Economics Professor Absolutely Agrees With Minimum Wage Increase

A demonstrator attends a downtown Windsor rally supporting $15/hr minimum wage in Canada. Photo taken April 15, 2016.

A Fanshawe College Economics Professor is disputing protests to the recent minimum wage increase, including comments made last year by the Sarnia-Lambton Chamber of Commerce.

Darren Chapman believes the increase will benefit a lot of Ontarians and the provincial economy as a whole.

“We’re actually giving the opportunity for the lower end of the socioeconomic scale to increase their real wages, which haven’t increased in the last 30 to 40 years,” says Chapman. “In one big chunk, it’s allowing them to catch up so they’re steadier on their feet.”

He says the suppliers or purchasers of the labour will take a hit, but it’s a cost they should be able to afford.

“A lot of the restaraunts and small businesses are complaining saying ‘I can’t afford this,’ but actually they can,” says Chapman. “What’s going to be required from them is to take a look at their menu prices, if you will, and start to increase the price of their goods and services so that they maintain and are able to achieve the higher levels of profit.”

“When you actually look at an average restaraunt, it probably means a difference of a 10 to 15 cent increase on all their menu items,” he says. “People are willing to pay that so that others can get a higher wage.”

Chapman says the increase won’t just benefit those who are making the minimum wage.

“If you were making $15/hour before and some people were making the minimum wage, you’re not going to be satisfied that people now making the minimum wage is the same wage that you’re making. So all wages are increasing. As a result, all prices are going to increase. So we’re going to see a bump in inflation, that’s a sign of a healthy economy. We just don’t want to see too much inflation.”

Chapman expects any negative effects, including potential job losses, to be short lived.

“When we look at it in the short term we can certainly say ‘yes, some people may lose their job, some people won’t get as many hours.’ When we look at it more in the longer term, those issues get worked out in the wash.”

He believes unemployment figures won’t dramatically increase as a result of the wage increase

“Some employers will make a point of it and lay people off. But at the end of the day, they’re going to need to rehire those people especially as the economy improves, which the economy is doing right now,” says Champan. “They’d be crazy to lay people off at the time when their business is starting to pick up.”

He finished by saying some people are overreacting to prices going up as a result of the wage increase.

“People expect to pay a higher price for goods and services because it means their wages are going up,” he says. “I don’t buy into the fact that we’re going to have mass unemployment and that the sky is falling— it’s not.”