Minimum Wage: Reframing the Debate

February 2011

Marylin Braun-Pollon, Vice-President, Saskatchewan and Agri-business
Amelia DeMarco, Senior Policy Analyst
Queenie Wong, Senior Research Analyst

 

Although governments have implemented minimum wage policies in hopes of reducing poverty and improving the well-being of low-income workers, the overall effectiveness of these policies is debatable. From the perspective of small- and medium-sized business owners, this report examines minimum wage policy in Canada and analyzes the economic impacts of minimum wage increases.

Small business owners aim to offer competitive wages that will help them attract and retain good staff. However, experience has shown that large jumps in the minimum wage tend to hurt the very people they are supposed to help: low-skilled and low-income Canadians. An increase to minimum wage forces small businesses to look for ways to absorb the cost through measures such as reduced hours, reduced training, or even job cuts.

This report attempts to quantify the number of Canadian jobs affected by minimum wage increases. CFIB estimates that a 10 per cent increase in the minimum wage across all provinces costs between 92,300 and 321,300 jobs. These job losses can take the form of hiring freezes, slower employment growth, or direct job cuts during economic downturns. Not only minimum wage earners are affected by these job losses, but also those workers earning more than the minimum wage.

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