Jobs report says minimum wage hikes under Alberta NDP killed 26,000 jobs

It suggested Alberta expand the current minimum wage differential for young workers — those under 18 have a $13-an-hour minimum wage, a change introduced by the UCP in 2019 — to include older workers or to have differential wages for entry-level workers or workers in training.

Jobs reports says minimum wage hikes under Alberta NDP killed 26,000 jobs
The Canadian Press / Jeff McIntosh
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According to an Alberta jobs report, the lame-duck NDP cost 26,000 people their jobs by raising the minimum wage by 47% during their tenure. An expert panel uncovered the impacts of successive minimum wage hikes under then premier Rachel Notley, rising from $10.20 to $15.00 an hour.

According to the report, the wage hike led to "sharp increases in labour costs at a time when businesses were most poorly positioned to do so" when Alberta "[struggled during] a massive economic downturn."

Younger workers (15-24) bore the brunt of the minimum wage hikes. They lost their jobs when the Alberta NDP shifted away from inflation-based wage increases leading to the number of Albertans on minimum wage rising 9.2 percentage points to 11.5%.

Using a synthetic control technique, the panel estimated total job losses between 23,000 and 26,000 due to the policy from 2015 to 2018.

"People moved up the wage distribution, but the problem is not everyone made it," said University of Alberta economist Joseph Marchand, who chaired the nine-person panel.

"If you want a ballpark number [regarding] the benefits versus the costs, about 250,000 workers moved up. One person lost their job for every ten people who got a raise due to the minimum wage. There are many different ways to respond to that."

Especially businesses outside of metropolitan Edmonton and Calgary, they widely decreased the size of their workforce and reduced or eliminated plans to hire additional workers. They also removed plans to hire young workers, postponed renovation and expansion plans, and raised prices to pass the buck on to consumers.

In a written statement, Alberta Jobs, Economy and Northern Development Minister Brian Jean said there is value in the panel's analysis and that it must be considered "in light of current economic conditions" in Alberta.

"My biggest takeaway from the panel report is that making big unexpected changes to minimum wages can hurt employment. These issues require lots of consultation and deliberation," said Jean.

The panel also assessed the wages of liquor servers and hospitality employees.

"Because it lowered the amount of direct labour costs that restaurants had to incur for liquor servers, the liquor server wage gave restaurateurs flexibility to compensate back-of-the-house staff and avoid increases in menu prices competitively," according to the report.

"This enabled restaurants to invest in enhancing the guest experience which, in turn, arguably helped liquor servers earn more in tips and realize higher overall earnings."

According to businesses' survey and payroll data, "the elimination of the liquor server wage likely reduced hours for liquor servers in Alberta. Liquor servers had less opportunity to earn tip income, negatively impacting their overall earnings."

The report found 71% of restaurants reduced hours for liquor servers in response to the eliminated differential minimum wage, leading to a 1.2% drop in average weekly hours for the workers between 2015 and 2019.

When the Alberta NDP eliminated liquor server wages, the panel concluded that restaurateurs lost the labour cost flexibility it had provided, leading to layoffs and reduced hours for front-of-the-house and back-of-the-house service staff. It added new pressures on liquor servers and impacted guest experiences, resulting in lower tip income.

Based on the results of industry surveys, most Alberta restaurants signalled they'd bolster shifts and hours for liquor servers if Alberta re-established a liquor server wage in Alberta. It would mean more tip income and higher overall earnings.

The panel's report included a series of recommendations for how the provincial government should handle minimum wage moving forward, including by tying future increases to inflation.

It suggested Alberta expand the current minimum wage differential for young workers — those under 18 have a $13-an-hour minimum wage, a change introduced by the UCP in 2019 — to include older workers or to have differential wages for entry-level workers or workers in training.

Amid the jobs report's release, the province launched a second Alberta is Calling campaign to attract more skilled labourers from Ontario and Atlantic Canada to join its thriving economy. The food service and hospitality industries are among the targeted industries from the campaign. 

"Alberta's vibrant and diverse restaurant sector is one of the province's largest employers," said Mark von Schellwitz, a vice-president for Restaurants Canada.

"However, after the pandemic, there are almost 18,000 vacancies in the restaurant sector for vital roles like managers, chefs and prep cooks. That is why Restaurants Canada is pleased to support the relaunched Alberta is Calling campaign."

According to a government release, Alberta workers have the highest earnings and workforce participation rate across all provinces. 

According to a Statistics Canada report released in December, Alberta workers continue to have the highest weekly earnings of any province, at $1,268. Alberta families earned a median after-tax income of $104,000 in 2020 — $7,000 more than Ontarian families.

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