Manitoba’s small business owners support helping low-income earners, but know there are better ways to do so than simply increasing the minimum wage. Minimum wage is a blanket policy that doesn’t always help those it is designed to help. When it increases, inexperienced youth are often the first ones to lose their jobs, while the government benefits from receiving higher personal income taxes and payroll taxes.
This is not surprising when you understand the costs associated with minimum wage increases. In 2019, the cost to employers of raising the wage of a full-time employee from $11.35 to $15.00 per hour would amount to $8,198, or a 32 per cent increase. For a business with just 10 of these employees, like your neighbourhood restaurant, the cost would be $81,977 annually! It is clear that past minimum wage increases have added significant costs to Manitoba’s small businesses and had negative impacts on them and their staff.
It is essential that the Government of Manitoba focuses on better ways to help low-income earners including: targeted tax relief such as adjusting the Basic Personal Exemption (BPE) amount or introducing low-income reduction tax credits; improving workforce development such as making training more accessible; and/or improving social programs. For targeted tax relief, several provinces have introduced policies to lower the tax burden for low-income earners including the Nova Scotia government who introduced a tiered BPE amount as incomes rise. Several provinces have also introduced low-income reduction tax credits to help in these cases.
CFIB challenged Manitoba parties to:
- Say “no” to a $15 minimum wage in Manitoba. Keep minimum wage increases predictable and in-line with inflation; and
- Focus on better tools to help low-income earners such as increasing the BPE, introducing targeted tax credits, improving training, etc.