.0
11.4
7.9
21.0
11.0
9.2
—
51

3.0
4.0
3.3
4.4
2.9
5.2
2.6
3.7
6.8
5.1
7.9
20.4
61.8
45.6
23.9
13.7
10.6
6.0
5.3
4.0
11.0
2.9
5.3
8.5
17.4
5.6
—
21.0

23.3
5.6
1.8
3.7
17.8
0.8
13.8
3.2
7.1
2.1
5.0
59.3
24.1
11.6
5.7
9.6
0.7
7.6
9.9
5.2
0.9
2.6
1.8
4.7
2.5
2.1
—
9.2

Educational attainment
Less than a highschool diploma
Highschool diploma
At least some post-secondarySome post-secondary
Post-secondary diploma or certificate
University degree

Job status
Full-timePart-time

Household status
Member of a couple [1]Spouse not employed
Youngest child is less than 18 years
No children or youngest child 18 or older
Spouse employedSpouse making minimum wage or less
Spouse making greater than minimum wage
Spouse self-employed
Head of household, no spouse
Youngest child is less than 18 years
No children or youngest child 18 or older
Son, daughter, or other relative living with family [2]
15–19 in school
15–19 not in school
20–24 in school
20–24 not in school
25 or over in school
25 or over not in school
SingleLiving alone
15–24
25–54
55 and over
Living with non-relatives
15–24
25–54
55 and overMember of a low-income household (2015) [3]Notes: [1] The sum of persons with a working or non-working spouse does not add up to the total number of persons with spouses since certain spouses may
have been outside the target group. This happens when one of the spouses is a member of the armed forces or is in an institution (and there may be otherreasons). The Labour Force Survey only collects information on the spouse not out of scope. [2] A low-income household is defined as being below the Low
Income Cut-Off (after taxes and government transfers). The low income data come from the Canadian Income Survey (CIS). The latest year available at the timeof writing was 2015. [3] ”—” indicates that data are not available.
Sources: Statistics Canada, 2018c, d.

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

Appendix 2: Characteristics of workers earning minimum wage, Canada, 2017
Total employees
Total
Age
15–19
20–24
25–34
35–44
45–54
55–64

Minimum wage

Total (000)s

Share (%)

Total (000)s

Incidence (%)

Share (%)

15,609.6

100.0

1,018.1

6.5

100.0

806.5
1,577.1
3,642.6
3,374.8
3,314.8
2,426.8

5.2
10.1
23.3
21.6
21.2
15.5

369.4
219.3
130.9
87.3
90.3
84.1

45.8
13.9
3.6
2.6
2.7
3.5

36.3
21.5
12.9
8.6
8.9
8.3

1,332.3
3,014.7
11,262.6
1,042.7
5,566.9
4,653.0

8.5
19.3
72.2
6.7
35.7
29.8

272.6
268.9
476.6
149.9
202.8
123.9

20.5
8.9
4.2
14.4
3.6
2.7

26.8
26.4
46.8
14.7
19.9
12.2

12,770.4
2,839.3

81.8
18.2

414.4
603.6

3.2
21.3

40.7
59.3

8,942.0
1,634.7
620.3
1,014.5
7,271.2
162.7
6,129.7
978.8
1,144.3
515.1
629.1
2,920.1
449.5
300.0
270.5
680.9
60.9
1,158.2
2,576.4
1,812.2
120.7
1,211.0
480.6
764.2
206.3
496.2
61.7
608

57.3
10.5
4.0
6.5
46.6
1.0
39.3
6.3
7.3
3.3
4.0
18.7
2.9
1.9
1.7
4.4
0.4
7.4
16.5
11.6
0.8
7.8
3.1
4.9
1.3
3.2
0.4
4.2

256.5
58.8
19.2
39.6
196.7
14.6
148.0
34.0
63.2
20.2
43.0
573.2
235.8
113.1
60.8
88.2
6.4
69.0
121.7
66.4
10.7
33.3
22.3
55.3
29.0
23.8
2.5
115

