OTTAWA – Prime Minister Justin Trudeau says his government isn’t looking at raising the minimum wage, hinting that it won’t be a “magic bullet” to help those who face various economic barriers.
Trudeau said helping low-income Canadians requires “work across many jurisdictions, and across many different challenges.”
He said the government is instead focused on helping people succeed by giving families more money through the new child benefit, making investments in infrastructure to boost productivity and helping low- and middle-income students afford post-secondary education.
“It’s not just about putting a little more money in peoples’ pockets, it’s about making sure that they have the conditions to be able to succeed,” Trudeau said during a question-and-answer session hosted by Thomson Reuters in Toronto on Friday.
Trudeau said the government is looking at different things to help workers, but raising the minimum wage is “not one we’re looking at at this time.”
Internal government documents suggest that, should Trudeau revisit his government’s stance on the minimum wage, the Liberals could end up doing more economic harm than good.
A July 2015 discussion paper from Employment and Social Development Canada says increases to minimum wages can have “negative overall employment impacts,” and end up missing those workers who need the extra money and greater income security.
“It is a blunt instrument that tends to benefit youth still living at home with their parents as opposed to low-income families,” reads the document, marked “Secret” and obtained by The Canadian Press under the Access to Information Act.
The conclusion is at odds with other research that suggests increases in the minimum wage have few employment effects.
During last year’s federal election campaign, the NDP proposed raising the federal minimum wage to $15 an hour, which would cover workers in federally regulated businesses, such as banks and telecommunications companies.
The Liberals rejected the idea, arguing it would leave out the vast majority of workers, whose minimum wages are set by provincial governments. Alberta, for instance, is raising its hourly minimum wage to $15 by 2018.
The discussion paper from last year says income growth for so-called middle-income families has kept pace with the top earners in the country over the last three decades. This isn’t because these families have seen their wages rise, but because they have been working more, officials wrote. As well, they wrote, women’s labour force participation rates have climbed so much over the last 30 years that it raises questions about whether they can go much higher.
The two issues combined led the paper to question whether middle-class families — which politicians of all stripes say they want to help — will see their incomes stagnate.
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