The Financial Post is the paper of record for big business, and they are earning their keep launching an all-out assault on higher minimum wages coming into effect across Canada.
In a recent column, Post columnist Lawrence Solomon argues that instead of raising minimum wages, Canada should follow the lead of the Trump Administration and cut taxes for the rich. The benefits of this, we are told, will “trickle-down” to everyone else.
Of course, this isn’t how things work in reality. Trump’s trickle-down economics make the rich richer and everyone else worse off.
Let’s analyze and debunk Solomon’s claims one by one.
Fact: The minimum wage is helping workers in Ontario
Solomon claims that Ontario has faced near economic apocalypse since increasing the minimum wage to $14 just three weeks ago:
While low-wage workers are nabbing a hefty pay hike, consumers are seeing price hikes as employers try to recover their increased labour costs. Businesses unable to raise prices have begun shutting their doors. And workers are having their hours shortened or their wage hike clawed back by employers cutting benefits or requiring staff to pay for their uniforms.
Solomon does not cite any data for this claim. That’s because none exists. More likely, Solomon is cherry-picking sensational and anecdotal news coverage to confirm his biases.
It will take more than 3 weeks to measure the ultimate impact of the higher minimum wage in Ontario. In all likelihood, this will take years of careful study by professional researchers.
Lawrence Solomon has no idea what the real impact of the minimum wage will be. But we can look at other jurisdictions to see what has happened elsewhere.
A famous study by David Card and Alan Kreuger compared two similar markets (Pennsylvania and New Jersey) after one increased its minimum wage and the other didn’t. Looking at fast food employment in particular, they concluded the wage hike had no impact on employment levels.
Another large US study looked at over 280 adjacent counties with different minimum wages and found that a higher minimum wage led to higher incomes for workers but had no effect on employment.
Lest you think we are selectively picking only favourable research, a literature review of over 64 different minimum wage studies concluded that minimum wage increases had no negative impact on employment.
To be sure, a small number businesses in Ontario have cut benefits for workers in the wake of the minimum wage increase. But the data tells us that this is usually a cash-grab by owners trying to squeeze out more profit from workers rather than an economy-wide phenomena.
Fact: The minimum wage is helping workers in California
Solomon goes on to condemn California for raising its minimum wage to $15, suggesting that doing so has increased poverty in the state.
California, long a leader in implementing social-justice policies, has been phasing in a US$15 minimum wage as part of its anti-poverty agenda, with predictable results. California now has the highest poverty rate in America, at 20 per cent, according to the U.S. Census Bureau’s Supplemental Poverty Measure.
This is a bizarre claim, and an obviously misleading confusion of coincidence with causation. It is true that California has both a) a $15 minimum wage, and b) high levels of poverty, but it does not follow that one has caused the other.
It would be just as valid to say California has a $15 minimum wage and nice weather, therefore a higher minimum wage causes nice weather!
Solomon must think his readers are idiots to buy into this, particularly because one thing almost all economists agree on is that the minimum wage reduces poverty.
A study out of the University of California Irving concludes that “raising the minimum wage 10 percent (say from $7.25 to near $8) would reduce the number of people living in poverty 2.4 percent.”
Solomon is likely well aware of this, and is making a blatantly misleading argument in bad faith. He is, as usual, interested in promoting an ideological agenda rather than assessing the facts.
Fact: Trump’s tax handouts for the rich are bad for workers
Solomon then turns to Trump’s tax giveaway for the rich, arguing that the benefits of it will trickle-down to everyone else.
This is the classic trickle-down economics argument that has been debunked time and time again (and by 30+ years of experience with its failures). Solomon barely bothers to marshal evidence for the point, instead pointing to Wal-Mart paying its employees bonuses after the Trump tax bill passed.
Once Republican tax cuts became law, the upward trajectory of wages steepened. In what may prove to be the largest income redistribution in history — an entirely voluntary redistribution from corporate shareholders to their employees — the titans of American industry are spreading the wealth. Wal-Mart is giving its one million U.S. employees a bonus of up to US$1,000, based on length of service.
Utter nonsense. Wal-Mart’s bonus scheme was a PR move designed to generate flashy headlines (and it worked), but the reality is that very few workers will benefit from the payments. Only workers who have been at Wal-Mart for over 20 years (a very small number) are eligible for the bonus. The average worker will receive a one-time bonus of around $190. And in fact, Walmart also announced they were closing stores and laying off workers!
The total payout to workers will amount to just 2% of Wal-Mart’s total gain from the tax bill. Owners will keep the rest, an estimated $18 billion over 10 years. In true trickle-down fashion, workers get peanuts while the rich will capture 98% of new profits.
Solomon likely picked Wal-Mart as an example because the broader picture is even worse. Big corporations are hoarding 99.9% of the benefits of the tax bill. Only around 0.13% is “trickling down” to workers.
Solomon loves Trump’s tax bill because it represents a huge giveaway to the rich. His attempt to present it as a boon to workers is rife with misinformation and falsehoods.
Lawrence Solomon and the corporate lackeys at the Financial Post want to impose Trump’s trickle-down agenda on Canada, redistributing wealth upward from workers to the richest 1%. They get paid to publish false information about the economy because doing so benefits the rich owners who sign their paychecks.
Just as troubling, the mainstream media refuses to call out the lies of corporate-supporting media institutions like the National Post. They continue to insist on politely presenting both sides of this argument as equally valid.
But both sides are not equally valid. One side is based on facts, the other based on the narrow financial interests of the elite. Rightwing media like the Financial Post give voice to people who are happy to lie to the public in order to advance corporate interests.
We need to call them out at every turn and expose them for what they are.