2.9
3.6
3.1
3.9
2.7
9.0
2.4
3.5
5.5
3.9
6.8
19.6
52.5
37.7
22.5
13.0
10.5
6.0
4.7
3.7
8.9
2.7
4.6
7.2
14.1
4.8
4.1
18.9

25.2
5.8
1.9
3.9
19.3
1.4
14.5
3.3
6.2
2.0
4.2
56.3
23.2
11.1
6.0
8.7
0.6
6.8
12.0
6.5
1.1
3.3
2.2
5.4
2.8
2.3
0.2
11.2

Educational attainment
Less than a highschool diploma
Highschool diploma
At least some post-secondarySome post-secondary
Post-secondary diploma or certificate
University degree

Job status
Full-timePart-time

Household status
Member of a couple [1]Spouse not employed
Youngest child is less than 18 years
No children or youngest child 18 or older
Spouse employedSpouse making minimum wage or less
Spouse making greater than minimum wage
Spouse self-employed
Head of household, no spouse
Youngest child is less than 18 years
No children or youngest child 18 or older
Son, daughter, or other relative living with family
15–19 in school
15–19 not in school
20–24 in school
20–24 not in school
25 or over in school
25 or over not in school
SingleLiving alone
15–24
25–54
55 and over
Living with non-relatives
15–24
25–54
55 and overMember of a low-income household (2015) [2]Notes: [1] The sum of persons with a working or non-working spouse does not add up to the total number of persons with spouses since certain spouses may
have been outside the target group. This happens when one of the spouses is a member of the armed forces or is in an institution (and there may be otherreasons). The Labour Force Survey only collects information on the spouse not out of scope. [2] A low-income household is defined as being below the Low
Income Cut-Off (after taxes and government transfers). The low income data come from the Canadian Income Survey (CIS). The latest year available at the timeof writing was 2015.
Source: Statistics Canada, 2018c, d.

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Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy

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Acknowledgments
The authors would like to thank the anonymous reviewers for their comments and suggestions. Any remaining errors or oversights are the sole responsibility of the authors. As the researchers have worked
independently, the views and conclusions expressedin this paper do not necessarily reflect those of theBoard of Directors of the Fraser Institute, the staff, or
supporters. This publication in no way implies that the
Fraser Institute, its directors, or staff are in favour of,or oppose the passage of, any bill; or that they support
or oppose any particular political party or candidate.

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Charles Lammam
Charles Lammam is Director of
Fiscal Studies at the Fraser Institute. He holds an M.A. in public
policy and a B.A. in economics
with a minor in business administration from Simon Fraser University. Since joining the Institute, Mr. Lammam
has published over 100 studies and 400 originalarticles on a wide range of economic policy issues including taxation, public finances, pensions,investment, income inequality, poverty, labour,
entrepreneurship, public-private partnerships,
and charitable giving. His articles have appearedin every major national and regional newspaper
in Canada as well as several prominent US-based
publications. Mr. Lammam’s career in public policy spans over a decade. He regularly gives presentations to various groups, comments in print
media, and appears on radio and television broadcasts across the country to discuss the Institute’s
research. He also frequently receives invitations toprovide expert testimony for various federal andprovincial government panels and committees.

Hugh MacIntyre
Hugh MacIntyre is a Senior Policy
Analyst at the Fraser Institute.
He holds an M.Sc. in Political
Science from the University of
Edinburgh, a Post Baccalaureate
Diploma in Economics from Simon Fraser University, and an Honours B.A. fromthe University of Toronto. Mr. MacIntyre has
published over 30 studies and has written over 80
original commentaries appearing in national andregional media outlets including the Globe & Mailand National Post. His research covers a wide
range of economic policy issues including taxation, government finances, government performance, public-private partnerships, labour policy,
income mobility, poverty, and charitable giving.

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