Small businesses with entry-level jobs will struggle to afford added payroll costs
VANCOUVER, May 4, 2016 – The Canadian Federation of Independent Business (CFIB) panned today’s announcement by the BC government of a 40 cent increase in the minimum wage to $10.85 an hour, followed by another 40 cent increase in 2017. The higher than expected hike, set to take effect annually on September 15, will leave many small business owners with entry-level jobs scrambling to afford a significant increase in the payroll.
“It’s disappointing to see the government so quickly abandon their own indexation policy that was meant to create certainty and depoliticize the process. Business owners with entry-level jobs were clearly expecting a more modest, predictable increase this fall according to the formula set by the provincial government just one year ago”, said Richard Truscott, CFIB Vice President, BC and Alberta.
The BC government announcement comes two days after CFIB released new analysis based on data from Statistics Canada and other official government sources that shows the majority of small business owners are hard-working members of Canada’s middle-class. The findings refute the assertion that business owners are wealthy and can afford to simply pay employees more.
Among adult workers, when hours of work are included, almost one-in-three business owners are earning effectively $15 an hour or less, compared to one-in-five paid employees. The incomes of business owners in the hospitality and retail sectors are even more modest.
“Many business owners, especially those in the service sector, operate in highly competitive markets and on razor-thin profit margins. They are not sitting on a mountain of money. Obviously, they will have to make a series of major operating adjustments, including cutting jobs and hours, in order to accommodate such a large jump in payroll costs”, stated Truscott.
Truscott added: “We need to move beyond tired old sloganeering and posturing, and look for more effective ways to help people move into better paying jobs through access to education, training programs, and information about where higher paying jobs exist.”
“We will certainly be looking for a series of more small-business friendly policy announcements from the BC government as we move toward the provincial election next spring, such as working with other provinces to reduce trade barriers within Canada and continuing to oppose a mandatory expansion of the Canada Pension Plan”, concluded Truscott.
CFIB is Canada’s largest association of small- and medium-sized businesses with 10,000 members in BC and 109,000 members across the country in every sector and region.