Double minimum wage spells trouble
A $20 hourly pay in Halifax would cripple small businesses
In recent years, some United Way agencies in Canada have waded into policy debates on income inequality, job insecurity, and recently, what constitutes a “living wage.”
The CBC reported, the United Way in Halifax paid the Canadian Centre for Policy Alternatives (CCPA) $23,000 to come up with a living wage for Halifax. The report concluded that $20.10 an hour would provide a family of four in the city with “a good quality of life.”
While the United Way of Halifax did not specify it should be legislated, the CCPA — a union-backed group — has long advocated for higher minimum wages and legislated living wage policies at the municipal level. Turning the tables, I’m sure advocates for a higher minimum wage would object if an esteemed charity were to fund a business group or business-funded think tank to prepare a similar analysis.
I tweeted that small business owners should to be aware of this when they choose which groups to give their charitable dollars to, considering they are some of the biggest contributors to community and charities. Our research shows 99 per cent of CFIB members give back to their communities in one form or another.
The Canadian Federation of Independent Business is not boycotting the United Way, as some would claim. My goal was to highlight the unintended consequences of moving to a $20.10 “livi ng wage.” It wo ul d cripple many s mal l businesses and lead to widespread layoffs, harming the very people it was intended to help.
Without getting into an analysis of the limitations or motivations of the report, it is worth noting it’s loud and clear about the desirable outcome (the “living wage”), but vague about how businesses will be able to provide it, aside from bizarre and irrelevant strategies to supposedly help employers absorb the associated costs. Those include increasing productivity (often done by replacing workers with technology), offering flex hours, additional paid vacation, and encouraging employees to engage in political advocacy to increase welfare benefits.
The very premise of achieving a living wage that is double Nova Scotia’s current one will remain an elusive goal because businesses are at the mercy of basic economics, and if they are forced by law to pay substantially more, they will have to reduce operations or close down. This could cause further damage to an already weak economy and eliminate job prospects for thousands of Haligonians, particularly young and inexperienced workers.
CFIB has long supported policies to help low-income earners, including increasing the basic personal income tax exemption. Nova Scotia requires low-income earners (those earning less than $8,500) to pay income taxes, where a worker in Saskatchewan doesn’t pay a nickel in income tax until they earn more than $15,000. Only Prince Edward Island taxes more lower-income workers than Nova Scotia.
CFIB has also been a strong proponent of training and hiring credits to encourage skills upgrading for those who need it most.
Other than union-funded research, almost all work done on minimum or living wage policies shows they end up hurting society’s most vulnerable.
The United Way of Halifax might want to consider this before jumping in with a group that has such a strong political agenda. Hiring the CCPA to do this analysis ensures only one result — and a quick scan of their impressive website and many carbon copy reports would have confirmed that.
If my Twitter comment was offside, it’s because I didn’t make clear that not all United Way agencies have taken this approach. This is more a consequence of the limits of a 140-character analysis and frustration on my part. Business owners don’t need my advice on which charities they should support. They know how to do that.
But it is nearly impossible for a business owner to speak out on this issue without being labeled an uncaring or irresponsible employer. They need someone in their corner to vigorously defend their perspectives, their employees and the broader community.
Operating a small business is not a licence to print money. I’ve spoken to so many business owners who are struggling to meet their payroll, today. Lots of business owners tell me they routinely take out less from their business for their families than they pay their staff. Several say they’ve had to use their credit cards just to meet payroll in bad months.
With all of the taxes they pay, jobs they create and community support they provide, the last thing small business owners need is someone telling them its unethical not to double wages.
If the United Way of Halifax wanted to start a conversation, I hope this perspective will be added to the mix.