1. Read the following articles and write one essay for both sources: https://www

Question

1. Read the following articles and write one essay for both sources: https://www.cdhowe.org/expert-op-eds/ripple-effect-ontario%E2%80%99s-minimum-wage-increase-globe-and-mail-op-ed and https://www.theglobeandmail.com/opinion/ontario-gets-it-right-with-move-to-higher-minimum-wage/article35499483/. All parts below should be written in an essay format (one big essay)

A. Describe the policy issue that your chosen sources explore
B. Is the source authoritative? Why or why not? Is the source unbiased? How can you tell?
C. Identify the thesis statement. What evidence does the author give to support the thesis statement?
D. In two to three paragraphs, explain why people disagree about the issue. Summarize the evidence on each side of the debate, and state which side you believe to be more credible and why.

Explanation / Answer

The economic impact of minimum-wage hike

Introduction-

Recently, Ontario increased its minimum wage to $14 from $11.60 and another hike – to $15 an hour – by 2019 is on the cards. This led to the debate where research economists and professors are pitted against each other. One side is of the view is that increase in minimum wage leads to -

While the other side is of the view that increase in minimum wage is beneficial and results in-

These two views find their basis in different economic studies conducted at different times. Earlier empirical work reinforced beliefs and arguments in the former while contemporary studies substantiate the latter view.

Minimum wage debate in literature-

Two authoritative sources picked up to look deeper into debate are-

Lars Osberg is McCulloch Professor of Economics, Dalhousie University. Craig Riddell is Professor Emeritus of Economics, University of British Columbia. Michal Rozworski is Research Analyst at the Ontario Confederation of University Faculty Associations. Jim Stanford is Harold Innis Industry Professor at McMaster University.

Both these essays are biased as they take extreme sides on the topic of policy issue under study—effect of minimum-wage increase. First essay provides how increasing the threshold at which higher minimum wages exacerbate, rather than reduce, inequalities. Second essay provides evidence of study to support the view that higher minimum wages are both credible and compelling.

Positive impact of increasing minimum-wage-

The notion that higher wages will result in job losses, raise consumer prices and will do little to help low-wage workers is outdated. Most research economists now has abandoned this simple-minded picture. For over two decades from now, many highly credible studies have found that the disemployment effects of higher minimum wages are generally very close to zero.

There are seminal works that have arrived on this conclusion that there is no impact of higher minimum wages on employment – and in some cases higher minimum wages were associated with more employment.

A seminal study in this field is-

Negative impact of increasing minimum-wage

business owners may substitute low-skilled employees with high-skilled workers because of an increase in the relative price of low-skilled labor. therefore, raising the minimum wage could also increase the demand for skilled labor and, consequently, their wages.

employers have to raise all wages to maintain a relative hierarchy of wages according to employee skill levels. Higher minimum wage results in higher labor costs that are eventually passed onto customers, causing inflationary pressures. the impact on inflation eventually results in higher wages across the wage ladder.

A study across Organization for Economic Co-operation and Development-member countries shows the minimum-wage hike actually begins to increase income inequality beyond a certain "maximum-effectiveness" level.

After reaching this level, additional wage increases are too high and can lead to significant job losses, increasing inequalities as a result.

Conclusion-

In my judgment, the economic arguments in favor of higher minimum wage hold true. Ontario's move has many precedents which prove the same. For e.g. the City of Vancouver will pay more than $20 an hour to its workers and outside suppliers. Alberta's minimum is heading to the same level. Other cities have adopted similar "living wage" policies. In the U.S. many states are moving to $15 (U.S.), and dozens of cities have already done so.

There is no credible evidence that this policy of increasing minimum-wage is hurting job creation. a minimum-wage increase has the potential to reduce income inequality, as more workers at the bottom of wage distribution earn wages close to middle-class wages. this is beneficial for economy as a whole. Following all this care must be taken to maintain minimum wage- hike below the “maximum-effectiveness” level. Therefore, it would be wise to give the labor market time to adjust to the recent increase before rushing forward with the plan for a second increase, to $15 an hour.

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