The Canadian Federation of Independent Business (CFIB) says the government’s decision to increase the minimum wage annually by indexing it to inflation will hit the retail and hospitality sectors the hardest, and ignores better ways to help low-income earners.
Today, the Government of Manitoba introduced Bill 33 – The Minimum Wage Indexation Act, which will annually index the minimum wage based on Manitoba’s Consumer Price Index (CPI) inflation rates from the previous calendar year. Annual increases will be determined by no later than April 1st, and will take effect on October 1st.
“While indexing minimum wage to an economic indicator is an easily accessible tool for governments, entrepreneurs worry that this approach assumes affordability every year, and does not reflect current economic conditions,” noted Jonathan Alward, CFIB’s director of provincial affairs for Manitoba. “The overwhelming majority of small business owners already pay well above the minimum wage, as they weigh the education, experience and skills of their employees against the ability of their firm to pay. However, we know today’s decision will hit small businesses in the retail and hospitality sectors the hardest.”
“We are calling on the government to introduce measures to help mitigate the negative impacts of the annually indexed minimum wage, such as introducing a training wage (for inexperienced workers, similar to Nova Scotia) or a gratuity wage (for workers who earn tips, similar to BC and Ontario).”
Business owners know that there are better ways to help low income earners than simply increasing the minimum wage. On September, 29, 2016, the Manitoba government took a positive step by freezing minimum wage, opting to help low income earners by indexing the Basic Personal Exemption to inflation in 2017.
When asked on the best ways for government to improve the standard of living for low-income earners, 81 per cent of Manitoba entrepreneurs supported reducing personal income tax rates for low-income earners. Increasing the Basic Personal Exemption, tax credits, and better training for low-income earners were also indentified as more effective alternatives to minimum wage increases. Only 27 per cent of respondents supported moderate, regular increases to the minimum wage rate.
“Given the shortcomings of minimum wage policy, we believe the government should have first exhausted its ability to help low-income earners through tax relief and better training initiatives,” added Alward. “Let’s not forget, Manitoba’s Basic Personal Exemption remains well below the national average and nearly $6,800 below the level in Saskatchewan.”
CFIB has previous called on the Manitoba government to conduct and publically release a thorough employment and economic impact analysis of any proposed minimum wage increases, as supported by 91 per cent of Manitoba’s small business owners. “We’re disappointed the government ignored our recommendations,” added Alward.
“Let’s be clear; today’s announcement translates into more taxes for the government, higher prices for customers and potentially fewer hours for low-income earners,” concluded Alward.