Lynda Brazeau knows the impact a few cents an hour can make.
As the executive director of the Friendship Inn, she meets many of Saskatoon’s working poor, who frequent the soup kitchen while making minimum wage when they can find work.
The provincial government’s decision to increase the minimum wage — and its plans to index the minimum wage to the consumer price index — can only mean good things for her clients, Brazeau said Monday.
“I don’t think it’s going to change the world for them, but I’m happy to hear that there’s an increase of any kind.”
Saskatchewan’s minimum wage will be increased from $10 to $10.20 in October. That means the average full-time employee making minimum wage will earn an extra $416 a year before taxes, bringing their average pre-tax annual income to about $21,000.
The minimum wage will likely increase year after year, as the government works to put in place a plan for an annual indexing of the minimum wage.
“We looked at what was taking place in other provinces. This moves us well up,” said Labour Relations and Workplace Safety Minister Don Morgan.
Past increases to the low-income cut-off for paying income taxes also factored into setting the $10.20 figure, Morgan said.
Not everyone thinks the few extra dollars in the pockets of low-income workers is a good deal.
“Certainly, retail and hospitality sectors will be hardest hit by an annual increase,” said Marilyn Braun-Pollon of the Canadian Federation of Independent Business (CFIB). “Business owners will have to consider increasing prices or cutting hours.”
Braun-Pollon said the CFIB’s data shows most business owners already pay more than minimum wage and that an increase is going to have a damaging “ripple effect” on the small business economy.
She said the increase is “a blunt tool” that won’t actually help low-income earners. She said the province should instead provide complete tax exemptions for low income earners.
Saskatchewan’s low-income tax credit currently provides a full-time minimum wage employee with about $240 a year, but the employee pays $418 in provincial taxes.
The indexation formula will be in effect for next year and will be based equally on percentage changes in the consumer price index and the average hourly wage for the previous year, Morgan said.
“We think low-income workers should participate in the growth of the economy as well. Strictly on the basis of inflation, we felt, doesn’t reflect what should happen.”
Changes to the minimum wage under the indexation formula will be announced each year by June 30 and implemented Oct. 1. Calculations will be based on the preceding year’s numbers.
Morgan had previously suggested there could be a base increase to the minimum wage in 2014 along with an indexed increase, but said Monday that $10.20 will be the rate from Oct. 1 until the same date in 2015.
Opposition labour critic David Forbes said he’s happy with the timeline, but disappointed with the $10.20 number.
“We thought we should be, as a province, higher than that,” Forbes said. “I’m concerned this is going to keep us in the back of the pack.”
The critic said he wanted to see the wage in the range of $10.40 to $11, noting some provinces have higher rates.
The government first said it would index the minimum wage as part of its provincial labour legislation overhaul. The exact indexing scheme will be released in three months, Morgan said.
BY THE NUMBERS
At $10.20 an hour:
A year: $21,216
A month: $1,768
A week: $408
Compared to $10 an hour:
An extra: $416 a year
An extra: $35 a month
An extra: $8 a week
Minimum wage in all provinces and territories:
New Brunswick: $10.00
Northwest Territories: $10.00
Prince Edward Island: $10.00
British Columbia: $10.25
Nova Scotia: $10.30