Non-Canadian readers of this blog (you're the majority, by the way) will surely remember Rob Ford, the larger-than-life Mayor of Toronto who was struck down by cancer at an early age. For a foul-mouthed, racist, misogynistic, booze-fueled drug addict, Rob was surprisingly popular with the voters. Even people who deplored everything he stood for would admit that he was impossible to dislike if you met him in person.
During Rob's improbable decade of prominence in Toronto politics, his older brother Doug was always the eminence grise in the background. Doug shares his late brother's right wing populist policy stance, but is nowhere near as likable. The old joke might well apply to him: why do people take an instant dislike to Doug Ford? Because it saves time.
Well, like him or not, Doug Ford is coming back into active politics. He had been planning for some time to take a run at the Toronto mayoralty late this year, but now a bigger opportunity presents itself. Last week, the slightly creepy leader of the Ontario Progressive Conservative Party, Patrick Brown, was felled by a sex scandal. With a provincial election due in June, the party finds itself scrambling to select a new leader, and Doug Ford has thrown his hat into the ring.
Ford launched his campaign on Monday with a press conference held in the basement of his mother's suburban home. (You really couldn't make this up). His pitch to the voters was entirely predictable: the PC party has been captured by "the elites", who don't want Doug in the race, but he's going to take it back from them and return it to the people.
This kind of talk might seem incongruous coming from the mouth of a man who inherited his considerable wealth from his businessman father, but it's an approach that worked for Rob Ford, and of course for Donald Trump. It would be cruel to say that the "elites" Ford is referring to mainly consist of people who can read and write, but it wouldn't be entirely wrong. As with Rob Ford and Trump, the bulk of Doug's support is going to come from the less educated portions of society, the kind of people who think "libtard" is a clever putdown.
It remains to be seen whether the rhetoric and barely-concealed thuggishness that works with "Ford Nation" in Toronto will sell in the rest of the Province. It's possible that the 200,000 PC party members will fancy his chances enough to make him leader, but rather less likely that he can actually win the Provincial election. Then again, much the same was said about Rob Ford when he ran for mayor. In any case, Doug has a ready-made fallback position: since the PC leadership election will be completed by the end of March, and the Provincial election is in mid-June, he can just re-enter the mayoral race if he isn't successful at the higher level.
It will be all Doug Ford, all the time in 2018. Buy a tin hat and cancel your cable TV and internet subscriptions if you want to stay sane.
Tuesday 30 January 2018
Saturday 27 January 2018
Bombardier's pyrrhic victory
Against all expectations, the US International Trade Commission has thrown out the close to 300 percent tariffs that the Department of Commerce had sought to impose on Bombardier's C-series passenger aircraft. Victories such as this are rare indeed, and likely to become even more so as Trump's protectionist instincts take hold.
The proposed tariffs were imposed in response to a complaint from Boeing that Bombardier was an unfair competitor because of the extensive public financial support it has received. That may be true, but Boeing's case was weakened rather severely by the fact that it does not produce, and has no current plans to produce, an aircraft in the 100-seat segment that the C-series is designed to serve. Boeing did not even attempt to compete for the 75-plane Delta Airlines order that Bombardier won, yet quickly moved to claim that the outcome was harmful to it. Surprisingly, the ITC rejected this, for once ruling on the basis of incontrovertible facts.
Boeing is, of course, playing a long game here. Having seen Airbus Industrie grow from a minor irritant into an across-the-board competitor, it has no interest in seeing Bombardier do the same. It is likely to step up its efforts to strike some kind of a deal with Embraer of Brazil, which does produce aircraft that compete with the C-series. It is also likely to continue its efforts to undermine Bombardier in Washington and in the courts.
