New Brunswick Business Journal: Hike would not cut jobs, economists say in letter

A public letter signed by six Nobel laureates and 650 United States economists suggests that raising the minimum wage does not cause job losses – contradicting the provincial government decision to delay hiking the minimum wage in New Brunswick.

The province’s Community Action Group on Homelessness has put forward the document in efforts to sway the provincial government on what has become a polarizing debate between small business owners and the working class.

New Brunswick’s lowest wage earners were promised a 50-cent increase to the minimum wage this September, but the Progressive Conservative government announced last week that it would delay the scheduled increase.

Premier David Alward said his government is saving jobs by not raising New Brunswick’s minimum wage.

A public letter signed by six Nobel laureates and 650 United States economists suggests that raising the minimum wage does not cause job losses – contradicting the provincial government decision to delay hiking the minimum wage in New Brunswick.

The province’s Community Action Group on Homelessness has put forward the document in efforts to sway the provincial government on what has become a polarizing debate between small business owners and the working class.

New Brunswick’s lowest wage earners were promised a 50-cent increase to the minimum wage this September, but the Progressive Conservative government announced last week that it would delay the scheduled increase.

Premier David Alward said his government is saving jobs by not raising New Brunswick’s minimum wage.

The government had been under pressure from the small business community that has continually warned that a jump to a $10 minimum wage – a 25-per-cent increase over 18 months – is a job killer.

“This letter highlights the need to look into the process behind the way this decision was made,” said Timothy Ross, the action group’s co-ordinator.

“We are not sure what kind of information the government used in the creation of this proposal to delay the next increase in the minimum wage.”

Studies by the Economic Policy Institute based in Washington, D.C., indicate minimum wage increases “can significantly improve the lives of low-income workers and their families, without adverse effects that critics have claimed.”

The institute created a public letter and backed it by soliciting the names of economists from across the United States.

“Invoking the names of well-respected economists is one way to gain some credibility on an issue,” Doug Hall, director of the institute’s economic analysis and research network.

“It’s often an equation where you have powerful business interests on one hand and then your typical, well-meaning anti-poverty groups on the other hand.

“That’s never a fair fight and we know who usually wins that fight.”

Hall said increasing the minimum wage actually helps stimulate a slow-recovering economy.

“What we find is that during tough economic times, something that still describes New Brunswick, putting money in the hands of lower income folks can actually be one of the best things you can do to keep your economy rolling,” Hall said. “What we know about low-income people is that because they are literally living paycheque to paycheque the money that you put in their hands is going to be instantly recirculated.”

Ross said that employers would also reap the benefits of a higher minimum wage through lower recruitment and training costs. The Progressive Conservative government also has plans to cut the small business tax in half.

The increase was a part of the province’s poverty reduction plan in November 2009.

The document committed New Brunswick to raising the minimum wage to the Atlantic Canadian average by September 2011, a document which Alward signed.

Alward, however, said his government was simply delaying the hike until April, when all the Atlantic Canadian provinces are expected to have a $10-an-hour standard.

The newest report by the Canadian Federation of Independent Business projected that the 50-cent increase was expected to lead to about 3,000 job cuts.