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Canada’s Small Business Lobby Is Working to Cut Wages and Government Benefits

Claiming to stick up for the little guy, the Canadian Federation of Independent Business has consistently fought to further its anti-worker, anti–public sector agenda. The COVID-19 pandemic has made their crusade even more obscene.

A man wearing a face mask walks past a store with an "OPEN" sign in Toronto, Canada, 2021. (Zou Zheng / Xinhua via Getty Images)

Amidst continued public debate on Canada’s post-pandemic future, the country’s Federation of Independent Business (CFIB) has offered its own solution to the ongoing economic crisis. Helmed by CEO and president Dan Kelly, the small business lobby, boasting 110,000 members, has called for business bailouts and alternatives to lockdowns throughout the crisis.

When the pandemic first hit Canada, the lobby initially supported the Canadian Emergency Response Benefits (CERB) income benefit. The CFIB did, however, urge the government to include provision for the self-employed and special dispensation for employers to allow them to keep employees in receipt of the benefit at work.

In the spring of 2020, the CFIB changed tack. The lobby demanded the federal government curb CERB to push the unemployed back into workplaces. To give support to their position, the CFIB demonized CERB recipients, alleging abuse of the system on the part of claimants and supported a plan to criminalize “fraudulent” beneficiaries.

When Ontario premier Doug Ford, acquiescing to the demands of business, lowered the required number of days that workers that test positive for COVID needed to isolate to five, the lobby was jubilant. The CFIB continues to oppose permanent paid sick days and the minimum wage hikes which the government has proffered. Even these meager reforms, they say, have come at the “worst possible time.”

In the CFIB’s eyes, no time is a good time for pro-labor laws. Founded in 1971, the CFIB has long opposed minimum wage hikes, public sector spending, and pro-worker reforms. Since the 1990s, growing membership and resources has enabled the lobby to ascend to a place of prominence in public affairs. For the last twenty years, it has used the media platforms to which its funds give it access to represent increases to the minimum wages as a harbinger of economic catastrophe. Income and unemployment supports, as well as the continued existence of public sector workers are, according to the lobby, threats to business.

None of this should be a surprise. The CFIB exists to serve one aim: weaken the power of labor in order to increase the profitability of small businesses.

Media-Savvy Scallywags

The CFIB is able to drive public discussion because of its close links to the media. As the Tyee points out, the lobby “[uses] a powerful and classic public relations strategy — the news release — to manipulate headlines.”

Resource-strapped news organizations publish these “ready-made narratives and interpretations” — amounting to little more than surveys featuring CFIB members and quotes from the organization’s officials. These press releases disguised as news present the CFIB’s political positions as if it were fact.

This enables the CFIB and its members to attack higher minimum wages or income supports without appearing partisan. One headline reads: “Some employees cite CERB as reason to refuse return to work, CFIB survey says.” The survey in question was based on interviews with CFIB members, who answered on behalf of their workers.

In addition to their newswire finesse, practically all news media outlets in Canada interview lobby’s members and quote its press releases verbatim. Often these media organizations do not challenge shoddy research or the obvious bias of the CFIB.

Skewering the Public Sector

Throughout the 2000s and 2010s, CFIB used these techniques to hurl attacks at public sector workers for earning salaries and benefits which it felt were too competitive. Equitable remuneration, they contend, creates unfair pressure on the private sector labor market and wastes public funds. Their most infamous intervention was Wage Watch, a dubious annual study of civil servant compensation. Trade unions criticized the report for its bias and flat-out deception.

Following 2008’s Wage Watch report, the National Union of Public and General Employees (NUPGE) worked with researchers to expose the study’s numerous problems. NUPGE’s verdict was damming: Wage Watch “would not be accepted in a second-year university” due to its catalog of mistakes, including, most strikingly, overembellishing wage-and-benefit gaps between public and private workers. (While these conditions often are more generous for civil servants, they’re not in the way CFIB would have you believe, and not across the board.)

Despite the clear shortcomings of Wage Watch’s methodology, the media spread the findings of the 2008 study widely, publishing its conclusions uncritically and repackaging them into clickbait agitprop. This mass dissemination of misinformation, year after year, has no doubt contributed to the caricature of the overpaid bureaucrat — and helped to manufacture consent for austerity and union-busting.

Even if Wage Watch did not overexaggerate wage-and-benefit differentials, there remained fundamental problems with the raison d’être of the study which NUPGE pointed out:

It may be that the CFIB is afraid the wages paid by many of their members will look too inadequate compared to wages in other sectors. It may be the lack of benefits, especially pensions, for workers in their sector will make it difficult for small business employers to attract employees.

