I was a bit surprised that the recent upsurge in unemployment in Ontario in June, which was especially concentrated amongst youth (individuals aged 15 to 24 years), did not generate much discussion about the impact of the minimum wage. Ontario’s adult minimum wage rose 75 cents on June 1st to hit 11 dollars per hour. Ontario also lost 34,000 jobs in June and employment in the age 15 to 24 category dropped by 28,800.
What I did was plot the nominal adult minimum wage in Ontario from 1976 to 2014 (Figure 1). I also have taken the CPI ($2002) and deflated the series and plotted the real minimum wage. Also on the accompanying diagram I have plotted the average real minimum wage for the entire period. From a nominal adult minimum wage of $2.40 in January of 1976, the minimum wage has grown to reach $11.00 in 2014. However, when this is converted to 2002 dollars using the CPI (Statistics Canada, v41690973 Canada; All-items CPI (2002=100)) it turns out the real minimum wage has fluctuated but has not really grown very much over time. The Ontario real minimum wage in $2002 was $7.92 in January of 1976 and $8.70 in June of 2014. The real average minimum wage over this entire period was $7.24.
While there is not a major upward trend in the real minimum wage, what is interesting is that there are periods when the real minimum wage has been above the average and periods when it has been below. There are approximately three periods when the real value of the minimum wage has been above the long-term average: 1976 to 1980, 1991 to 2000 and 2008 to the present. Other periods have seen the real minimum wage below the long-term average.
Is there an effect on youth employment? Is the growth in youth employment greater and the youth unemployment rate lower when the real value of the minimum wage was declining or below the long-term average? For what its worth, here is a plot of the youth unemployment rate in Ontario since 1976 (Figure 2). I suppose the youth unemployment rate has gotten higher over the last few years - coinciding with an increase in the real minimum wage - but there has been a recession and the youth unemployment rates do not look much different from those during the recession of the early 1980s or early 1990s. Well this could be an interesting topic for a graduate student thesis. The monthly employment and minimum wage data is easy enough to collect for the ten provinces and I suppose you could examine the differences across provinces. Have fun.
July 16th Update:
Well, I was able to find average hourly earnings for Ontario from 1991 to 2014 - its in two series (1991 to 2000 and 2001 to 2014). They are for an industrial aggregate that excludes unclassified businesses and overtime. The two Stats-Can series are v78968191 & v1591285. The average hourly earning was $13.77 in January 1991 and rose to $22.36 by April 2014. I plot below the ratio of the average adult hourly minimum wage to the average hourly earnings for the 1991 to 2014 period.