Freeze Minimum Wages, Business Group Says
Filed under: Employment & Careers, Entrepreneurship, Small Business
Increases to the minimum wage in Canada hurt the very people they are supposed to help, according to a new report by the Canadian Federation of Independent Business (CFIB), an association for small to medium-sized businesses.The group argues that provincially regulated increases to minimum wages cause small businesses to either cut jobs, reduce staff hours or postpone new hires. Using their own estimates, they say a 10% increase in minimum wages against all provinces would cost the Canadian economy up to 321,300 jobs.
"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.
Minimum wage rates currently range from $8.00 in British Columbia to $11.00 in Nunavut. British Columbia is the only province that has not increased its minimum wage since 2001.
"Governments should consider all other alternatives in place of minimum wage increases so that small businesses' ability to create jobs is not compromised," Braun-Pollon said. "It's time provincial governments are held accountable for the ineffectiveness of their minimum wage policies."
However, there is a gaping hole in the CFIB's argument. Minimum wages are increased every now and again in order to make sure that workers' wages keep within a decent range to the cost of living. Instead of raising minimum wages to keep up with the cost of goods and services in the economy, the CFIB suggests "alternatives," which could be in the form of tax relief or training opportunities. Either way, it appears the CFIB wants tax payers to take on some responsibility of making sure Canadians can afford to live rather than make employers pay workers on the minimum wage what their time is truly worth.
Then, of course, there is the economic counter argument: workers on very low wages tend to spend increases on money on paying for rising living expenses and the odd social activity, thus injecting the money back into the economy and back into business. In effect, it works as a stimulus to the economy and to business.
My niece is a case in point. She works at a B.C. ski resort on a wage of $8 an hour in a position where she does not receive tips. Her $320 a week goes almost entirely toward paying her rent in her sparsely furnished home, utilities and grocery expenses. She is always in debt and there are many things she would love to buy. Any additional money she earned would most definitely be spent, and fast.
The CFIB is correct in suggesting that minimum wage increases could hurt businesses, but in order for this to be the case, minimum wage increases would need to run rampant and outpace the rate of inflation over a sustained period of time, and this is not the case.
A balanced and controlled approached to minimum wage increases is more beneficial to the economy in the long run. If a business can't afford to pay a worker what their time is worth, then perhaps they should not be in business. In a capitalist world, someone will always come in and fill the gap if there is sufficient demand.
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Reader Comments (Page 1 of 1)
2-27-2011 @ 5:47PM
HERBERT ROBICHEAU said...
With wages going up we have no choice to cut staff.The sales are not there to cover the wages.We had at one time eighteen employes. Now fourteen.If wages go up again we will cut another employee . Taxes,lights.oil,insurance have all gone up.No more sales are coming in,so where do you cut.
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3-01-2011 @ 11:41AM
Stephen said...
Whatever your paycheck turns out to be, there were some helpful, easy tips on Http://bit.ly/moneyminded I particularly liked their Con-Economics and the article You're Being Over-Charged! It made me realize that no matter how much or how little we're making at our jobs, we can still save and spend smarter.
3-05-2011 @ 12:28PM
Al said...
Herbert, if the people that work for you don't have more money to spend, how will your sales ever increase? If businesses don't support keeping the middle class employed, they will not have cusomters who consume their products or services.
The real question we need to address is that of productivity. What have you done over the last decade to improve productivity?
3-03-2011 @ 9:40AM
Brian Wm. Burnett said...
Push up the wages and the business, whatever it is , has to raise the cost of their services, products, etc., to keep the profits margin up. Then the workers demand a raise because the cost of things went up.
Nice inflationary spiral that doesn't stop until you have the bottom fall out of the markets like it did during the last recession. But then the prices don't go down, they level off for a while
I remember when Ontario had a minumum wage of 2.65/hr.and cigs were .65-.75 for a pack of 25 and coffee was .15 a cup. Now it's 10.25 /hr and cigs are 10.00 a pack I
believe(quit them 7 plus years ago) and coffee is 1.35-1.50 cup.