So, it's all good news for Bombardier and Canada, then? For sure, winning at the ITC is a much better outcome than losing would have been, but the upside is not as great as it might seem. Bombardier was clearly convinced it was going to lose the tariff battle, which is why it decided late last year to give away a large portion of the C-series program to Airbus. The joint venture is now moving ahead with plans to assemble the C-series jets -- including the all-important Delta order -- at a new plant in Alabama. The jets already have about 50 percent US content even when built in Canada, and any future orders from US airlines will undoubtedly be directed to the Alabama factory. The benefits of the ITC decision to Canada (and the taxpayers who have kept Bombardier alive) will therefore be very limited.
Canadian union leader Jerry Dias has responded to the ITC decision by asserting that there is no longer any need to assemble the C-series in 'Bama. He may be right, but there is no prospect of Airbus and Bombardier changing their plans at this stage. Truly, Bombardier is a company that can't win for losing.
The proposed tariffs were imposed in response to a complaint from Boeing that Bombardier was an unfair competitor because of the extensive public financial support it has received. That may be true, but Boeing's case was weakened rather severely by the fact that it does not produce, and has no current plans to produce, an aircraft in the 100-seat segment that the C-series is designed to serve. Boeing did not even attempt to compete for the 75-plane Delta Airlines order that Bombardier won, yet quickly moved to claim that the outcome was harmful to it. Surprisingly, the ITC rejected this, for once ruling on the basis of incontrovertible facts.
Boeing is, of course, playing a long game here. Having seen Airbus Industrie grow from a minor irritant into an across-the-board competitor, it has no interest in seeing Bombardier do the same. It is likely to step up its efforts to strike some kind of a deal with Embraer of Brazil, which does produce aircraft that compete with the C-series. It is also likely to continue its efforts to undermine Bombardier in Washington and in the courts.
So, it's all good news for Bombardier and Canada, then? For sure, winning at the ITC is a much better outcome than losing would have been, but the upside is not as great as it might seem. Bombardier was clearly convinced it was going to lose the tariff battle, which is why it decided late last year to give away a large portion of the C-series program to Airbus. The joint venture is now moving ahead with plans to assemble the C-series jets -- including the all-important Delta order -- at a new plant in Alabama. The jets already have about 50 percent US content even when built in Canada, and any future orders from US airlines will undoubtedly be directed to the Alabama factory. The benefits of the ITC decision to Canada (and the taxpayers who have kept Bombardier alive) will therefore be very limited.
Canadian union leader Jerry Dias has responded to the ITC decision by asserting that there is no longer any need to assemble the C-series in 'Bama. He may be right, but there is no prospect of Airbus and Bombardier changing their plans at this stage. Truly, Bombardier is a company that can't win for losing.
Friday 26 January 2018
Jamaica farewell
The brief hiatus in posting here over the past couple of weeks (please tell me you noticed) was result of our annual trip to warmer climes, specifically Jamaica. Just a couple of days after we arrived, the Jamaican government announced a state of emergency in the parish of St James, which includes the tourist hub of Montego Bay. This action received a remarkable amount of media coverage worldwide, not least back home in Canada, where one breathless news anchor seemed incredulous that Canadian airlines were still flying tourists to such a hellhole.
Jamaica has always had its violent side. The capital, Kingston, has been a rough old place almost since the days of the pirate Blackbeard. Many parts of the island, including the parish where we stayed, are tranquil, but violent crime levels in some areas, including Montego Bay, have been rising. The murder numbers for the island as a whole are startling -- more than 1600 cases in 2017, in a resident population of fewer than four million -- but the fact of the matter is that almost all of these are gang-on-gang killings. If you abide by the long-standing advice not to wander around Mobay at night, you have very little to worry about.
The murder rate is surprising because the Jamaicans you meet as a tourist, be it at the airport, or driving a bus, or at your resort, are the nicest people you could ever encounter: helpful, friendly and always smiling. It's hard to believe that they leave their places of work each day and have to cower in their homes because of the risk of getting caught up in gunplay, and the truth is, most of them don't have to live that way. Like the visitors, they know where they can safely venture and where they should avoid.
