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Small business hit by $1.50/hr minimum wage increase over 18 months

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The provincial government provides no support

St. John’s, February 24, 2020 – On February 21, 2020, the provincial government announced four increases to the minimum wage that collectively will mean an additional $1.50 per hour plus payroll taxes. The government maintained the old formula for April 1, and delayed the use of the new rate setting mechanism until October 1. Nonetheless, the scheduled increases will likely require a small business owner to find an additional $3,200 per employee per year by October 2021. The typical small Canadian Federation of Independent Business member (ie. less than 20 employees) has 10 employees, so it could mean labour costs grow by $32,000 per year. 

“While the government’s announcement provides some predictability for business owners, the additional cost is going to be very difficult to manage for many, particularly small retailers who are already struggling with huge competition from online retailers and the big box stores,” said Vaughn Hammond, CFIB’s director of provincial affairs in Newfoundland and Labrador. “Further, the legislated review is still in place, so the minimum wage rate and the threat of more substantial increases will be back on the agenda again in two years.”

The minimum wage increases should not be viewed within a vacuum because there are significant future challenges facing small business owners, primarily increases in electricity costs associated with Muskrat Falls. Statistics Canada recently reported Newfoundland and Labrador saw 9,800 fewer jobs in January 2021 compared to the same month a year earlier. The province’s smallest businesses (ie. less than 20 employees) have not been creating jobs. Unfortunately, the provincial government still hasn’t shown how it will help small businesses cope with these planned wage increases. 

“The states of emergency in the Northeast Avalon region (a well performing economy relative to the rest of the province) exposed the precarious situations of many business owners and there will be no support coming from the provincial government, as it will rely on the federal government instead,” added Hammond. “A minimum wage increase of $1.50/hr in 18 months is clearly not the news many small business owners wanted to hear. Now, the provincial government really must turn its attention to helping them create the jobs Newfoundland and Labrador so desperately needs.”

For media enquiries or interviews, please contact:
Vaughn Hammond, Director of Provincial Affairs, CFIB
709-753-7764
[email protected] 
 
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members across every sector and region, including 2,000 in Newfoundland and Labrador. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.