Never mind what the increased taxes and fees have done to the buying power of a dollar.
The 20.00 bill is the equivalent to what 5.00 was a few years ago.
Maybe time to call a halt to ALL increases across the board for a time.
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2-28-2011 @ 2:31PM
Averagedancer said...
I live in BC where minumum wage hasn't increased in 10 years, but the cost of day to day items has inexorably risen. Additionally, folks who receive minimum remuneration for their work, often avail themselves of government programs on a regular basis: housing subsidies, daycare subsidies, food bank donations, welfare/E.I. assistance, including supplemental income and job training programs, health care subsidies, and the list goes on. One simply cannot work a minimum wage job and live at a decent standard. Perhaps business owners should be taxed to offset all of the supplemental funding made available to the working poor, in order for them to squeak by. And maybe, just maybe, these businesses ought to consider who it is they are dismissing - and disparaging - with these callous assertions; without these workers, you would have no business. Remember it.
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3-05-2011 @ 4:02PM
Fred said...
In a free market business owners have the right to outsource their production to foreign suppliers if the domestic costs rise too high. That is exactly what has happened. Businesses are under no obligation to hire people just because they need a job. It is the government that takes on the responsibility of dealing with the unemployed (and unemployable). To suggest that businesses should have to burden the cost of social benefits is just asking for all businesses to move elsewhere.
2-28-2011 @ 2:43PM
j pack said...
Lets face it, the cost of merchandise would have went up even if the minimum wage hadn`t gone up. Have you ever tried to live on minimum wage? even at 10.25 it is hard, with the cost of housing and groceries there is nothing left.
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2-28-2011 @ 6:20PM
Rob Olson said...
The minimum wage is only a problem with employees that are paid tips. The other jobs need to pay more to keep their staff. Even foreign workers need to be paid 12-13 dollars an hour for a job with no skill requirements, and no experience if there are no tips involved.
If you make 25K a year in tips then you should not need an extra $10 an hour from the employer. it just drives up costs and food prices.
Also, the arguments in this article are false. There is only one ski hill that pays thier staff minimum wage and that includes a ski pass and accomodations.
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2-28-2011 @ 8:22PM
bargainsone said...
The minimum wage does not need to go up any more. I have spent much money in the past few years trying to get a good education, and in the past few months I have met many people who have no or minimal education who actually are surviving on minimum wage! I think that it is already a bit too high, minimum wage IS MINIMUM WAGE for a reason, it means that it is not sufficient for a decent standard of living. Many people who work hard, are educated, etc. still work hard for their money. With the wage where is right now in Ontario, it discourages people from getting an education and working hard, when they know that can live on the current wage and still do okay. This is wrong! The cost of living has gone up so much even in the past year, who can keep up? My message is, if you know that minimum wage is hard to live on, then try learning some skills and education so that you can not only provide a decent living for yourself but also contribute to the Canadian economy, so that we can all live better.
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3-01-2011 @ 12:43AM
Smallbizowner said...
As a small business owner who makes the same wage as his 10 person staff I have to say that minimum wage increases hurt small businesses. It doesn't hurt starbucks or walmart but if you want the quirky little personable places that add character you're out of luck.
We had to let go of two staff last increase and I took on even more responsibility. Sales plummeted because people earning min. wage suddenly found themselves laid off or found that they couldn't afford the increase in costs (implemented by businesses to fund the minimum wage increases) and spent more time at home or at friends' rather than going out. We had to make less staff do more work.
People making 60 or 70K/year think 'what difference could an extra 50 cents an hour make?' You look at the number of small businesses collapsing over here and let me tell you, it's not the answer.
A real answer would be to cap executives salaries and pour some of that income back into the average person's pockets! See what kind of spending that would provoke. Incidentally my fellow business owners who have small businesses with higher earning clientele reported that there was no change in business following the increase.