The Canadian media coverage that we caught on cable TV was particularly odd because Jamaica is just one of a large number of territories that the External Affairs people in Ottawa warn visitors about. Just check out this mind-boggling list. Other countries subject to the same "use a high degree of caution" label as Jamaica include France, the UK and the UAE, alongside such tourist traps as St Lucia and the British Virgin Islands. It's not clear why Jamaica was singled out for particular obloquy this past week. Heck, I could take you to places in our neighbouring city of St. Catharines where you really would't want to linger at night.
Jamaica has always had its violent side. The capital, Kingston, has been a rough old place almost since the days of the pirate Blackbeard. Many parts of the island, including the parish where we stayed, are tranquil, but violent crime levels in some areas, including Montego Bay, have been rising. The murder numbers for the island as a whole are startling -- more than 1600 cases in 2017, in a resident population of fewer than four million -- but the fact of the matter is that almost all of these are gang-on-gang killings. If you abide by the long-standing advice not to wander around Mobay at night, you have very little to worry about.
The murder rate is surprising because the Jamaicans you meet as a tourist, be it at the airport, or driving a bus, or at your resort, are the nicest people you could ever encounter: helpful, friendly and always smiling. It's hard to believe that they leave their places of work each day and have to cower in their homes because of the risk of getting caught up in gunplay, and the truth is, most of them don't have to live that way. Like the visitors, they know where they can safely venture and where they should avoid.
The Canadian media coverage that we caught on cable TV was particularly odd because Jamaica is just one of a large number of territories that the External Affairs people in Ottawa warn visitors about. Just check out this mind-boggling list. Other countries subject to the same "use a high degree of caution" label as Jamaica include France, the UK and the UAE, alongside such tourist traps as St Lucia and the British Virgin Islands. It's not clear why Jamaica was singled out for particular obloquy this past week. Heck, I could take you to places in our neighbouring city of St. Catharines where you really would't want to linger at night.
Friday 12 January 2018
Cold, hard cash? No thanks!
The 21 percent increase in the minimum wage that went into effect here in Ontario at the start of the year is generating lots of news coverage. The biggest scandal so far has involved the ubiquitous Tim Hortons "coffee" chain. Some of the company's franchisees (including Tim Horton's own daughter) immediately cancelled their staff's paid lunch breaks and curbed medical benefits; some even went so far as to deny staff members the dubious benefit of a free cup of joe as they were going off shift. This has led to calls for "Tim-free Tuesdays" to put pressure on the company; I'd join in, but as you may be able to judge, my preference is for a Tim-free year anyway.
Here in Niagara we've seen an odder and, I suspect, unforeseen consequence of the wage increase. Garbage collection in the region was privatized years ago, and until this past fall had been working satisfactorily. Then things started to go wrong, with collections delayed or missed entirely. The contractor blamed various factors, including the weather (too warm in the fall, too cold in late December) and wear and tear on the aging truck fleet.
This week, however, a new factor was suggested. The contractor pays its people more than the new minimum wage (C$14/hour), but the increase in the minimum has prompted a significant number of workers to conclude that they can live just fine on that wage if they can trade in the joys of toting garbage in the frigid temperatures for some -- any -- inside gig*. At Tim Hortons, maybe?
It took me some time to come up with an economics-based rationale for this behavior, but then I remembered the term "satisficing", which I haven't heard since my undergrad days. Much of economics assumes people or firms are trying to maximize income, but satisficing (a term from behavioral science) attempts to achieve some acceptable minimum level of income, not necessarily the maximum. Our satisficing garbage collector could earn more by staying on the truck, but is happy to take the newly-boosted minimum wage if he can stay indoors.
Without knowing of further examples such as this, it is difficult to assess the overall economic impact. However, it is hard to imagine that our local trashmen are the only people to have figured this out. If such behavior is in fact widespread, the impact of the higher minimum wage may be much stronger than the Provincial government is expecting.
