Minimum Wage Increase in Canada
Several occupations and industries are exempt from minimum wage standards. These include municipal police, real estate brokers, academic staff at a post-secondary educational institution and extras in film production.
The Alberta Chamber of Commerce says minimum wage increases hurt small businesses. They argue that there are other policy options.
What is a minimum wage?
A minimum wage is a level of pay below which an employee cannot work. It may be established by law or in collective bargaining, and it is typically adjusted periodically for inflation. In Canada, multiple provinces have their own minimum wages and many also index them to the Consumer Price Index (CPI).
The federal government sets the basic personal amount, or BPA, which is the amount that people do not pay taxes on. In addition to the BPA, there are a number of tax credits and deductions that can reduce an individual’s overall tax bill. These include RRSP contributions, Employment Insurance (EI) payments, and Canada Pension Plan payments.
A small number of occupations are exempt from the minimum wage, including municipal police officers, real estate brokers, academic staff at post-secondary educational institutions, and extras in film production. In addition, employees who work less than 28 hours a week are eligible for meal and lodging deductions.
What is a severance package?
A severance package is the pay an employer offers to workers who are terminated or laid off as part of a company shakeup. It can include a bundle of benefits like unused vacation days and sick days, along with a lump-sum payment. It may also include other perks like career coaching and job search assistance.
Typically, severance packages are based on years of service and can vary from company to company. “A week’s worth of salary for each year is common, while four weeks per year would be generous,” explains New York employment attorney Robert Ottinger.
Severance packages usually include a general release of claims and a 21-day period to review the agreement before signing it. Employees who accept severance packages may lose the right to collect unemployment benefits and should consult an experienced lawyer before signing any documents. Severance packages may also contain noncompete clauses, which could prevent workers from taking a job in the same industry.
What is the impact on small businesses?
While many small businesses may feel the pinch of an increased minimum wage, there are ways to help alleviate this pressure. For example, a small business tax deduction can make the difference for smaller companies. It can reduce the tax rate to 9% and make it easier for companies to manage higher labour costs.
Additionally, a minimum wage increase can lead to lower poverty rates. When more people are able to afford food and housing, they can depend less on government programs. This can mean that governments can shrink their budgets and save money that they can pass onto businesses.
Finally, a minimum wage increase can also lead to more consumer spending, which can help businesses offset some of the effects of an increased minimum wage. Ultimately, a minimum wage increase is good for everyone, including the small businesses that make up the heart of Alberta’s economy. This is why it’s important that businesses get behind the initiative and support its implementation.
What is the impact on employees?
Despite business lobbyists’ claims, minimum wage increases have little impact on jobs. The economy adjusts to higher wages by shifting hours worked, more reliance on skilled versus unskilled labour, higher consumer prices and benefits, and automation.
More than 60 economists from universities across the country signed a letter in 2014, concluding that raising the minimum wage had no effect on jobs. Moreover, most people working at minimum wage are not poor. Only 18 per cent of Alberta’s low-wage workers live in poverty households, and most of them have a spouse earning a higher income.
Nonetheless, the government is continuing to review employment data. In a written statement, Brian Jean, Minister of Jobs, Economy and Northern Development, said the panel’s report was valuable. However, he said the government had no plans to introduce a separate minimum wage for liquor servers or change Alberta’s current system. He also noted that the panel included business interest representatives but did not include any labour unions.