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A Curious Thing Happened When Ontario Hiked Minimum Wages By Over 20%

Minimum wage hikes, and the inevitable job losses that result from them, are a consistent topic of conversation for us…here are just a couple of recent examples:

Of course, no amount of empirical evidence (or common sense for that matter) will ever be sufficient to convince left-leaning politicians that basic economic concepts governing the relationship between supply and demand also apply to the market for labor.  No, in the mind of politicians, every business ever created is an evil corporation owned exclusively by “millionaire, billionaire, private jet owners” who earn infinite profits and will casually accept whatever minimum wage hikes or tax increases are thrown at them…

That said, here in the real world, competition prevents corporations from earning excess profits (at least for an extended period of time anyway) and businesses respond to higher labor costs through capital investments designed to reduce labor (think ordering kiosks at McDonald’s) and/or other cost cutting initiatives.

In fact, for the latest example of the unintended consequences of higher minimum wages, one has to look no further than a pair of Tim Horton’s franchises in Ontario, Canada.  Faced with a 21% hike in minimum wages starting January 1st, with hourly rates going to $14 from $11.60, owners of the two restaurants said they had no choice but to cut employee benefits and eliminate paid breaks to offset their higher costs.  Per the Financial Post:

Employees at the Tim Hortons locations owned by the children of the co-founders of the franchise say they have reduced employee benefits and cut back paid breaks to help offset Ontario’s $2.40 jump in hourly minimum wage.

…click on the above link to read the rest of the article…

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