Minimum wage hike in New Brunswick will hurt more than help
Moncton, February 16, 2011 - In spite of government's promise to re-examine planned minimum wage hikes, it just confirmed small businesses' worst fear - the minimum wage will increase on April 1st by 50 cents and then on September 1st by another 50 cents to finally reach $10 per hour. This total jump of 10 per cent in one year alone will put New Brunswick in second place tied with the oil-rich Newfoundland and Labrador among all provinces.
Small business owners - who represent more than 75 per cent of the province's economic make-up - feel frustrated and once again taken for granted. The government naively assumes that small business can afford to continue providing jobs to over two-thirds of New Brunswickers in a sluggish economy in spite of another significant hike in minimum wage.
"This ostrich-attitude ignores what many studies and Economy-101 prove: when the price of labour goes up, it creates upward pressure on all wages and increases payroll costs. As a result, the demand for labour diminishes and hence business owners cut back on staff hours, training or even eliminate jobs to offset the increased costs," said Andreea Bourgeois, director for New Brunswick.
The newest report by the Canadian Federation of Independent Business (CFIB) Minimum Wage: Reframing the debate shows that minimum wage increases tend to hurt the very people they are intended to help - low-skilled and inexperienced workers. The 50 cent increase is expected to lead to about 3,000 job cuts.
"At a time when economic growth is lagging, and employment expectations are very soft, business owners from every corner of the province hoped the government will reconsider the minimum wage increase," Bourgeois added.
"Hiding behind a noble goal of poverty reduction, there is a crass misunderstanding of how small businesses operate. No business owner in New Brunswick wants anyone to be poor. Minimum wage hikes have been shown not to be the best or most effective solution at poverty reduction."
Government should have examined other tools first to really achieve this goal and not harm economic growth.
For more information, contact Andreea Bourgeois at (506) 855-2526.
As Canada's largest association of small- and medium-sized businesses, CFIB is Powered by EntrepreneursTM. Established in 1971, CFIB takes direction from more than 108,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.