Minimum wage increases on the way for Manitoba: groups, businesses weigh in

Manitoba – A month from now, minimum wage earners will be better equipped to start closing the gap between their monthly earnings and their ever-increasing cost of living. As of October 1, minimum wage in Manitoba is set to rise from $11.95 to $13.50 per hour.

This increase will mean an approximate $250 per month in extra gross pay for full-time employees. But it’s only the first in a series of rate hikes that the province plans to legislate over the next year.

On April 1, 2023, minimum wage will climb to $14.15 per hour. And by October 1, 2023, it will jump to approximately $15 per hour.

Premier Heather Stefanson made the announcement in mid-August, calling the phased-in approach as a means to narrow the divide between Manitoba’s minimum wage and that of every other province in the country.

“We know that to attract and retain new workers and immigrants in Manitoba, wages need to be competitive with other provinces,” she said at a news conference.

According to the Retail Council of Canada, even at $13.50 per hour Manitoba will only barely slide past Saskatchewan, who will be going to $13 per hour as of October 1. This will bump Manitoba from lowest spot to second-lowest in the country, at least until October 2024, when Saskatchewan plans to join Manitoba at the $15 mark.

Manitoba Chamber of Commerce Responds 

Shortly after Stefanson’s announcement, the Manitoba Chamber of Commerce (MCC) acknowledged that there was indeed a need for a minimum wage increase due to rising cost pressures.

Even so, they said, there’s a lot to be considered.

“There needs to be a balance between having a competitive minimum wage and recognizing that employers faced serious economic challenges through the COVID-19 pandemic, and that they continue to deal with the financial aftermath of operating restrictions and labor shortages,” says Elisabeth Saftiuk, MCC Vice President of Policy and Government Relations.

As an advocate for Manitoba business owners, MCC encouraged the provincial government to consider a complete tax review in their efforts to help ease the burden for businesses, too.

“It is imperative that governments consider offsetting the cost to business,” reads an MCC press release. “Minimum wage is one part of the affordability discussion, but we cannot have that discussion without considering Manitoba’s taxation framework, which is [also] falling behind our provincial and territorial neighbors.”

According to the MCC, Manitobans are not only known for having the lowest minimum wage. At the same time, we boast the highest income tax rates compared to Ontario, Saskatchewan, Alberta, and British Columbia.

“An individual earning $50,000 in employment income in Manitoba would save over $1,000 in income taxes if they lived in Saskatchewan instead,” the statement reads. “To further break this down, Manitoba has the third lowest Basic Personal Amount (BPA) in Canada, behind only Nova Scotia and Newfoundland and Labrador.”

The BPA is the amount of taxable income a wage earner is allowed to earn before the government applies income taxes. Workers making a taxable income that’s less than the BPA pay no income tax. Workers receiving a higher taxable income than the BPA pay taxes on their gross taxable income less the BPA.

For 2022, Manitoba’s BPA is set at $10,145. For comparison, Saskatchewan’s BPA is $16,615. This means that employed residents of Saskatchewan are able to make almost $6,500 more in income before it becomes taxable.

Living Wage Arguments 

As the MCC has entreated the province on behalf of business owners, the Manitoba office of the Centre for Policy Alternatives (CPA) has been building their own case, which would see even further increases to the minimum wage.

In late August, the CPA released a report advocating for low-earning Manitobans to be guaranteed a “living wage” instead of what the CPA deems the “poverty wage” that the province recently introduced.

“A poverty minimum wage is bad public policy, as families who work for low wages must sacrifice necessities to make ends meet, leading to chronic stress and long-term health issues,” the CPA report says.

The report infers that a living wage takes into consideration the amount of income that a family of four, with two full-time working adults, would need to bring home in order to cover their most basic needs of housing, transportation, and food. It should also be sufficient to allow for the healthy social, civic, and cultural development of the children.

“The living wage is designed so young adults are not discouraged from having children and older workers have some extra income as they age,” the report adds.

Based on current inflation rates, the report concludes that a minimum wage of $18.34 per hour is what’s needed for a Winnipeg wage earner to actually get by.

Tax Accountant Evaluates Dollars and Cents 

Henry Friesen of Blue River Group is a chartered professional accountant and financial consultant in Niverville.

Friesen says it’s difficult for the average person to understand just how a wage increase will affect them until income tax time comes around.

Canada, he says, has tax laws that are quite favourable for those earning very low incomes. The federal government provides numerous tax credits for low-income earners, such as rent assistance and financial relief on the cost of pharmaceuticals, to name only a few.

