Increasing the minimum wage to $15/hour would be a job killer for Manitoba’s youth: new analysis

Winnipeg, September 28, 2017 – Increasing Manitoba’s minimum wage to $15 per hour, as some are calling for, would disproportionately hurt young workers, potentially resulting in between 8,100 and 18,300 youth job losses, according to a new report by the Canadian Federation of Independent Business (CFIB).

Manitoba’s minimum wage will increase to $11.15 an hour on October 1, 2017, which was calculated using an indexation formula that was legislated in June, 2017. But groups, like the Manitoba Federation of Labour (MFL), have been urging the provincial government to rapidly increase the province’s minimum wage to $15 per hour — which would represent a 35 per cent increase.

“While hiking the minimum wage may sound like a good idea, the evidence shows that it’s a job killer,” said Jonathan Alward, CFIB’s Director of Provincial Affairs for Manitoba. “A $15 minimum wage would particularly affect employment opportunities for Manitoba’s youth — a segment of the population who already suffer from high unemployment.”

Using 2016 Labour Force Survey data, CFIB’s report examines the effects of a $15 minimum wage in each province. Nationally — if all provinces jumped to a $15 minimum wage — between 184,800 and to 422,400 youth jobs would be put at risk. These estimates include the number of direct job losses and fewer jobs being created.

“Setting minimum wage is always a  challenging issue for any government. The Manitoba government has resisted the temptation to follow Alberta and Ontario by raising the minimum wage to $15 per hour,” Alward added. “While the vast majority of Manitoba’s employers hire at rates above minimum wage, several important sectors of the economy, including retail and hospitality — sectors that employ a large number of young people — will be the hardest hit. We will continue to call on the provincial government to introduce measures to mitigate the impact of Manitoba’s annually indexed minimum wage by introducing a training wage (for inexperienced workers, similar to Nova Scotia) or a gratuity wage (for workers who earn tips).”

Currently, over 60 per cent of minimum wage workers in Canada are young people between the ages of 15 and 24. Past research has shown that, as minimum wage rises, these young workers become the most vulnerable group in the economy. Often, as their wage costs increase, employers will choose to hire fewer youth or hire more experienced adult workers — instead of younger workers — at the same wage rate.

“Minimum wage is a blunt tool to help low-income workers,” concluded Alward. “We will continue to advocate for more practical and effective ways – like further reducing income taxes and helping low-income workers upgrade their skills.”

Background:  Other provinces have taken steps to move to a $15 minimum wage. In 2016, the Alberta government was the first provincial government to announce an increase to the minimum wage rate to $15 per hour by 2018. Ontario followed suit with a plan to increase the minimum wage rate to $15 per hour by 2019. Most recently, the Government of British Columbia removed the deadline to implement a minimum wage increase to $15 per hour by 2021 until a review can be completed.     

For the complete analysis including methodology, download the report.

To arrange an interview with Jonathan Alward, CFIB’s Director of Provincial Affairs for Manitoba on the provincial results, please call 204-982-0817 or email msman@cfib.ca. You can also follow CFIB Manitoba on Twitter @cfibMB.

CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members (4,800 in Manitoba) across every sector and region.