Minimum wage hikes: not an effective solution to poverty reduction



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CFIB recently presented to Ontario Minimum Wage Advisory Panel outlining the negative impact that minimum wage hikes have on small business. While we support the province’s efforts to reduce poverty, spontaneous and politically-motivated jumps in the minimum wage tend to hurt not only small employers, but the very people they are supposed to help: the low-skilled and low-income workers, by reducing the businesses’ capacity to hire and retain them. We provided recommendations for more effective alternatives in reducing poverty.

To help this segment of the economy, we are calling on government to implement measures such as changes to the personal income tax system and incentives for informal, on-the-job training.  For example, Ontario has a much lower basic personal exemption – the amount Ontarians can earn before paying taxes – than provinces such as Alberta, Saskatchewan and Quebec. An increase in the personal income tax exemption will provide an immediate increase in disposable income for low-income earners, far greater than hiking their hourly pay rate by a few cents.  In addition, more skills training opportunities will allow low-skilled workers to broaden their expertise and qualifications and will eventually expand their ability to earn more than just minimum wage.  If implemented these solutions will help more Ontarians to get above the poverty line and will allow  small, independent businesses to continue creating jobs and economic growth without imposing additional payroll burden on them

Link to original article on CFIB’s website

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