Five reasons a higher minimum wage helps us all

Business lobby groups are protesting plans in Ontario, Alberta and BC to raise the minimum wage to $15 an hour. But there’s plenty of evidence higher wages are needed to boost economic growth. There are also important social and political reasons to significantly increase minimum wages.

1.  It’ll boost our sluggish economy

Labour compensation and household spending make up almost 60 per cent of our Gross Domestic Product. Higher wages mean more spending, and more demand for goods and services. If wage and income growth stays low, economic growth will remain sluggish and businesses won’t create new jobs. Minimum wage increases might lead to slower job growth and some job losses, but they’ll be counter-balanced by the new jobs resulting from increased demand. Recent studies have found few job losses from minimum wage increases.

2.  It’ll draw people back into the workforce

Our economy is also being held back by slow labour force growth, including from fewer people working or looking for work. Higher minimum wages are likely to draw more people back into the workforce, which will boost our economy over the long term.

3.  It’ll increase productivity

The most productive and competitive countries in the world aren’t those with low wages, but are higher-wage countries, such as Switzerland, Germany, the United States and the Scandinavian countries. Higher wages force businesses to invest in more efficient equipment, which increases productivity and makes them more competitive internationally. In addition, a stronger economy will encourage employers to invest more in their workers to increase productivity.

4.  It’ll help reduce inequality

Higher minimum wages directly benefit the lowest-paid workers. Minimum wages have barely kept up with inflation since the mid-1970s, while productivity, and compensation for top executives, has increased much more rapidly. Growing inequality hasn’t just been bad for our society and those directly affected, it’s also been bad for the economy.

5.  It’ll build solidarity

Growing inequality fuels hopelessness and desperation. A recent EKOS survey shows more people feel their personal financial situation will be worse in the next five years than those who think it will be better. People have become increasingly cynical and tired of promises that don’t improve their standard of living. Feeling forgotten and left behind has helped fuel the rise of right-wing populism and xenophobia. The question isn’t whether employers can afford this minimum wage increase for economic reasons. It’s whether we can afford the social and political consequences of not raising minimum wages. 


Source: CUPE National