Ontario government raises the minimum wage…and sends the bill to small business

Ontario’s general minimum wage will be $11 per hour (from $10.25), starting June 1, 2014.  We know that many CFIB members will be negatively affected by this increase and will have no choice but to reduce hours and positions and to put a break on future hiring.  Immediately, following the announcement, CFIB sent a letter (top right) to Labour Minister Yasir Naqvi to express the serious concerns that the small business community has regarding this rate increase, based on “retroactive” inflation calculations.

CFIB recently presented to Ontario Minimum Wage Advisory Panel and also met with Minister Naqvi to highlight the negative impact that minimum wage hikes have on small business. While we support the province’s efforts to reduce poverty, increases in the minimum wage tend to hurt not only small employers, but the very people they are supposed to help: the low-skilled and low-income workers, by reducing the capacity of businesses to hire and retain them.

Instead of raising the minimum wage and putting an additional burden on small business payrolls, we called on the government to implement measures such as changes to the personal income tax system and incentives for informal, on-the-job training.  For example, Ontario has a much lower basic personal exemption - the amount Ontarians can earn before paying taxes – than provinces such as Alberta, Saskatchewan and Quebec. An increase in the personal income tax exemption will provide an immediate increase in disposable income for low-income earners, far greater than hiking their hourly pay rate by a few cents.  In addition, more skills training opportunities will allow low-skilled workers to broaden their expertise and qualifications and will eventually expand their ability to earn more than just minimum wage.  If the government had implemented these solutions, it would have helped more Ontarians to get above the poverty line and would have allowed  small, independent businesses to continue creating more jobs and economic growth.