2 December 2021
Minister Trevor Holder
Chestnut Complex
P. O. Box 6000
Fredericton, NB E3B 5H1
Via email: trevor.holder@gnb.ca
Dear Minister Holder:
Re: Increase to New Brunswick’s Minimum Wage
I am writing on behalf of our small business members to express the Fredericton Chamber of Commerce’s concerns with the dramatic minimum wage increase announced earlier today. Our concerns fall primarily into five buckets:
- Deviating from the statutory review process and the associated required consultation
- The disproportional impact on businesses that have been hardest hit by the pandemic
- The cascading effects on wages throughout the economy
- The inefficiency of increasing the minimum wage as a policy choice to alleviate poverty
- Lack of notice period to ease the implementation process
As you know, New Brunswick’s Employment Standards Act requires the government to review minimum wage every two years, including a consultation process – this was last completed in 2020 and is therefore due to be completed again in 2022. The government’s choice to deviate from this established process that allows for various stakeholder groups to provide input and ensure government has the perspective needed to make knowledgeable decisions as circumstances change quickly – even more so in the midst of a pandemic. This is the very reason to require a statutory review with such a high frequency.
According to a May 2021 Working NB report, less than 5% of New Brunswick’s workforce makes minimum wage (the 2nd lowest rate in the country) – many in entry-level positions – but a large portion of these workers are in the sectors that have been hit hardest by the pandemic – 66% working in either the retail trade or accommodation and food service industries. It is also notable that this wage increase comes during a pandemic where the New Brunswick government’s pandemic relief and stimulus efforts over the last two years have been more than $1 billion below the average of other provinces, these businesses will be further challenged to recover – not all of them will. The overall relative strength of the provincial economy as evidence of business’ ability to absorb such an increase is meaningless to these businesses that continue to struggle.
Using a blunt instrument like minimum wage to address complex problems like poverty will produce unintended consequences. With thin profit margins to begin with, businesses in these hardest hit sectors will have to react in some manner – if not closure, then either fewer staff members, hours cutbacks, raising prices, waiting to make needed investments or a combination of these and more. We also expect to see wages rising proportionally amongst the cohort of staff members that currently make above minimum wage – they will expect a similar increase in wages. With inflation currently at concerning levels, this will further exacerbate the cost-of-living issue in the province.
With a myriad of policy options available to government to address poverty, minimum wage, while obviously easiest for the government’s budget, is the tool that will be most painful to the hardest hit sectors while providing diminishing benefits to those experiencing poverty. Studies are at best inconclusive on whether raising the minimum wage will be beneficial to workers as they reduce employment opportunities and contribute to the inflationary environment. Raising the low-income tax threshold, investing in affordable housing, come to an agreement with the federal government on childcare and providing more direct support to individuals would be better policy levers – and not on the backs of the province’s smallest and most vulnerable businesses.
During your news conference today, you stated that you were making the announcement at this time to give businesses time to plan to implement. However, it is already December – many businesses have long set their budgets for 2022, based on the established CPI system that was kept in place just last year after the 2020 statutory review. The consultation process required by statute would have produced this information for consideration before, as you say, implementing the largest hike in minimum wage in the province in 40 years.
Sincerely,
Krista Ross, CEO, Fredericton Chamber of Commerce
cc: Hon. Blaine Higgs, Premier, Province of New Brunswick
cc: Hon. Arlene Dunn, Minister Responsible for Economic Development and Small Business