Artificial increases distort market wages and raise payroll costs well beyond entry-level positions
October 1, 2025, Charlottetown, PEI – The Canadian Federation of Independent Business (CFIB) is warning that today’s increase in Prince Edward Island’s minimum wage, from $16.00 to $16.50 per hour, is creating a chain reaction of cost increases for small business owners.
By artificially lifting the wage floor, government isn’t just raising entry-level pay; it is forcing wage increases for many other employees across small businesses, setting off another round of cost pressures before the next hike to $17.00 per hour on April 1, 2026.
“When government raises the minimum wage, it isn’t just changing one number, it’s pushing up the entire wage ladder,” said Frédéric Gionet, CFIB’s Director for PEI/Atlantic region. “The labour market, not political decisions, should determine wages. By raising the floor in this way, government is effectively raising all wages, even when the economy does not justify it. It should be the other way around.”
Why small businesses are concerned:
- 84% of small businesses say they are impacted by minimum-wage hikes because raising the floor forces them to lift wages for more experienced, higher-productivity staff as well, distorting the natural wage progression that should reward skills and productivity rather than being driven by government-mandated increases
- Distorted signals: Instead of letting market-driven, median wages lead the way, reflecting real economic growth and productivity, government is ordering wage levels, creating upward pressure on costs and prices.
- Poor poverty reduction tool: Only 12% of CFIB members believe minimum-wage increases are an effective affordability measure, while 72% oppose government-mandated “living wages.”
Gionet noted that while headline hourly pay grabs attention, take-home pay for low-income workers barely improves once taxes and income-tested benefits are factored in.
“PEI has made smart moves in recent years by raising the basic personal amount and adjusting tax brackets so that workers keep more of what they earn,” said Gionet . “That’s the right approach. Minimum-wage hikes, by contrast, are a blunt political instrument that create cost pressures for small businesses without solving affordability.”
CFIB cautions that October’s hike is only the start, with another jump to $17.00 coming in April 2026, compounding costs for employers across all pay levels.
“We are calling on the province to reform the law so that future increases are tied to the prevailing median wage and applied on a steady, annual basis. This would keep wage growth in step with real economic conditions instead of triggering disruptive and often politically driven spikes,” added Gionet.
For media enquiries or interviews, please contact:
Frédéric Gionet, CFIB
506-866-5548
frederic.gionet@cfib.ca
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses, with 100,000 members across every industry and region. In Atlantic Canada alone, CFIB represents more than 10,000 members, over 900 of them in PEI, and collectively employ more than 124,000 people in the region (10,200 in PEI). CFIB advocates for policy change at all levels of government, provides expert advice and tools, and negotiates exclusive savings to help business owners succeed. Learn more at cfib.ca.
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