BE CAREFUL WHAT YOU WISH FOR
CBC
Tue, October 10, 2023
Currently, the minimum wage is set through a recommendation of a committee.
CFIB's proposal would cut red tape, says Frederic Gionet. (Canadian Federation of Independent Business)
Gionet argues this method would be more transparent and reduce red tape.
He said several countries in the Organization for Economic Cooperation and Development do this, setting the minimum wage at between 50 and 65 per cent of median income.
Running the numbers
The method described below is just one possibility, but not an unlikely one should such a policy be adopted on the Island.
Wages on P.E.I. vary through the year, with the median falling in the summer when people including students occupy more service jobs in the economy. To account for that, this system uses a 12-month average of wages.
This hypothetical system would change the minimum wage only once a year, on Jan. 1, which fits with many companies' fiscal years and matches the usual time for changes to programs like Employment Insurance and income tax.
This example calls for an announcement on Oct. 1 of each year, with the new wage taking effect the next New Year's Day. Given the availability of data from Statistics Canada, that would mean the 12-month average time span runs from September to August.
Looking back to the beginning of this century, P.E.I.'s minimum wage has almost always stayed within that 50 to 65 per cent band. But it's been climbing within that band. In 2000, it was running about 53 per cent of the median wage. Since 2021, the minimum wage has occasionally popped out over 65 per cent of the median.
While tying minimum wage to median wage offers transparency, it does not protect business from dramatic changes.
For most of this century, wage increases have been moderate, under five per cent in all but six years for minimum wage and three years for median wage.
Some of that moderation was lost for both wages following the COVID-19 pandemic.
On New Year's Day this year, the minimum wage was $14.50, up from $13 a year earlier. That's an 11.5 per cent increase. The median wage rose only 3.4 per cent over the same period.
Using the 65 per cent formula, which is what the wage is close to now, that would have seen the minimum wage rise to $13.99 from $13.53.
But if minimums were tied to the median wage, businesses would have found themselves paying for that temporary reprieve this coming January.
They'd be looking at 13.8 per cent jump in the minimum wage on New Year's Day 2024, with the wage rising to $15.91 on the 65 per cent formula, well above the actual $15 wage.
CBC
Tue, October 10, 2023
Currently, the minimum wage is set through a recommendation of a committee.
(Singkham/Shutterstock - image credit)
The Canadian Federation of Independent Business wants the P.E.I. government to change the way minimum wage is set, pegging it to a percentage of the median wage rather than following advice from a committee.
The federation, a small-business advocacy group that says it has 97,000 members across Canada, says the system needs consistency.
"What [businesses] want is predictability and rationale behind that, so it's easy to figure out and read how the minimum wage should rise every year," said Frederic Gionet, a senior policy analyst of legislative affairs with the CFIB in the Atlantic region.
Take P.E.I., for example. On Sunday, the wage moved to $15 an hour. Three days later, the province announced two further increases for 2024, which will see the wage hit $16 by the end of 2024.
Movements in the minimum wage follow advice from a committee of the Employment Standards Board, which weighs various economic factors. That recommendation is then reviewed by P.E.I.'s cabinet for a final decision.
The federation is suggesting the province simply set the wage every year as a percentage of the median wage paid on the Island. The median is the statistical midpoint of a group of numbers. In this case, it's the wage level where half of P.E.I. earners are making more and half are making less.
The Canadian Federation of Independent Business wants the P.E.I. government to change the way minimum wage is set, pegging it to a percentage of the median wage rather than following advice from a committee.
The federation, a small-business advocacy group that says it has 97,000 members across Canada, says the system needs consistency.
"What [businesses] want is predictability and rationale behind that, so it's easy to figure out and read how the minimum wage should rise every year," said Frederic Gionet, a senior policy analyst of legislative affairs with the CFIB in the Atlantic region.
Take P.E.I., for example. On Sunday, the wage moved to $15 an hour. Three days later, the province announced two further increases for 2024, which will see the wage hit $16 by the end of 2024.
Movements in the minimum wage follow advice from a committee of the Employment Standards Board, which weighs various economic factors. That recommendation is then reviewed by P.E.I.'s cabinet for a final decision.
The federation is suggesting the province simply set the wage every year as a percentage of the median wage paid on the Island. The median is the statistical midpoint of a group of numbers. In this case, it's the wage level where half of P.E.I. earners are making more and half are making less.
CFIB's proposal would cut red tape, says Frederic Gionet. (Canadian Federation of Independent Business)
Gionet argues this method would be more transparent and reduce red tape.
He said several countries in the Organization for Economic Cooperation and Development do this, setting the minimum wage at between 50 and 65 per cent of median income.
Running the numbers
The method described below is just one possibility, but not an unlikely one should such a policy be adopted on the Island.
Wages on P.E.I. vary through the year, with the median falling in the summer when people including students occupy more service jobs in the economy. To account for that, this system uses a 12-month average of wages.
This hypothetical system would change the minimum wage only once a year, on Jan. 1, which fits with many companies' fiscal years and matches the usual time for changes to programs like Employment Insurance and income tax.
This example calls for an announcement on Oct. 1 of each year, with the new wage taking effect the next New Year's Day. Given the availability of data from Statistics Canada, that would mean the 12-month average time span runs from September to August.
Looking back to the beginning of this century, P.E.I.'s minimum wage has almost always stayed within that 50 to 65 per cent band. But it's been climbing within that band. In 2000, it was running about 53 per cent of the median wage. Since 2021, the minimum wage has occasionally popped out over 65 per cent of the median.
While tying minimum wage to median wage offers transparency, it does not protect business from dramatic changes.
For most of this century, wage increases have been moderate, under five per cent in all but six years for minimum wage and three years for median wage.
Some of that moderation was lost for both wages following the COVID-19 pandemic.
On New Year's Day this year, the minimum wage was $14.50, up from $13 a year earlier. That's an 11.5 per cent increase. The median wage rose only 3.4 per cent over the same period.
Using the 65 per cent formula, which is what the wage is close to now, that would have seen the minimum wage rise to $13.99 from $13.53.
But if minimums were tied to the median wage, businesses would have found themselves paying for that temporary reprieve this coming January.
They'd be looking at 13.8 per cent jump in the minimum wage on New Year's Day 2024, with the wage rising to $15.91 on the 65 per cent formula, well above the actual $15 wage.
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