Group warns $20 living wage could cost Canada $45B and 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 B.C. and Alberta $4.3 billion each, Quebec $10.256 billion, 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 B.C. (75,495).
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 said in an interview.
According to Living Wage for Families B.C., 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 B.C. spokesperson Anastasia French said over email in March.
CFIB argues that recent minimum wage hikes hurt the Canadian small biz sector by "forcing 60 per cent of small businesses to raise wages for other workers and 59 per cent of them to raise prices, contributing to current inflationary pressures."
Additionally, the report says that 31 per cent of small businesses had to cut back on hiring young and unskilled workers, with 25 per cent of them reducing overall employment.
The federation recommended governments to consider the following steps:
Fareen Karim
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