Affordability, minimum wages, and living wages: Striking a balance for small businesses

In today's volatile economic environment, affordability has become a pressing concern for Canadians. The rising cost of living has left many grappling with the challenge of making ends meet, particularly vulnerable workers and small business owners struggling to navigate the numerous economic challenges that arose because of the pandemic and its aftermath.

Supply disruptions resulting from lockdowns, substantial monetary and fiscal stimulus, and geopolitical conflicts have all contributed to significant cost-of-living increases in recent years.¹ This scenario raises questions about how to best ensure that vulnerable workers and small business owners are not disproportionately affected.

Many governments have attempted to address the escalating cost of living, yet nearly nine out of 10 Canadian small businesses believe that these efforts have not been effective. Business owners overwhelmingly feel that governments are not adequately considering their perspectives in addressing the rising cost of living, with many bearing the burden themselves.

This perception stems from the reliance on minimum wage policies as the government's primary tool to address Canada's affordability challenges. However, many business owners view minimum wage increases as a blunt instrument that fails to effectively target the root causes of the country's affordability shock while adding more costs to their operations.