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3-01-2011 @ 1:01AM
Randall said...
The arguments of CFIB and small business owners is a load of horse manure. They seldom if ever add more employees to cover the work properly, or give pay increases. Every penny goes to their personal profit, and none of it ever "trickles down" to the people. It never has, and never will, because the rich get more greedy as they receive more profit. There is only one way for the economy to recover, and that is to give more money to the people who actually do the real work, and let the money "trickle up" through spending, whatever is left after people are able to make a decent living. Anything less than this only serves to enslave the people and destroy the economy in ever worsening cycles. Captialism simply does not work because capitalists are not moral enough to invest properly in their workers. Companies that do, do very well, but most companies don't...and when the "captains of industry" start to sink, they expect the poor to bail them out, so they can remain rich enough to keep us poor. Wake Up!
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3-02-2011 @ 7:38AM
Lorraine said...
I agree, totally with your comments!!! No matter what small business's do, the fat cats, always want to remain FAT! and the rich always want to be richer. The people at the bottom of the food chain, always pay through the nose!!!
3-04-2011 @ 11:40AM
rick khan said...
Are we running this country for small and mid size businesses or for the people.
People deserve a minimum wage which is consitent with the cost of living and even at 10.25 an hour it is not enough.
All these business lobbying groups care about is reducing their costs and hurting the average man.
Canada is built on a socio-democratic system and it must remain for the People of Canada and not small business.
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3-05-2011 @ 4:16PM
sevnoaks said...
I totally agree. If you remain uneducated (and God knows why anybody in Canada would allow themselves to get into that situation, given our free high schools, numerous opportunities for inexpensive evening and weekend courses) you are effectively declaring yourself to be competing with the lowest paid person anywhere in the world. For the rest of society to have to then pay you an unrealistic wage (minimum wage) for work that could be done elsewhere actually drags down our economy and makes us less competitive. Harsh words perhaps but they need to be said.
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3-05-2011 @ 4:22PM
sevnoaks said...
Every time employees wages are pushed higher (and out of proportion to their value) you will see businesses invest more and more in automation. It's your choice. Luddites don't win.
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3-05-2011 @ 4:33PM
sevnoaks said...
My advice to smallbizowner is close shop and get a job. It is now the business executive's wages that are causing his problems? And if they were lowered people would clamber into his shop? Give me a break. Can we get back to economics 101 for just one minute? Supply and demand. If you are selling goods or services that someone wants you will make money. If you are operating a restaurant in the midst of a dozen more you had better be awfully sure that you have something unique and compelling that will make people come through the front door. You do not have the right to make money just because you put up an "open" sign. When are they going to make business and economics a compulsory course in high school???
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3-07-2011 @ 4:46PM
Matthew Buck said...
This article and its comments brings up some really good points. It is a very tough call what is better for the economy and its people: raising minimum wage or halting it at a certain amount. It is true that many business owners are greedy and don't want to pay employees anymore to continue to keep all the profits. But there are also small business owners out there that live a comfortable life that isn't overbearing, and these are the people who would suffer after all the hard work they have put into the business. Yes, people that work these minimum wage jobs should make more money, because somebody has got to work them and its not fair that these people get paid so much less just because they do not have an education. It is more difficult to get a strong education than some people think, and these people should not be penalized. But I think the government needs to step in and provide more tax cuts to these people, so they can be happy as well as small business owners. It seems so much of our money is spent on taxes, and the government never really makes it clear where it all goes. For all we know, taxes could be being spent on things much less important than helping our Canadian people live life without scraping by.
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3-13-2011 @ 10:16PM
janet said...
The minimum wage should be at least $10./hr. This is 2011, folks. It's been rock bottom forever. If you can't afford to pay this, you shouldn't be in business, period. Otherwise you are exploiting workers paying them 320. a week for a 40-hour week. Come on!! Let's get real.
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