Business group challenges effectiveness of wage increases in alleviating poverty

Canadian money
Canadian money Courtesy Peter Scobie/CBC

According to data released by the Canadian Federation of Independent Business (CFIB), minimum wage increases are being questioned as an effective means of reducing poverty, says Blacklock's Reporter.

Findings from the CFIB research, following a 2021 labour department report, suggest that the link between minimum wages and poverty is relatively weak, casting doubts on the efficacy of such measures in addressing economic inequality.

The CFIB report highlights that the majority of minimum wage workers are young individuals entering the workforce with a high school education or less, often residing with their parents. These jobs are frequently transitional, serving as a starting point for young workers rather than long-term career positions.

Researchers noted that only a small proportion of minimum wage workers, approximately 1.5% are single parents. The majority, comprising 37%, are teenagers, while 57% are under the age of 25. Furthermore, nearly half of minimum wage workers, 42%, remain in the same job for less than a year, with only 16% retaining the minimum wage rate for over five years. Additionally, 62% of minimum wage workers are engaged in part-time employment.

Drawing from responses from 4,104 business operators nationwide, the CFIB research reflects widespread discontent among business owners regarding government efforts to address the rising cost of living.

An overwhelming 89% of respondents disagreed with the statement that governments are effectively addressing the issue, indicating a perceived lack of consideration for their perspectives.

The labour department's 2021 report, provided in response to inquiries from the Senate social affairs committee, echoed the CFIB's findings.

It highlighted that many minimum wage workers are teenagers from middle and higher-income families or young adults attending college or university and residing at home. The department also emphasized that changes in minimum wages have minimal impact on family income for individuals in many low-income households.

Moreover, the report noted that poverty rates in Canada have either remained stable or declined substantially in recent years, despite substantial increases in minimum wages relative to the cost of living.

Currently, the federal minimum wage, indexed to the Consumer Price Index, stands at $17.30 per hour. However, provincial minimum wages vary across the country, ranging from $14 per hour in Saskatchewan to $16.75 in BC, reflecting regional disparities in wage standards and cost of living.

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