Increasing minimum wage decreases employment: CFIB

Report recommends income tax relief and training opportunities instead of wage increase
|Canadian Payroll Reporter|Last Updated: 02/11/2011

The Canadian Federation of Independent Business (CFIB) has released a research report challenging the overall effectiveness of the minimum wage policy in Canada. Minimum Wage: Reframing the debate concludes minimum wage increases tend to hurt the very people they are supposed to help.

Small business owners aim to offer competitive wages that will help them attract and retain good staff. Large jumps in the minimum wage force business owners to reduce hours, reduce training or even eliminate jobs, found the report.

The report estimates that a 10 per cent increase in the minimum wage across all provinces costs up to 321,300 jobs. These jobs losses would take the form of hiring freezes, slower employment growth or direct job cuts during economic downturns.

"At a time when the economy is in slow recovery, the last thing governments should be considering are policies that further hinder job creation," said Marilyn Braun-Pollon, CFIB's vice-president for Saskatchewan and co-author of the report.

The report states minimum wage increases can significantly add to the payroll costs small firms are already forced to pay, leaving employers with no choice but to scale back.

"Governments should consider all other alternatives in place of minimum wage increases so that small businesses' ability to create jobs is not compromised," said Braun-Pollon.

The report calls for governments to provide additional income tax relief and training opportunities to help low income earners, as opposed to increasing the minimum wage.

Minimum wage rates currently range from $8 in British Columbia to $11 in Nunavut. Since 2001, most provinces have substantially increased their minimum wage rates. British Columbia is the only province that has not increased its minimum wage since 2001.

Add Comment

  • *
  • *
  • *
  • *