The costs of paying a living wage

Canada's small business federation says if Canada mandate a living wage, over 570,000 small businesses would lose money. But one Ottawa business that does pay a living wage, say that's the cost of paying people enough to live.

By Xiaoli Li

As a business group warns of dire economic consequences if provinces enact basic livable wages, a company already doing so argues there are positives to paying workers more.

Putting in place a basic livable income for workers is the goal of a bill before Parliament from the NDP.

Beatrix Abdul Azeez, a policy analyst with the Canadian Federation of Independent Business (CFIB), looked at a hypothetical — what if small businesses were required to pay a living wage of $20 an hour?

She found this rate would be devastating, and put as many as 600,000 small businesses at risk of closure due to added costs.

“The pandemic has shown us that the CPI can go to crazy numbers. So we’re asking for them to actually tie it to median wages, which are more reflective of what’s going on in the labour market,” said Abdul Azeez.

Additionally, she says rather than raising wages, lowering taxes would do more for affordability.

“Mandatory wage hikes don’t actually solve the affordability crisis — what they do is transfer the responsibility from governments to small businesses,” she told CityNews. “It make the cost of doing business quite high and that can move businesses toward closure.”

But Liz Mok, the owner of Moo Shu Ice Cream in Ottawa, doesn’t see higher wages as a bad thing. She says her company has been paying livable wages since 2022.

“I don’t think that raising the minimum wage is going to solve everything but I also don’t think it’s something that we should be fighting against,” Mok said.

Mok concedes she’s had to raise prices but says that’s just part of the cost of doing business.

“As small businesses, we don’t have a lot of room to negotiate how much rent we pay. Same with our input costs like our ingredients, our supplies. And so labour is one of the few that we do have control over. We should be conscious about what the market rate actually is and what our employees actually need to be paid to have a life where they’re free of financial stress,” she explained.

Despite having to make adjustments, Mok tells CityNews she has seen many benefits.

“Employee satisfaction has gone up, when we do hire we do get a lot of high-quality applications,” she noted, adding they’ve also seen new business and more loyal customers as a result.

However, both sides acknowledge a basic income is not the only answer to affordability issues, and note governments have more to do more to address the price of rent and groceries.

Top Stories

Top Stories

Most Watched Today