CFIB warns $20/hour "living wage" could cost Canada $45B, harm small businesses
The Canadian Federation of Independent Business (CFIB) has published a report about the dire effects mandating a $20-per-hour living wage in all Canadian provinces could have.
According to the Cambridge English Dictionary, the definition of a living wage is the minimum income necessary for a person to meet their basic needs.
In a release published Wednesday morning, CFIB says the $20 living wage is “a proposal under consideration by several organizations” but does not specify which organizations.
According to the report, the Canadian economy would have to pay $44.9 billion in extra wages, putting almost 600,000 small businesses “at risk of becoming unprofitable.”
Officials said governments need a new approach to addressing affordability challenges. Current policies about minimum and living wages fall short of addressing “the root causes of the rising cost of living while simultaneously increasing costs on small businesses.”
At a glance, a $20 living wage could cost BC and Alberta $4.3 billion each, Quebec $10,255, and Ontario $16.7 billion — the highest amount of all provinces.
Ontario could also see the highest number of small businesses (200,387) at risk of unprofitability, followed by Quebec (141,927) and BC (75,495).
CFIB
CFIB’s policy analyst Beatrix Abdul Azeez believes governments are setting minimum and living wage policies “with no anchor in economic reality, relying on subjective and unpredictable criteria.”
“Minimum wage and living wage policies often miss the mark when it comes to truly supporting the most vulnerable workers,” she stated. “Governments should shift away from relying on these blunt tools and instead adopt a new approach to ensure workers can cope with the rising cost of living while also guaranteeing that small businesses aren’t unfairly burdened.”
As of 2023, the living wage rate is as low as $18.65 in Southwestern Ontario and as high as $25.05 an hour in the Greater Toronto Area, according to the Ontario Living Wage Network.
“It’s a modest existence; it doesn’t take into account debt servicing or savings for retirement or homeownership,” stressed Ontario Living Wage Network spokesperson Craig Pickthorne told Daily Hive over an earlier phone call.
According to Living Wage for Families BC, the living wage in British Columbia is as low as $20.91 in Kamloops and as high as $25.78 in Golden. The minimum wage in the province is set to increase by 65 cents to $17.40 this June.
“There is still a $7/hour gap between the legal minimum you must pay workers and what they actually need to survive,” Living Wage for Families BC spokesperson Anastasia French told Daily Hive over email in March.
CFIB argues that recent minimum wage hikes hurt the Canadian small biz sector by “forcing 60% of small businesses to raise wages for other workers and 59% of them to raise prices, contributing to current inflationary pressures.”
Additionally, the report says that 31% of small businesses had to cut back on hiring young and unskilled workers, with 25% of them reducing overall employment.
The federation recommended governments to consider the following steps:
- Alleviate the impact of rising minimum wages on small businesses by reducing other taxes and payroll costs (such as small business tax rate, CPP, EI, health/education payroll taxes, etc.)
- Establish a minimum wage setting process that is predictable, transparent, reflective of market conditions, and mindful of economic impacts.
- Link minimum wage adjustments to private sector wage growth or a predetermined percentage of the median wage.
- Address the root causes of the affordability crisis by enacting policies to increase the supply of housing, reduce energy taxes, and remove interprovincial and international trade barriers.
- Provide targeted fiscal support for vulnerable workers through reduced personal income tax rates, increased basic personal amounts, and expanded tax credits.
Read more about why Canada’s minimum wages, even with scheduled increases, aren’t exactly “living” wages here.
What are your thoughts? As a worker or an employer, do you think a $20/hour “living” would be fair in Canada in 2024?
Let us know in the comments or email us at [email protected].
With files from Daily Hive’s Isabelle Docto
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