Myth Buster

Printable version: Myth Buster – English

Myth # 1: Raising the minimum wage will raise the unemployment rate.
In January 2014, 600 economists (including 7 Nobel Prize) wrote to President Obama to explain the importance of increasing the minimum wage. Many studies conducted in recent years are clear: increasing the minimum wage has little or no effect on the employment rate, even in periods of economic downturn. In fact, research shows that increasing the minimum wage would have a “stimulating” effect on the economy. (Source: Economy Policy Institute, 2014).

Myth # 2: Small and medium businesses cannot support a higher minimum wage.
In general, any increase in the wages of low-income workers is followed by an increase in local consumption. Increasing the minimum wage has the effect of injecting more money into the economy: workers have more money and therefore, spend more, which increases the demand for goods and services offered by these companies. (Source: OECD, 2014)

Myth # 3: The minimum wage increase will lead to higher prices for goods and services.
The impact of the minimum wage increase on the prices of goods and services is minimum. Several other factors have a significant impact on prices: the rapid growth of demand relative to supply, prices of raw materials, energy prices, the price of imported products, the tax rate for businesses, local taxes, etc. The consumer price index (CPI), which is the main indicator of cost of living, increases significantly faster than the minimum wage. Since 2010, the CPI rose 8.4%, while the minimum wage rose only ($9.50 to $10.55) As a result of inflation, every time the minimum wage is not increased, people become poorer. (Source: Statistics Canada, 2015)

Myth # 4: A minimum wage increase will decrease the competitiveness of Quebec and Canadian companies in the international market.
The sectors affected by a minimum wage increase are not in direct competition on the world market. The main sectors with minimum wage workers are retail stores, hotels and private health care. As mentioned above, the cost of labour is not the only factor that pushes up prices. (Source: IRIS, 2015)

Myth # 5: Raising the minimum wage will hurt economic growth in Quebec.
The OECD explains clearly that inequalities undermine economic growth. The most recent work of the Organization shows that economic growth increases faster in countries where there is less income inequality. A substantial increase in the minimum wage is an effective tool to reduce inequality. (Source: OECD, 2014)

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