Minimum wage increases to $11 an hour today
Canadian Federation of Independent Business says wage hike will fall back on consumer
If you work for the minimum legal wage in New Brunswick, you'll be earning 35 cents an hour more today.
The minimum wage is going up to $11 an hour from $10.65 on April 1, which means adjustments for some businesses.
Jake Saunders, co-owner of TrailWay Brewing in Fredericton, said he already pays his bartending staff $11 an hour. Now that they'll be on par with minimum-wage earners, he may have to discuss a small raise with the other owner of the brewery, he said.
"I do like paying a little bit more than minimum wage," he said. "I just feel better."
Saunders stressed that he can't raise his wages too much, though. The brewery opened a year ago and is still establishing itself in the community, he said.
Some people may believe business owners "swim in money," he said, but he can only afford to pay so much for wages before he must pass costs on to consumers, which means making his beer more expensive.
"For most businesses, staffing is the biggest line item on the financial statement," he said.
One cost among many
The increase today marks the third time the minimum wage was raised in the province since December 2014. In a news release, the government said the increase "will put more money into the pockets of New Brunswickers."
"They will buy and invest more," said Premier Brian Gallant. "This helps strengthen the economy."
- Minimum wage to be tied to inflation starting in 2018
- Increase in minimum wage, to $11 coming in April 2017
The Canadian Federation of Business said it also takes more money out of the pockets of businesses, which will affect consumers in return.
Louis-Philippe Gauthier, director of provincial affairs for the federation, said the 35-cent increase may seem minimal, but it will have a significant impact on businesses.
After tax, minimum-wage employees will now gain $594 more a year.
But the business will pay $792 per employee, which includes additional costs for benefits or employment insurance, he said. On top of that, business owners face a raise in property tax, the gas and diesel tax, the land transfer tax and a "skyrocketing" increase to worker's compensation benefits, he said.
Benefits will increase again next year, he added, while businesses also brace for a carbon tax and rate hikes for employment insurance.
They'll have to find efficiencies, or they'll have to transfer the minimum wage in this case on to the consumer by raising prices.- Louis-Philippe Gauthier
"So when you consider the whole environment of all the new cost that has been layered on top of the expenses of businesses, for some they'll reach the point where they have to make decisions on cuts in certain areas of their businesses," Gauthier said.
"They'll have to find efficiencies, or they'll have to transfer the minimum wage in this case on to the consumer by raising prices."
Instead of raising the minimum wage every year, the federation recommends the government reconsider policies to help low-wage and low-skilled workers, he said. In the past, the federation recommended that government boost the Working Income Tax Benefit, increase personal or spousal exemptions, or reduce personal income tax rates for targeted groups of low-income earners.
"Unfortunately, all of these policy potentials are essentially being disregarded," he said. "So now it's the businesses that have to make the tough decisions on cutting."
Not enough, says activist
Jean-Claude Basque, provincial co-ordinator for the Common Front for social justice, welcomed the wage increase but said $11 an hour is not enough to support many low-income workers or single-parent families.
Too many people pay more than 30 per cent of their income for housing, which means they often run up debt to pay for housing and other expenses, he said.
If anything, the government should provide more low-income earners with higher wages and reduce their taxes at the same time, he said.
Even people working 40 hours, they are still under the poverty line.- Jean-Claude Basque, Common Front
"Even people working 40 hours, they are still under the poverty line," he said. "That's the real problem."
Basque said the minimum wage would have to be $15 to allow for workers to live without debt and above the poverty line.
The group also wants the government to announce minimum standards, including at least five days of sick leave a year, and better overtime pay. Basque said that many low-income earners pay for their own uniforms and other work-related expenses "so those are the changes that would really help workers."
Difficult for business
Saunders sees both sides of the coin.
While it's not feasible for him to pay his staff $15 an hour now, he understands the difficulty of raising a family on today's minimum wage, he said. When the brewery is doing a bigger business, he'd like to pay his staff more, he said.
"The end goal for us is, the people you do hire, you want to see them to make well above minimum wage," he said. "You love to see people being able to get paid a living wage and being able to take a couple of weeks of vacation and not live paycheque to paycheque."