If companies like our garbage contractor are unable to attract the employees they need, they will have little choice but to boost wages. That will rapidly translate into higher property taxes across Niagara Region. And if this sort of thing is in fact happening in other locales and in other relatively well-paid but unpleasant professions, then estimates that the higher minimum wage will add just 0.1 percent to inflation and cut just 0.1 percent from GDP may prove to be underestimates.
Ontario politicians are airily dismissing business sector complaints about the new minimum, saying that companies should just raise their prices by a few pennies. If this just happens in places like Tim Horton's, that's one thing, but if it turns out that costs and prices are being pushed higher in the broader economy, Bank of Canada Governor Stephen Poloz may well be forced to react. At the moment the higher minimum wage has broad popular support, but that may not last if voters start to feel a squeeze on their pocketbooks.
* It's hard to blame them. Last week our garbage was picked up two hours after dark, from a street that could have doubled as a hockey rink, in temperatures close to minus 20 Celsius.
Here in Niagara we've seen an odder and, I suspect, unforeseen consequence of the wage increase. Garbage collection in the region was privatized years ago, and until this past fall had been working satisfactorily. Then things started to go wrong, with collections delayed or missed entirely. The contractor blamed various factors, including the weather (too warm in the fall, too cold in late December) and wear and tear on the aging truck fleet.
This week, however, a new factor was suggested. The contractor pays its people more than the new minimum wage (C$14/hour), but the increase in the minimum has prompted a significant number of workers to conclude that they can live just fine on that wage if they can trade in the joys of toting garbage in the frigid temperatures for some -- any -- inside gig*. At Tim Hortons, maybe?
It took me some time to come up with an economics-based rationale for this behavior, but then I remembered the term "satisficing", which I haven't heard since my undergrad days. Much of economics assumes people or firms are trying to maximize income, but satisficing (a term from behavioral science) attempts to achieve some acceptable minimum level of income, not necessarily the maximum. Our satisficing garbage collector could earn more by staying on the truck, but is happy to take the newly-boosted minimum wage if he can stay indoors.
Without knowing of further examples such as this, it is difficult to assess the overall economic impact. However, it is hard to imagine that our local trashmen are the only people to have figured this out. If such behavior is in fact widespread, the impact of the higher minimum wage may be much stronger than the Provincial government is expecting.
If companies like our garbage contractor are unable to attract the employees they need, they will have little choice but to boost wages. That will rapidly translate into higher property taxes across Niagara Region. And if this sort of thing is in fact happening in other locales and in other relatively well-paid but unpleasant professions, then estimates that the higher minimum wage will add just 0.1 percent to inflation and cut just 0.1 percent from GDP may prove to be underestimates.
Ontario politicians are airily dismissing business sector complaints about the new minimum, saying that companies should just raise their prices by a few pennies. If this just happens in places like Tim Horton's, that's one thing, but if it turns out that costs and prices are being pushed higher in the broader economy, Bank of Canada Governor Stephen Poloz may well be forced to react. At the moment the higher minimum wage has broad popular support, but that may not last if voters start to feel a squeeze on their pocketbooks.
* It's hard to blame them. Last week our garbage was picked up two hours after dark, from a street that could have doubled as a hockey rink, in temperatures close to minus 20 Celsius.
Wednesday 10 January 2018
Throwing in the towel on NAFTA
It has emerged today that on December 20, Canada lodged at the World Trade Organization (WTO) a massive trade complaint against the US.
Even as the NAFTA renegotiation talks drag on, the US has been busy imposing unilateral tariffs on Canadian products, from softwood lumber to newsprint to passenger aircraft. In light of those tariffs, it may be little surprise that Canada feels the need to retaliate, even though the US is certain to ignore any verdict against it that the WTO may care to deliver.
Still, it seems unlikely that Canada would have lodged such a complaint if it saw any real hope that the NAFTA can be saved. Is the game already over?
