Manhattan Institute

There are two sides of the minimum wage debate. On the one hand, workers in lower-paid fields such as the hospitality industry argue that they cannot live on current wage levels. Business owners oppose a minimum wage hike, believing that more wages will kill their businesses.

Some Think Wage Hikes Increase Prices and Harm the Economy

The business owners’ position is not crazy. Overregulation can weigh down employers and stunt growth. But, according to some data out of Ontario, Canada, hiking pay to a living wage does not create a burden on the economy.

Ontario, Canada’s most populated province, recently increased the minimum wage to $14. Such an increase is in line with some neighbors to the south, like New York and Seattle, which are at or near $15 an hour.

Ontario’s Economy Is Booming

Rather than withering due to increased wages, businesses of all sizes in Ontario are experiencing growth. Unemployment is low and the wage hike may have come at the right time for companies who were struggling to keep key employees.

In the food services industry, Ontario added a staggering 14,000 jobs since the higher minimum wage went into effect. It seems that another side of the argument is coming true — that wage increases add more cash into the economy as workers on the lower end of the scale tend to spend their wages.

Population Growth Might Be Fueling the Economy

Another possible reason for the stable financial state of affairs in Ontario is the influx of new residents. The population has grown almost two percent over last year. These new residents contribute to the economy, as workers, spenders or both.

It is clear that minimum wage has had no adverse effect on Ontario. The province might serve as a model for other cities and regions, showing how increasing livability results in shared prosperity.