I know I shouldn’t read the Star. Especially not when it’s reporting on the latest report from the Canadian Center for Policy Alternatives (the “CCPA”). Not because I don’t agree with them (it’s no fun reading people you agree with), but because the degree of stupidity and ignorance which oozes from their writing is just traumatizing to the brain of a thinking person.
Consider this story from today’s Star about the CCPA’s latest report about the ‘eye-popping’ shift to “low-wage” work:
The research compiled by the left-leaning think tank shows that the share of Ontario workers labouring for the minimum wage is now five times higher than in 1997. It rose from less than 3 per cent of all employees to about 12 per cent in 2014.
The share of low-paid work has also ballooned: almost a third of all employees in the province are now making within $4 of the minimum wage, compared with less than 20 per cent of the workforce in 1997.
Oooh, that sounds bad, the number of people working for minimum wage has increased 5-fold, surely this is the end of capitalism.
It’s too bad that no one at the Star applied even an ounce of critical thinking to this story. Think about it for a second, what could have caused the number of people working for minimum wage to have increased? Could that possibly have anything to do with the sharp increase in the minimum wage over the past decade – an increase aggressively supported by the likes of the Toronto Star and the CCPA?
Well, let’s go to the numbers shall we? From the CCPA report (with emphasis in red added):
|Year||% <= minimum wage||% <= minimum wage +$4||Minimum Wage ($)||% Change|
I can’t be the only one to notice that the years in which there are material increases in the percentage of people working for minimum wage (i.e., by more than one percentage point) are the years in which there are significant increases in the minimum wage rate. And this should be controversial to exactly no one. One would expect that if you increased the minimum wage rate, more people will be paid the minimum wage. And when you increase the minimum wage by 60% (in nominal terms) in the course of a decade, well, gee, wouldn’t you expect more people to be paid minimum wage? I’d be worried if the number of people making minimum wage was increasing and the minimum wage was flat, but that isn’t the case (and, interestingly, in those years where the minimum wage doesn’t increase, the number of people making minimum wage generally falls) .
Moreover, it’s and odd complaint for the CCPA and Star to be making, that more people are making $11 an hour now then were making $6.85 and hour in 2003. It was true in 2003 that there were more people making $11.00 an hour or less than there were people making $6.85 an hour, so the fact that that is still true today is not really suggestive of growth in a “low-wage” economy. The number of people working for “low wages” may well have increased, but this study doesn’t show that. Indeed, take another look at the CCPA’s numbers – in 2003, 18.6%% of the population made $10.85 an hour (i.e., $6.85+$4) or less. In 2014, a smaller number, 11.9% made $11 an hour or less (almost all of them making exactly $11 an hour). And from this the CCPA concludes that the number of people making low wages has increased? Their data suggests the exact opposite(Granted, that comparison only looks at nominal wages, and not real wages, but it’s worth recalling that the minimum wage rate has increased far above the rate of inflation since 2003. In any event, I can only work with the sloppy statistics the CCPA gives me.)
Furthermore, think about the logic of the CCPA study, if you set the minimum wage at $100 an hour, 95% of Ontario’s employees would be working for minimum wage (granted, the unemployment rate would be close to 100%, but ignore that for a second). On the CCPA’s measure, this would be evidence of rapid growth in the “low-wage” economy. To the extent people are actually employed in that world, few would characterize it as a “low wage” economy.
And think about the gall of the Star and the CCPA – to the extent that the fact that a growing number of Ontarians are working for minimum wage is a problem (and it isn’t, so long as the minimum wage is increasing), it’s a function of the policies that they’ve promoted for years, namely sharp increases in the minimum wage rate. They’re complaining about a fake “problem” that they’re principally responsible for creating. What’s the story about the kids who kills his parents, then begs for leniency on the grounds that he’s an orphan?
These are such self-evident point, that it boggles the mind that the Star and the CCPC would actually publish a story or report like this. I mean, I can chalk the Star’s publishing decision up to ignorance – journalists are characteristically know-nothings when it comes to economics, and I have no trouble believing that the Star saw a press-release with a punchy headline (which just happens to coincide with the Star’s own ideological proclivities). The Toronto Star could do a lot worse than to start following Frances Wooley’s tips on improving economics coverage in the media.
But it’s harder to forgive the CCPA – assuming they’re not morons (perhaps a brave assumption), they have to know that the rising proportion of people working for minimum wage is a function of higher minimum wage rates, not a “low-wage” economy – their own data tells them that. If they’re not morons, though, then they knowingly published their garbage study on the expectation that it would be picked up by gullible journalists (read: the Star). Well, shame on them. This is the sort of sloppy research that gives think-tanks a bad name. If you have a valid point about inequality and the state of Ontario’s economy, by all means, make it. But if you can’t support your case without this sort of amateur hour research, well, that says something about the merits of your position.
Finally, note to lefties out there, I know the recent NDP victory in Alberta have you all slobbering over yourselves at the prospect of being in government. But recall the Bob Rae experience in Ontario – unless you have good policies, backed by solid research, seizing the reins of power is likely to result in a monumental face-plant followed by decades of political oblivion. Take policy guidance from the likes of the CCPA at your own risk.