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Debunking Minimum Wage Myths

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CFIB’s minimum wage myth-busting research reveals that minimum wage increases are not effective. Not only does a minimum wage increase kill jobs, minimum wage earners also do not receive the full benefits.

Minimum wage rates have steadily crept up over the years across Canada. Provincial governments have commonly used the minimum wage rate as a tool to appeal to Canadian workers. Often, governments promote minimum wage increases as a way to boost the incomes of minimum wage earners but fail to explain who actually stands to win or lose from such a policy.

On one hand, minimum wage increases impose a negative impact on employers, especially small businesses which are generally more labour intensive than big businesses. Employers may be forced to cut jobs, freeze hiring, or even reduce employee work hours. Small business owners may also have to find ways to mitigate increased labour costs by hiking prices, reducing business investment, and decreasing employee training. On the other hand, governments reap benefits at the cost of businesses through higher personal income and payroll tax revenues.