On Tuesday, five provinces raised their minimum wages, following hikes in several other regions earlier in the year. Some of the recent wage hikes were directly tied to increases in the consumer price index, a mechanism intended to address rising cost-of-living pressures and economic uncertainty. Here, the Financial Post breaks down the recent moves, the calculations behind them and how the provinces now stack up when it comes to the minimum wage.

Which provinces raised their minimum wages Oct. 1? 

Ontario, Manitoba, Saskatchewan, Nova Scotia and Prince Edward Island raised their minimum wages on Tuesday.   

Ontario boosted its minimum wage to $17.60 from $17.20, a 2.4 per cent hike that lifted it to the second highest among the provinces in the country (behind British Columbia, which raised its minimum wage to $17.85 in June). 

Manitoba increased its minimum wage by 20 cents to $16 an hour. Saskatchewan workers who make minimum wage also saw a 35-cent pay bump to $15.35 an hour, which boosted the province from its position as one of the lowest minimum wage provinces in the country, tied with Alberta.

That title now belongs solely to Alberta, which hasn’t raised its minimum wage of $15 an hour since 2018.  

Maritime provinces Nova Scotia and Prince Edward Island both increased their minimum wages to $15.70 an hour Oct. 1. This represented a $1 hike from Nova Scotia’s last increase in April (or a total increase of $1.30 in 2025) and a 50-cent increase for Prince Edward Island, which is set to boost its minimum wage to $17 by April 1, 2026.  

Other provinces and territories raised their minimum wage earlier this year: British Columbia to $17.85 on June 1; Newfoundland and Labrador to $16 on April 1; the Northwest Territories to $16.95 on Sept. 1; Nunavut to $19.75 on Sept. 1; Quebec to $16.10 on May 1 and Yukon to $17.94 on April 1.

What’s the formula for calculating the minimum wage? 

The provinces and territories don’t all use the same formula for calculating minimum wage increases, but several of them, including Ontario and Manitoba, are currently tied to inflation. For example, the 2.4 per cent increase in Ontario’s minimum wage reflects the average 2.4 per cent change in its consumer price index in 2024.  

Nova Scotia introduced an additional wage increase this year due to cost of living challenges but plans to return to its legislated formula, which uses the change in the rate of inflation plus an additional one per cent to update the provincial minimum wage every April.  

Some provinces measure minimum wage increases by other metrics. For example, in Prince Edward Island, the Employment Standards Board reviews the minimum wage each year and provides recommendations for increases to the government.   

Joseph Marchand, a professor of economics at the University of Alberta and the founding director of the Alberta Centre for Labour Market Research, said other provinces have been “playing catch-up” since Alberta became the first to raise its minimum wage to $15 an hour in 2018 — which at the time was a sharp 47 per cent increase over a period of just three years.  

Marchand said that up until 2015, Alberta had a minimum wage increase formula that automatically changed based on movements in prices and earnings, which he referred to as a “half-and-half formula.”  

So, if prices went up by, say, three per cent, and earnings increased by four per cent, the minimum wage would rise by 3.5 per cent (half the total increase), he said.   

Marchand, who chaired a minimum wage expert panel in Alberta in 2019 and 2020, said at the time that the panel was in favour of the province reinstating the old formula once the other provinces and territories had caught up to Alberta’s minimum wage and that its minimum wage policy should be reevaluated every five years.  

He said now would be a good time for the Alberta government to bring back its old minimum wage policy, and that this would mean a two or three per cent increase, based on current prices and earnings. 

While the provinces and territories typically tie movements in minimum wage to increases in inflation, it is unclear if the opposite holds true: Could a minimum wage decrease if the consumer price index falls?  

“Theoretically, it’s possible. But in practice, no,” said Anil Verma, a professor emeritus at the University of Toronto’s Rotman School of Management who chaired the Ontario government’s Minimum Wage Advisory Panel between 2013 and 2014.  