Even as the NAFTA renegotiation talks drag on, the US has been busy imposing unilateral tariffs on Canadian products, from softwood lumber to newsprint to passenger aircraft. In light of those tariffs, it may be little surprise that Canada feels the need to retaliate, even though the US is certain to ignore any verdict against it that the WTO may care to deliver.
Still, it seems unlikely that Canada would have lodged such a complaint if it saw any real hope that the NAFTA can be saved. Is the game already over?
Flushed down the John
Back in October, I mused about the possibility that Canada had reached peak political correctness, after the Toronto School Board announced that it was dropping the word "Chief" from its job titles on the grounds that it was offensive to Canada's indigenous peoples. Seems I may have spoken to soon: we now learn that the Sir John's Public House in Kingston, Ontario is dropping the first half of its name, on the grounds that Sir John (A. Macdonald, Canada's first Prime Minister) was unenlightened about those same indigenous peoples.
The pub's soon-to-be-forgotten name was appropriate for two reasons. First, the building once housed Macdonald's law office. Second, the man was by all accounts a prodigious boozer, so he would undoubtedly have been more than happy with the building's current use. He would certainly have been raising a glass there today, this (January 10) being his birthday.
I'm not about to defend Sir John's record in dealing with indigenous peoples or anyone else. He was a man of his time, and by most accounts rather more enlightened than most on native matters. What is undeniable, however, is that he more than any other person was responsible for the creation of Canada as a unified Confederation. Celebrations of that Confederation's sesquicentennial last year were muted -- some would say ruined -- by complaints from current native leaders about the treatment of their people through the years.
Fair enough: Canada's record towards its indigenous citizens has been shameful. However, their fate will not be improved one whit by the fulsome* apologies that politicians now love to offer, or by airbrushing people out of history. If we can't even mention someone's name without people taking offense, how can we have any kind of discussion about what they did, for better or for worse?
I love the comment in the linked Star article from the owner of the pub, Paul Fortier that "many customers that because of the name....they felt unsafe". Oh, please. It's not as if Macdonald is likely to walk in through the door at any moment, and if he did it's quite certain his first priority would be grabbing a libation. If I were Mr Fortier I might have considered spreading the word that the place was named for some other bibulous Sir John -- Falstaff, maybe? Too late now.
* I use this word in its true sense: excessive to the point of insincerity.
The pub's soon-to-be-forgotten name was appropriate for two reasons. First, the building once housed Macdonald's law office. Second, the man was by all accounts a prodigious boozer, so he would undoubtedly have been more than happy with the building's current use. He would certainly have been raising a glass there today, this (January 10) being his birthday.
I'm not about to defend Sir John's record in dealing with indigenous peoples or anyone else. He was a man of his time, and by most accounts rather more enlightened than most on native matters. What is undeniable, however, is that he more than any other person was responsible for the creation of Canada as a unified Confederation. Celebrations of that Confederation's sesquicentennial last year were muted -- some would say ruined -- by complaints from current native leaders about the treatment of their people through the years.
Fair enough: Canada's record towards its indigenous citizens has been shameful. However, their fate will not be improved one whit by the fulsome* apologies that politicians now love to offer, or by airbrushing people out of history. If we can't even mention someone's name without people taking offense, how can we have any kind of discussion about what they did, for better or for worse?
I love the comment in the linked Star article from the owner of the pub, Paul Fortier that "many customers that because of the name....they felt unsafe". Oh, please. It's not as if Macdonald is likely to walk in through the door at any moment, and if he did it's quite certain his first priority would be grabbing a libation. If I were Mr Fortier I might have considered spreading the word that the place was named for some other bibulous Sir John -- Falstaff, maybe? Too late now.
* I use this word in its true sense: excessive to the point of insincerity.