The Canada Workers Benefit (CWB) is a refundable tax credit specifically designed to help individuals and families who are working and earning a low income.

Considering the CWB alone, and no further tax credits that a person may be eligible for, Friesen says that the worker making $11.95 per hour today would be eligible for a federal tax reduction of $1,124 at the end of the year. In 2023, when the minimum wage reaches $15 per hour, that same worker’s CWB credit will drop to $177.

Add to this a reduction in all the other tax credits that a lower income person may be eligible for, and it’s clear to him who will come out the winner in this situation.

“The real winner here is the federal government,” says Friesen. “We have a lot of credits for poor people that are reduced as their income increases… I call that a tax, in a way.”

The bottom line, Friesen says, is that at $15 per hour most of the CWB will be lost to these employees. Because of that, $15 per hour will actually come closer to $13.35 an hour when all is said and done.

Closing the Wage Gap 

Pasquale Rocchio of Niverville is a healthcare aide with the Winnipeg Regional Health Authority. For the most part, Rocchio says, the $22 per hour he makes with his level of training isn’t out of line. But he sees big problems with how the significant rate hikes will affect him if businesses are expected to bear this cost alone.

“Costs of everything will go up, making it more difficult for everyone as a whole,” he says. “Those… [who are] making a fair wage presently will be forced to have increased costs that won’t be reflected [through] wage increases for ourselves.’

Essentially, he says, the new rates may look good to low-income earners now, but once they drive up the cost of living even further no one will truly benefit.

As well, he suggests, this political manoeuvre may in fact encourage people to take a drop in wage.

“I’ve seen many workers leave my field due to stress, overwork, and other similar issues as of late,” Rocchio adds. “A drastically [reduced] wage gap will make many more people contemplate leaving for jobs with less responsibility [even though it means] a small wage loss. And honestly, it makes me question my worth in my field as well.”

At minimum, Rocchio would love to see the provincial government work towards fairness at every wage level. Prior to the pandemic, Rocchio says, the Pallister government forced a merging of unions for all lower-tiered healthcare workers such as himself.

Since that time, workers’ wages have been frozen and negotiations delayed. The WRHA, Rocchio says, has been without a contract since April 2018.

Restaurateurs Weigh In 

The Citizen reached out to a number of local restauranteurs who rely heavily on minimum wage workers.

Niverville Chicken Chef owner Laura Mulvena and Niverville DQ owner Nikki Hagidiakow agree that they are glad to see their hard-working employees earn more income.

“We want [our employees] to be living a good life,” Hagidiakow says. “My heart feels happy for them because they all deserve as much as they can get.”

For Hagidiakow, though, about 50 percent of her employees earn more than minimum wage. To keep things equitable for all of her employees, she says she feels the need to raise everyone’s wage in order to maintain the wage gap between new trainees, trained employees, and managers. So while the government’s legislation was intended to address only those at the bottom of the pay scale, in many businesses like hers it will have a far more far-reaching effect.

“Like any business, there is only so much you can pay someone to ensure your business continues to operate,” explains Mulvena. “There is little to no room for error operating a restaurant right now. With the uncontrollable food costs, and now this, it will be very tough for businesses in the next few years as we are all still trying to recover from the last two years.”

Both Niverville restaurant owners agree that government assistance for small businesses would be greatly appreciated.

Hagidiakow says, for her business, it would be as simple as making the Canada Summer Jobs grant more accessible.

The Canada Summer Job grant is a federal government initiative which assists small businesses by providing wage subsidies during the summer months.

Unfortunately, Hagidiakow says the grant is fairly restrictive, requiring her to ensure that her employees work at least 30 hours per week. None of her young staff were prepared to put in the hours or give up their evenings and weekends to make the grant work.

“I think that [covering the cost of a minimum wage increase] should be a combined effort,” Hagidiakow says. “The government does have to contribute and make things like getting grants a little easier for small business. Lessening the burden somewhere would really be helpful.”

As for Mulvena, she’s also among many business owners who have really struggled to find enough employees as of late. And she’s not as convinced as Premier Stefanson that paying higher wages will change that.

“I feel a lot of people have gone away from wanting to work in this industry over the past few years, since COVID,” Mulvena concludes.

At the end of the day, Friesen agrees that businesses will suffer not just the costs of the increased hourly wages. The higher wage also impacts the annual cost of statutory holidays, vacation pay, workers compensation benefits, and the business owner’s portion of Employment Income and Canada Pension Plan for each employee.

Brenda Sawatzky is a Local Journalism Initiative Reporter for The Niverville Citizen.