In 2015’s Wage Watch report — another roundly criticized study — the CFIB doubled down on public sector bashing. The CFIB conceded that high compensation “is essential in building a good quality public service.” It nevertheless maintained that:

compensation should be fair and not exceed what is being offered in the private sector. Excessive government wage and benefits premiums . . . have significant negative impacts on local economies as well as on Canada’s economy as a whole.

Accordingly, the CFIB’s recommendations for the public sector is that it should implement worse pension schemes for its employees combined with “no-strike legislation for a larger proportion of its workforces.” The lobby has also encouraged the government to impose limits on the right to strike, calling the 2009 municipal workers strike in Toronto “the latest, atrocious example where ‘the right to strike’ is wrong.”

For anyone sympathetic to workers’ struggles, the idea that people should be paid well, have access to protections like paid sick days, have money to spend locally (including at CFIB businesses), and retire with dignity at a fair age isn’t controversial. The CFIB itself might not even disagree with these ideas in theory, but it has worked hard to characterize the public service as taking these ideas too far. State run organizations, they claim, have a penchant for out-of-control excess.

Kelly took the findings of a the CFIB’s 2012 report, which revealed that public sector workers take significantly more sick days than their private sector counterparts, as justification for his opposition to government enterprises. “I don’t think anybody believes that public sector workers just get sick more often, yet something makes them feel entitled to more time off,” Kelly said. The possibility that better conditions allowed workers to take time off rather than working whilst ill was inconceivable to Kelly. Predictably, the report that Kelly referred to was criticized for its embellishments.

Ten years on nobody could deny the obvious value in having paid sick days. During a pandemic, it’s a key way in which workers can avoid contracting and transmitting disease. Despite the ongoing public health crisis, the CFIB continues to resist the call for an employer-paid sick day program. Similar programs have proved to be a massive success in places like New Zealand, Australia, Germany, and Sweden.

Depicting basic labor standards as “excessive” allows the business lobby to avoid the obvious corollary that a recognition of such standards would entail — that the private sector should offer them, too. Instead, the CFIB whips up fury and resentment about public servants getting paid personal days, for example, or federal servants working seven fewer hours per week on average than their private sector counterparts.

In turn, they suggest that Canadian governments should “downwardly harmonize” public sector wages and benefits with their substandard private sector counterparts. As one critic has pointed out, this strategy “will just make the situation worse and suppress wages and benefits for all workers” amidst a skyrocketing cost of living.

Of course, the CFIB pays little attention to what might actually improve life for workers. This is because its mandate is to lower, not raise, the floor.

Decent Minimum Wages Won’t Lead to Armageddon

Nowhere is the CFIB’s position clearer than on the minimum wage. The CFIB has made itself Canada’s loudest opponent of wage hikes, offering homespun versions of right-wing myths and helping to slow government progress on the issue.

Throughout the last twenty years, CFIB has been quick to pull out predictable talking points, threatening job losses with the classic canard that minimum wage raises “hurt the very people they’re meant to help.” In one noteworthy case in 2015, the CFIB recommended that its members reconsider their donations to the United Way after the organization cosigned a “living wage” report conducted by the Canadian Centre for Policy Alternatives.

Research by the Nobel Prize–winning economist David Card has undermined the view that minimum wage hikes are bad for workers. Card’s work found that minimum wages don’t impact employment levels, affirming arguments many researchers have been making for decades. Quite the contrary: in many cases, higher wages can actually attract more applicants.

For their annual Red Tape Awareness Week, the CFIB applauded Ontario’s Doug Ford whose “major overhaul of harmful labor rule changes” turned the tide on the reforms of the previous Liberal government implemented under social movement pressure in 2017. The changes included a $15 minimum wage — a major victory for Canada’s labor movement — as well as paid sick days, emergency leave, and fairer scheduling.

Demonizing Income Supports

Throughout the pandemic, income supports — specifically, CERB — became key for workers seeking to make ends meet and avoid getting sick during insecure times. In keeping with its long history of attacking employment insurance (EI), the CIFB didn’t take long to find an enemy in CERB, too.

As early as April, when fears about the virus had somewhat allayed, CFIB began regularly peddling horror stories of teenagers living lavishly — luxuriating in clover on income supports that worked out to roughly $12.50 an hour. The lobby also badgered the federal government to reform the program to force workers back into the labor market. The CFIB even accused CERB of “funding summer break” for hospitality workers.

