New NDP leader Gary Burrill has launched his $15 minimum wage franchise in Nova Scotia.
This massive minimum wage hike is modelled on the Alberta NDPâs plan and is a cause cÃlÃ¨bre for organized labour across Canada. The so-called âFight for 15â has left Alberta with an economic policy that is horrifying for many small businesses.
The Alberta governmentâs advisors say âitâs reasonable to assume significant job loss is one realistic possibility.â The government has not produced a single economic impact analysis demonstrating otherwise. Premier Rachael Notley admitted Albertaâs economy cannot handle this shock.
Nova Scotia is no better equipped to handle this hike. More worrisome, Mr. Burrill is proposing the NDP can meet the $15 goal by 2018. They have provided no economic impact analysis and, worse, no implementation plan.
Mr. Burrill does say the NDP would exempt small and family-operated businesses from the increase while large corporations would foot the bill. This is nice spin, but there is no indication how this could even be done.
What benchmarks would be used? Revenue? Ownership? The number of employees? How would it be monitored and at what cost?
Does this mean the small family-owned restaurant will be exempt while âcorporateâ franchise owners next door are not? If our favourite large coffee chain franchisees are required to pay the $15 wage, what might this mean for the small âfamily-ownedâ coffee shop down the street?
Imagine trying to find staff in an environment where other firms are mandated by government to pay higher wages? Unintended consequences of this ill-conceived labour market intervention are mind-boggling.
The firms affected will need to hike prices, lay off staff, reduce employee work hours and reduce training. Profitability will decline, reinvestments and growth in business will diminish and jobs which might have been created will simply not appear.
But government will rake in higher personal income and payroll taxes.
For the low-income employee, the benefit of a $15 minimum wage will be marginal. In fact, minimum wage earners lost more in 2015 to higher government deductions (CPP/QPP, EI, federal and provincial taxes), compared to 2010, in most provinces and territories. In Alberta, minimum wage earners could see payroll deductions increase from $1,965.60 in 2010 to $5,576.22 in 2018.
Minimum wage hikes harm youth employment. According to a new Fraser Institute study, for every 10-per-cent increase in minimum wage there is a resulting decrease of youth employment of three to six per cent. Given the NDPâs proposed 29-per-cent hike, we could see a nine to 18 per cent drop in youth employment in Nova Scotia.
Nearly 60 per cent of people earning minimum wage are ages 15 to 24, typically just entering the workforce. Only two per cent of minimum wage earners are single parents with a dependent. If Mr. Burrill is trying to help those folks, thereâs a better way.
CFIB has been recommending that, to help low income earners, government need look no further than the basic personal exemption (BPE).
Nova Scotia has the second lowest BPE in Canada at $8,481. This is the point at which workers start paying taxes. We continue to urge the Nova Scotia government to address this shameful statistic before looking at reckless minimum wage hikes.
We were very pleased to see the premier suggesting this is his preferred option. If so, CFIB will be looking for it in the next budget.
Nova Scotians face some of the heaviest taxes in the country. By allowing low-income earners to keep more of what they earn, rather than enrich the treasury through minimum wage hikes, the government can actually do something meaningful to benefit those who need it most.
Jordi Morgan is vice-president, Atlantic, of the Canadian Federation of Independent Business (CFIB).