Cash counter usage may rise with minimum wage hike
With wages higher, thanks in part to changes in minimum wage laws, cash counter usage frequency is poised to increase as wallets fill with currency, including polymer notes. However, new analysis suggests there could be an unintended consequence of a rise in minimum wage: fewer employment options.
By 2019, the economy may have 60,000 fewer jobs than it does presently, the Bank of Canada forecasts. The central bank believes the dip is a consequence of minimum wages rising, with employers aiming to defray their losses by dialing back hours worked.
In accordance with federal law, all of the provinces and territories have raised their respective minimum wage levels slightly over the last few years. For instance, in Ontario, the uptick went into effect Jan. 1, rising from $11.40 to $11.60. The next adjustment for Canada's largest province will be at the start of 2018, when the minimum rises to $14 and an eventual $15 in 2019. In other parts of Canada, the minimum wage elevated earlier in 2017, to $11 back in the month of April in New Brunswick and $11 in Newfoundland and Labrador Oct. 1.
In addition to fewer jobs being available, the Bank of Canada also expects gross domestic product to be adversely impacted, at least in the immediate aftermath.
"A structural general equilibrium simulation suggests that minimum wage increases would reduce the level of gross domestic product by roughly 0.1 per cent by early 2019 and boost CPI inflation by about 0.1 per cent," analysts at the central bank wrote in a research note.
Incomes expected to improve
On balance, however, the Bank of Canada says income levels for the typical family should rise, providing consumers with more currency, including polymer notes, business owners will undoubtedly put through their money counters should spending intensify.
The number of jobs lost - if the Bank of Canada's prediction bears out - would be a stark contrast to how the economy has fared in recent months. For instance, in December, employers added 79,000 jobs to the nation's payrolls, Statistics Canada reported. Economists had anticipated a net gain of only 1,000, according to Financial Post. The 79,000 figure pushed overall employment for 2017 to 423,000, a 2.3 per cent increase in comparison to the 12 months of 2016.