The consumer price index has rarely declined year-over-year, though the inflation rate temporarily turned negative during recessionary periods such as in April 2020 and the summer of 2009.  

While some provinces have frozen their minimum wage during some periods in which prices have still increased, thereby reducing its value, there has never been a time in which they have nominally reduced the minimum wage.  

Do minimum wages meet the cost of living now? 

Marchand said the minimum wages in Canada’s provinces and territories are “pretty close” to in line with the cost of living at an aggregate level. The problem is that the cost of living doesn’t look the same across municipalities in a given province, he said.  

For example, metro areas such as Toronto and Vancouver are known for having significantly higher prices and affordability challenges compared with other cities. A better solution would be for provinces to set different minimum wages for their municipalities depending on the cost of living in each city, Marchand said.  

Verma said while minimum wage increases do follow increases in cost-of-living, the provincial minimum wage in itself isn’t adequate for someone to afford living expenses.

Several organizations produce calculations on living wages, rather than minimum wages, which they say do account for the cost of living but metrics, such as rent and groceries, tend to be weighted differently depending on the organization. For example, Ricardo Tranjan, Ontario research director at the Canadian Centre for Policy Alternatives (CCPA), said the CCPA looks at how much money people need to earn without spending more than 30 per cent of their income on rent for a one- or two-bedroom apartment.  

The most recent figures from the Ontario Living Wage Network showed workers required a living wage of $26 an hour to make ends meet in the Greater Toronto Area in 2024. Even the lowest figure, which was for the London Elgin Oxford area, came to $19.50 an hour, nearly $2 higher than the current minimum wage for the province.  

According to the most recent report from Statistics Canada, British Columbia, Ontario and Alberta had the highest cost of living in 2021, while Prince Edward Island and New Brunswick had the lowest. The report found that for every dollar spent in British Columbia, this was equivalent to $0.82 spent in New Brunswick.  

While Alberta had higher disposable incomes, which compensated for higher prices, Ontario and British Columbia fared the worst in terms of people’s purchasing power.  

What does this mean for businesses and provincial economies? 

Marchand said employers who pay their staff a minimum wage tend to view these increases as higher business costs and sometimes make changes to offset the costs.  

In his own research, he has seen reduced hours for workers amid minimum wage increases, but noted the data don’t reveal whether this is due to employers trimming hours to cut costs or workers themselves taking on fewer hours due to higher earnings to focus on child care or other responsibilities.  

Some employers may increase costs to consumers as a result of minimum wage increases, which is particularly common in the restaurant industry, Verma said. However, Marchand said some business owners cannot raise their prices if their prices are fixed nationally.  

Another concern is the potential for job losses and higher unemployment, Marchand said, adding this tends to disproportionately affect younger people and women in particular. In his own research, Marchand found that when Alberta raised its minimum wage to $15 an hour in 2018, 175,000 workers received raises but 25,000 jobs were cut.  

“ For every seven workers that got a raise, one worker’s job was lost,” he said.  

Still, he noted this employment effect, which he termed “disemployment,” was unique to a situation in which the minimum wage was lifted by 47 per cent over a short time horizon and prices “were barely moving.”  

This may not be the case when “most of the minimum wage changes that are happening today are fairly small, fairly incremental, and so we would not expect disemployment effects,” Marchand said.  

There is no evidence to suggest large-scale changes in hiring if minimum wage increases are in line with increases in inflation, Verma said.

Larger wage hikes often occur after periods in which the minimum wage increase (or lack thereof) has fallen behind some standard of living, Tranjan said. 

“The overall impact on growth has been shown to be minimal,” he added, referencing a 2017 Bank of Canada report, which estimated that minimum wage increases in 2017 could trim the level of gross domestic product by 0.1 per cent and increase consumer price index inflation by 0.1 per cent by early 2019.

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Tranjan said low-income households have nearly zero savings, so minimum wage increases typically go toward unmet needs, such as rent or groceries, injecting these higher wages back into the economy.