The main argument against increasing minimum wage is that it will lead to job losses, especially for those who it is intended to help: those working for low wages. But is this really true?

The answer is no.

Increases in the minimum wage can actually increase employment both in the short-term when they boost consumer spending and in the long-term when they spur productivity growth.

The argument that minimum wage hikes kill jobs held sway with economists and politicians for decades, which led to steep declines in the real value of minimum wages through the 80s and early 90s. But then ground-breaking and detailed analysis by economists David Card and Alan Krueger found that employment actually increased slightly among minimum wage employers following wage hikes because increased spending by minimum wage workers exceeded job losses from the increased costs. 

Since then this issue has been studied extensively, with some finding stronger job creation following minimum wage hikes, some finding job losses, and others no impact. Now a detailed study by Unifor economists Jordan Brennan and Jim Stanford has found very little evidence that minimum wage changes on their own significantly affect employment levels. In 90 per cent of 70 tests they found minimum wage changes had no significant impact, and in the other 10 per cent the results were mixed, both positive and negative.

Instead, employment levels are more strongly affected by the general state of the economy represented by GDP growth, with this relationship stronger in larger provinces. Increasing minimum wages will make life better for low-paid workers and reduce inequality, but it also needs to be combined with measures to strengthen the economy and create jobs, such as increasing public investment and expanding public services.