The minimum wage increased by 50 cents an hour Thursday for workers in Newfoundland and Labrador, tying the province for the second-highest in the country.
The 5.3 per cent bump, to $10 an hour, brings the province in line with Nunavut and behind only Ontario, where the general minimum wage is $10.25 an hour.
The boost is part of the provincial government's poverty reduction strategy, which has powered a 67 per cent increase in the minimum wage over the last five years.
Assuming a standard 40-hour work week, someone making minimum wage will now earn just under $21,000 a year — which is comfortably above the poverty line for a single person in Newfoundland and Labrador, but slightly below the cutoff for a lone parent with one child.
Richard Alexander of the Newfoundland and Labrador Employers Council said the rapid wage increase has been difficult on small businesses. Bumping up the minimum wage can actually increase unemployment, he said, as employers lose the ability to expand and may turn to automation and other cost-cutting measures to cope.
"The impact of minimum wage in terms of job losses doesn't happen immediately. It happens over the medium to long term. It generally comes from a reduction in employment that would have happened."
'Not the reality'
But the same argument is made every time the minimum wage goes up, Lana Payne of the Federation of Labour said.
"We did not see that in our labour market. This is not the reality of what happened," Payne said. "No longer, by the way, are the citizens of the province satisfied to be able to say, 'I should be just lucky I got a job.' "
The employers council is asking the government to halt any further increases to allow businesses time to adjust. Legislation requires that the minimum wage be reviewed within two years of the latest change.
Economists have no conclusive answers on the effects of a minimum wage increase.
Some assert it stifles job creation by making workers more expensive to employ.
But others say hikes in the minimum wage give consumers more money to spend, which promotes economic growth and ends up benefiting companies even more.