Canada’s workplaces have been a major vector for transmission, and some of the riskiest public-facing sectors — health care or entertainment, for example — were the ones with the largest labor shortages. For many workers, the lack of protections, paired with the pittance many jobs paid, were not worth the risk of getting sick.

The CFIB sought to counteract this trend by demobilizing CERB, thereby forcing workers back into their jobs. This would, in turn, grease the wheels for employer applications for the Canada Emergency Wage Subsidy (CEWS) program. The program, an influx of cash to help businesses to cover lost revenues, was intended to subsidize employee payrolls. CEWS — which the government rolled out on top of provincial and municipal subsidies — enjoys the distinction of being the most expensive program in Canada’s history.

Putting aside the problems with pushing workers back into the workplace, CEWS has been a spectacular failure, even by its own standards. Analysts found that CEWS costs roughly $188,000 per year per job it purports to “save.” That’s compared to paying $24,000 annually to keep people home and safe via CERB — a program much more attuned to the interest of public health.

But public health hasn’t guided these policies: profit has. Instead of income supports, which go right to workers, the wage subsidy is paid out to businesses. This allows them to hire work at a subsidized rate for however many hours they deem necessary. Such flexibility might be good for bosses, armed with cheap and disposable labor, but it’s bad for workers who have bills to pay and need reliability — something CERB, if imperfect, provided. In the event of further restrictions or lockdowns, which will lead to lost hours, workers are the ones left holding the bag.

But the above scenario is only relevant if the CEWS money goes toward retaining staff. There’s practically no guidelines for how CEWS has to be spent, and because it enters general business revenues, countless businesses took the benefit whilst laying workers off. The massive discrepancy between the cost for CEWS and CERB results from the fact that CEWS pays for all workers at the recipient businesses, not just for those employees facing lost earnings. It’s by far the largest private sector welfare scheme in Canadian history.

The CFIB doesn’t seem to care too much about CEWS’ enormous cost or inefficiencies. Even now, the lobby continues to cite CERB and its much less generous successor program, the Canada Recovery Benefit, to explain why businesses can’t fill positions, despite income supports ending months ago.

Friendly Neighborhood Sweatshops

As Canada’s small business lobby, the CFIB often leans on its members’ embeddedness in the local community to justify their laggard labor standards. They argue that while the “big guys” might be able to absorb labor law improvements financially, small businesses simply can’t afford it. The claim that mom-and-pop enterprises add richness and flavor to a community allows small businesses to get a pass for low wages and few to no benefits.

Focusing on whether or not the small business cry of privation is even true is the wrong framing for the issue. The problem posed by small business parsimony should force broader considerations. Independent companies may well be the very thing that give cities their vibrancy by providing unique restaurants and the like — but at what cost?

If the survival of mom-and-pop businesses depends on underpaying their workforce — the very people who infuse our communities with meaning, beauty, and value — are those businesses worth saving? As rents and bills skyrocket, should we tolerate our neighbors being underpaid? And doesn’t it make economic sense that workers, too, have money to spend locally?

More people have begun asking these very questions. In fact, it’s now commonplace to hear arguments that assert that, “if a business can’t pay their workers a wage that they can live off of, the business shouldn’t exist.” It’s no surprise that workers are now moving the needle on this issue in Canada, where a housing crisis, austerity, and rising income inequality have hammered workers for decades.

Capitalists themselves are even admitting, in the face of labor market difficulties, that the situation is untenable. As a result, some restaurants have begun raising wages, offering more flexibility, and providing benefits.

Meanwhile, the CFIB is holding its line on the issue. Using their own surveys, they argue that raising wages isn’t a “silver bullet;” that the federal government should ensure “EI programs do not discourage individuals from returning to work;” governments must reduce red tape in order for businesses to automate easier; and that the Temporary Foreign Worker Program should be streamlined.

Mainstream researchers and economists have joined the Left in debunking many of CFIB’s claims. Minimum wage hikes will not cause the sky to fall and public sector workers are not undeserving fat cats. But the lobby remains wedded to its regressive views, continuing to leverage its influential position within the Canadian media ecosystem to spread its misinformation.

Of course, one shouldn’t expect an organization like the CFIB to change their position in the face of evidence or opposition, especially if such arguments might advance the cause of workers. The CFIB exist to do a job, and they do it dutifully.

In fact, the lobby’s opposition to material improvement for workers makes them an increasingly vulnerable opponent: its recent bellyaching about a whopping ten cent minimum wage hike in Ontario left it looking exactly like the regressive, close-fisted entity it is. For the CFIB, maximizing profits for small business comes first. The lobby can be counted on to ignore all moral or empirical evidence that undermines its aims.