Friday 5 January 2018
Stronger and stronger
The US non-farm payrolls data for December that were released this morning show some signs of a slowdown in employment growth. In contrast, the Canadian jobs market continued to barrel ahead. With the market consensus looking for a minimal increase in employment, the actual result was a 78,000 increase in the month. This brought the unemployment rate down to 5.7 percent, the lowest level since the comparable data series began in January 1976.*
The majority of the new jobs in December (over 50,000) were part time positions, but the data for the full year tell a different story. The economy added 423,000 jobs in 2017, almost twice as many as in 2016. Of those jobs, 394,000 were full-time in nature. Seven of the ten Provinces added jobs and lowered their unemployment rate during the year, with the only exceptions being three of the smaller Provinces: Saskatchewan, Newfoundland and Labrador, and New Brunswick.
The 423,000 increase in employment represents a 2.3 percent annual increase, and the sectoral breakdown reveals some impressive increases. Employment in the goods-producing sectors was broadly higher, with a 3.5 percent increase led by a rise of more than 5 percent in manufacturing jobs. Natural resources employment rose strongly after two years of sharp decline. The services sector posted a 2 percent increase in employment, led by transportation and finance.
I've gone into more detail than usual on these numbers to underline the fact that the Canadian economy is pretty much firing on all cylinders here. Things may turn sour if the NAFTA talks fail, but there is very little reason for the Bank of Canada to hold back on a rate increase when its Governing Council meets on January 17. An updated Monetary Policy Report will be published on the same day. Bank Governor Stephen Poloz has been emphasizing that rate decisions remain data dependent. In that context, today's employment number, combined with the fact that CPI has moved above the Bank's 2 percent target, must surely argue for a 25 basis point hike.
* I was just a year into my Canadian economics/banking career back then, but I can't claim to remember this!
The majority of the new jobs in December (over 50,000) were part time positions, but the data for the full year tell a different story. The economy added 423,000 jobs in 2017, almost twice as many as in 2016. Of those jobs, 394,000 were full-time in nature. Seven of the ten Provinces added jobs and lowered their unemployment rate during the year, with the only exceptions being three of the smaller Provinces: Saskatchewan, Newfoundland and Labrador, and New Brunswick.
The 423,000 increase in employment represents a 2.3 percent annual increase, and the sectoral breakdown reveals some impressive increases. Employment in the goods-producing sectors was broadly higher, with a 3.5 percent increase led by a rise of more than 5 percent in manufacturing jobs. Natural resources employment rose strongly after two years of sharp decline. The services sector posted a 2 percent increase in employment, led by transportation and finance.
I've gone into more detail than usual on these numbers to underline the fact that the Canadian economy is pretty much firing on all cylinders here. Things may turn sour if the NAFTA talks fail, but there is very little reason for the Bank of Canada to hold back on a rate increase when its Governing Council meets on January 17. An updated Monetary Policy Report will be published on the same day. Bank Governor Stephen Poloz has been emphasizing that rate decisions remain data dependent. In that context, today's employment number, combined with the fact that CPI has moved above the Bank's 2 percent target, must surely argue for a 25 basis point hike.
* I was just a year into my Canadian economics/banking career back then, but I can't claim to remember this!
Wednesday 3 January 2018
The impact of higher minimum wages
Minimum wages are rising all across Canada this year. The most widely-publicized increase is in Ontario, where the minimum wage jumped to $14/hour on January 1 from $11.60 previously, and will rise to $15/hour on the first day of 2019, provided the Liberals are re-elected come June. (Not, of course, that the abrupt increase in the minimum, and the crafty ploy of bringing it in in two stages, has anything to do with the looming election -- perish the thought). Several other Provinces, notably Quebec and Alberta, are primed to follow Ontario's lead.
Studies of the impact of higher minimum wages in various US states have tended to suggest that the overall effect is positive, though it has to be said that few jurisdictions have dared to make as big a move as Ontario's. During the holiday period the Bank of Canada quietly tabled a staff report suggesting that the impact of the actual and planned increases will be moderately negative: somewhat lower employment by 2019 (but higher labour income), slightly lower GDP and slightly higher inflation.
