$20/h minimum wage ‘cautionary’ tale: CFIB report

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Should minimum wage hit $20 per hour, upwards of 23,000 small Manitoba businesses would risk becoming unprofitable, a new Canadian Federation of Independent Business report concludes.

The findings come amid social policy lobbyists calling for national living wage minimums. Both the City of Vancouver and City of New Westminster (B.C.) have implemented such policies for municipal staff.

Closer to home, City of Winnipeg councillors voted in March to study an estimated living wage of $19.21/h for its employees. Councillors denied a proposal to pay civic staff the wage by 2025.

The new CFIB report is “a bit cautionary,” noted Brianna Solberg, the non-profit’s director of legislative affairs for the Prairies and northern Canada. Neither Manitoba nor the federal government seem to be planning a minimum wage mandate of $20/h, she added.

However, with all the discussion around hiking minimum wages, the CFIB said it wanted to highlight the “unintended consequences” of changing the rate to what some groups deem a living wage.

“Business owners are keenly aware of the budget pressures their employees are facing,” Solberg said. “But it’s perhaps unfair for governments to place the burden of addressing the rising cost of living on business owners.”

A $20/h living wage would cost the province’s economy $2.8 billion in extra wages, the CFIB asserted.

More than two-thirds of Manitoba small businesses — 69 per cent — have increased their pay amid recent minimum wage legislation. Les Saj restaurants in Winnipeg are among them.

Between October 2022 and October 2023, Manitoba’s minimum wage rose 13 per cent, to $15.30/h. Its minimum wage increases are tied to Statistics Canada’s consumer price index; government can implement larger hikes when inflation surpasses five per cent.

“We have to (eat) some costs but we also have to end up increasing the menu item prices,” explained Adam Tayfour, co-owner of Les Saj, a Middle Eastern eatery with three locations in the capital city.

The 2022-23 minimum wage increases happened while food, gas and other utility prices were also climbing. The wage raises were “manageable,” Tayfour said, but a jump to $19 or $20/h would be a stretch.

He believes he’s pricing Les Saj’s wraps at the maximum cost acceptable to customers. Meanwhile, consumers are eating out less, Tayfour has observed.

Tony Siwicki figures a $4 minimum wage increase, to $19 an hour, would drain his business of $300,000 per year.

“Where do you get that, at the end of the day?” the Silver Heights Restaurant owner said Wednesday. “(I’m) not sure anybody could overcome that cost.”

Already, local restaurants are hiring fewer teenagers and focusing on older workers who have experience to cut back on training and related costs, Siwicki said.

Forty per cent of the CFIB’s 178 Manitoba minimum wage survey respondents said they reduced hiring of young and unskilled workers after the latest mandatory increase; 32 per cent reported lessening overall employment.

Siwicki is chairman of the Manitoba Restaurant & Foodservices Association. The group is lobbying for a grant to offset eateries’ labour costs for hiring newcomers and youth.

“Everybody wants a living wage … but there’s ways around it to not hurt the industry,” Siwicki maintained.

In its report, the CFIB lists a number of policy changes to “help alleviate Canada’s affordability crisis.”

Reducing business taxes to ease the strain of higher current minimum wages, linking minimum wage adjustments to private-sector wage growth, and addressing housing shortages are among the suggestions.

“I think we end up just throwing numbers out there and saying, ‘We need to raise it to this,’” Chuck Davidson, president of the Manitoba Chambers of Commerce, said of minimum wage discussions.

“We need to have a … broader conversation.”

Many minimum wage workers are high school students and young adults living at home, Davidson said.

However, a growing number of overall workers receive minimum wage, posited Niall Harney, a senior researcher for the Canadian Centre for Policy Alternatives Manitoba branch.

Eight per cent of Manitoba’s workforce earned minimum wage in 2023, up from four per cent in 2022 (but near 2016’s seven per cent), CCPA data show.

Sixty-four per cent of the keystone province’s minimum wage workers are at least 20 years old, according to the data. Half of minimum wage-earning staff had been at their jobs for more than a year.

The CCPA released a labour policy report in April; one of its recommendations rehashed its ideal of a $19.21/h minimum wage in Winnipeg.

“We, in this country, have become really accustomed to a low-wage business model,” Harney said. “Getting off of that model will take adjustment and planning.”

People receiving higher wages will be able to purchase better food (creating less stress in the province’s health-care system) and contribute more to taxes, among other benefits, Harney listed.

The recent near-$4/h increase in Manitoba’s minimum wage didn’t lead to a public wave of business insolvencies, he added.

The CFIB conducted its minimum wage survey online Aug. 17 through Sept. 27, 2023, with 4,104 Canadian participants. It released its report May 15.

gabrielle.piche@winnipegfreepress.com