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Businesses need time to adjust to minimum-wage hikes: CFIB

Vaughn Hammond — Telegram file
Vaughn Hammond — Telegram file - SaltWire Network
ST. JOHN'S, N.L. —

The Canadian Federation of Independent Business (CFIB) says if there’s going to be a minimum wage increase, give business owners enough time to prepare. 

In October, the government announced a panel to review the minimum wage in Newfoundland and Labrador. The panel is part of a commitment by the government to review the wage every two years after a 2017 announcement that the minimum wage would be tied to the national inflation rate and would increase or decrease according to the cost of living. 

Currently, Newfoundland and Labrador has the second-lowest minimum wage in the country, at $11.40 an hour. 

Vaughn Hammond, director for Newfoundland and Labrador with the federation, says the business owners the CFIB represents appreciate the predictability of the current format for minimum wage increases and don’t want any sudden shocks. 

“Until government makes its decision on what to do on the minimum wage, how will employers know what’s going to happen on April 1 and how to plan accordingly?” said Hammond.

“All we’re asking is that if there is going to be a minimum wage increase, which we assume there will be, then give employers at last six months lead time to adjust to that from the time that the government announces whatever the minimum wage rate will be.” 

Hammond doesn’t want to see the minimum wage increase at all.

The federation released data it compiled to give an idea of what the cost of a minimum wage increase would be on businesses. The table cites a study by the Canadian Centre for Policy Alternatives, which suggests a living wage in St. John’s would be $18.85 an hour — $7.45 higher than the existing minimum wage. But within that, Hammond says an increase of just 60 cents to $12 an hour (the Atlantic Canadian average minimum wage in 2020) could cost businesses $1,383 a year.

Hammond says industries that rely on low-wage workers will feel the impact the most. 

“The labour costs of a business is the largest cost they incur, notwithstanding food cost, transportation costs and every other cost,” he said. 

“When we did consultations with our membership just this month, what we learned is that the smallest members that we have, the typical smallest member is around ten employees. They have two minimum wage workers on staff, typically. If those two people get minimum wage increases, and if we assume that’s going to ripple to others who want a similar increase, then what you’re looking at is the magnitude for employers becomes ten-times. That’s where the concern comes in.”

But minimum wage advocates say the costs to businesses could be offset by having more money in the pockets of people relying on the minimum wage.

“Nobody wants to see small business and local mom-and-pop shops have to suffer under having living wages, but also we want to make sure there are supports in place for those folks. We want everyone to be pulled forward by having a living wage,” said Alyse Stuart, chair of Common Front NL.

“Jurisdiction after jurisdiction worldwide has seen benefits to the local economy when you do increase a minimum wage. You are going to see benefits. You’re going to see the local economy flourish. … More folks are able to dine out, more folks are able to take the alleviation of stress from trying to survive and begin to thrive in their local economy.”
Stuart says employer concerns are relevant, but the workers can't be forgotten.

“We talk about the cost to employers, how they’re going to deal with this, but how are the 70,000 workers in this province going to continue to make below a living wage and be expected to stay and build a life in this province?” she said.

“The cost to those workers who are struggling to live in Newfoundland and Labrador is considerably high. Also, we need to look at the bigger picture. There’s a cost to this province if we continue to not pay a living wage as a minimum wage, and expect people to stay here when we’re not giving them the tools financially to do so.”

The final report of the minimum wage review committee is due later this month.

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