Montreal, December 8, 2016 – Labour Minister Dominique Vien will soon announce Quebec’s minimum wage for the year 2017. The MEI would like to remind the government that a dramatic increase would threaten thousands of jobs in the province. Moreover, an Economic Note published today shows that such a policy would have a disproportionate effect on jobs in rural regions, and accelerate the rural exodus.
“In the 25 most-affected RCMs, between 56% and 41% of the workforce would be at risk,” says Mathieu Bédard, Economist at the MEI and co-author of the publication. “Low-income adult workers in rural regions would be the primary victims of this increase.”
The Rocher-Percé RCM leads the pack in this ranking, with 56% of the labour force between 25 and 64 years of age at risk if this increase were implemented in 2017, versus 46% in 2021. “Such a minimum wage hike would also have the effect of discouraging regional economic development, thus accelerating the rural exodus which certain regions of Quebec have been struggling with since the middle of the 20th century,” adds Alexandre Moreau, Public Policy Analyst at the MEI and co-author of the Note.
The volume of economic activity is not the same across Quebec. In certain rural areas, productivity is low. This is not due to workers and the quality of their work, but to economic conditions in the region. “Despite this difference between big urban centres and rural regions, the minimum wage is applied uniformly across the province, thus having particularly negative effects on employment in rural regions,” points out Mr. Bédard.
At the current level of $10.75 an hour, these effects are present but relatively minor. However, if the minimum wage were set at a much higher level, these effects would quickly become much more apparent.
To help low-income workers, the authors suggest instead that the government raise the basic personal amount on which no one pays income tax, or that it increase and expand the eligibility conditions for the solidarity tax credit or the work premium.
“Resorting to these tools would be far better, and would avoid creating a veritable atomic bomb striking the most economically vulnerable regions of Quebec, to borrow economist Pierre Fortin’s expression,” concludes Mr. Moreau.
The Economic Note entitled “Would a $15 Minimum Wage Accelerate the Rural Exodus?” was prepared by Mathieu Bédard and Alexandre Moreau, respectively Economist and Public Policy Analyst at the MEI. This publication is available on our website.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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