The headline takeaway from the report, at least as far as the media are concerned, is a forecast that by 2019, employment will be 60,000 lower than it would have been in the absence of the minimum wage hike. A quick perusal of media comments boards or Twitter will reveal that a large number of people are interpreting this as meaning that 60,000 unfortunate souls will be thrown out of work stat. This is not, of course, the report's conclusion. Given that the economy created over 300,000 jobs in 2017, and given that GDP is forecast to continue growing, albeit more slowly, through this year and next, it seems certain that overall employment will in fact increase, not decrease.
As for the forecasts for higher inflation and lower GDP, once again the report is talking about minor changes to the previously-expected base case. GDP is not forecast to decline outright, but simply to rise very slightly less quickly. Even that projection needs to be qualified: the report's authors suggest that the Bank will move to tighten policy more quickly if the wage hike boosts inflation. Given the number of other factors that go into the Bank's policy decisions, this is far from certain.
The report's belief that aggregate labour income will be boosted by the minimum wage hike, despite the marginal loss of employment, has received little media coverage, no doubt because it is buried towards the rear of this very long (8 pages!) document. Yet surely this is the key point. It has been reported this week that CEO pay in Canada has been rising at an 8 percent annual clip, against less than 1 percent for hourly paid employees. CEOs at the largest corporations now earn more than 200 times the average wage. This year's increases, especially in Ontario, may be startlingly large, but in the context of rising inequality, they hardly even count as a baby step.
UPDATE, January 4: In response to the higher minimum wage, a few franchisees of the world's worst coffee chain, Tim Horton's, are cutting employee benefits. I'd boycott the place, but I never go there anyway so it wouldn't have any effect.
Studies of the impact of higher minimum wages in various US states have tended to suggest that the overall effect is positive, though it has to be said that few jurisdictions have dared to make as big a move as Ontario's. During the holiday period the Bank of Canada quietly tabled a staff report suggesting that the impact of the actual and planned increases will be moderately negative: somewhat lower employment by 2019 (but higher labour income), slightly lower GDP and slightly higher inflation.
The headline takeaway from the report, at least as far as the media are concerned, is a forecast that by 2019, employment will be 60,000 lower than it would have been in the absence of the minimum wage hike. A quick perusal of media comments boards or Twitter will reveal that a large number of people are interpreting this as meaning that 60,000 unfortunate souls will be thrown out of work stat. This is not, of course, the report's conclusion. Given that the economy created over 300,000 jobs in 2017, and given that GDP is forecast to continue growing, albeit more slowly, through this year and next, it seems certain that overall employment will in fact increase, not decrease.
As for the forecasts for higher inflation and lower GDP, once again the report is talking about minor changes to the previously-expected base case. GDP is not forecast to decline outright, but simply to rise very slightly less quickly. Even that projection needs to be qualified: the report's authors suggest that the Bank will move to tighten policy more quickly if the wage hike boosts inflation. Given the number of other factors that go into the Bank's policy decisions, this is far from certain.
The report's belief that aggregate labour income will be boosted by the minimum wage hike, despite the marginal loss of employment, has received little media coverage, no doubt because it is buried towards the rear of this very long (8 pages!) document. Yet surely this is the key point. It has been reported this week that CEO pay in Canada has been rising at an 8 percent annual clip, against less than 1 percent for hourly paid employees. CEOs at the largest corporations now earn more than 200 times the average wage. This year's increases, especially in Ontario, may be startlingly large, but in the context of rising inequality, they hardly even count as a baby step.
UPDATE, January 4: In response to the higher minimum wage, a few franchisees of the world's worst coffee chain, Tim Horton's, are cutting employee benefits. I'd boycott the place, but I never go there anyway so it wouldn't have any effect.
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