Minimum wage hike could spur unintended consequences in New Brunswick

The Holt government wants New Brunswickers to weigh in on the province’s minimum wage, by emailing or calling the government until October 9. No doubt many will argue for higher minimum wages, but in reality they’re fraught with unintended consequences.

For starters, consider the effect on young people. Youth unemployment has been rising dramatically in Canada in recent years. In New Brunswick, youth unemployment (ages 15 to 24) hit 14.1 per cent in July 2026 (well above the 12.6 per cent national youth unemployment rate). As of July, 8,700 youth in the province were unemployed. 2025 and 2026 have been the highest non-pandemic years on record for youth unemployment in New Brunswick.

Of course, there are many reasons for these high numbers, but minimum wages are likely partly to blame. It’s basic economics. When governments set minimum wages, they effectively legislate a wage level that’s higher than what the market is willing to pay for some workers. As a result of the increased cost of labour, demand for labour falls and businesses hire fewer workers. This has a disproportionate effect on younger workers who are more likely to seek entry-level positions given their lack of knowledge, skills and experience needed to command a higher wage.

Consequently, many young New Brunswickers who would happily work for something less than the legislated minimum wage are now shut out of the labour market entirely. Not only are these young people unable to make money, they’re also unable to build up their skills and move on to higher-paying jobs.

The negative effects of high minimum wages are well-documented. One review of 70 studies on minimum wages reported that the majority of those studies found negative effects on employment, with stronger effects among youth and those with less education.

The connection to youth unemployment raises another important unintended consequence. Contrary to the common view that minimum wages help the poor, most people who earn the minimum wage in Canada (data specific to New Brunswick were not available) are not in fact low-income workers. In fact, according to a 2021 study, only 7.7 per cent of Canadian workers who earned the minimum wage were in low-income households. In New Brunswick, 54.7 per cent of minimum wage earners were between the ages of 15 and 24, and many others are secondary earners in their households. In other words, a policy designed to help the poor is actually benefitting people who aren’t poor.

Finally, it’s always worth remembering that there’s no free lunch. As famously noted by economist Milton Friedman, “free” things from the government often have hidden costs. If increasing the minimum wage in New Brunswick from its current level of $15.90 per hour to, say, $20 is good for workers, why stop there? Why not set the hourly wage to $25 or $50? Governments can set the minimum wage to whatever level they wish, but Friedman’s law will continue to apply—the costs will show up somewhere, likely through continued increases in unemployment, particularly among young people looking for that entry-level job.

To be sure, higher incomes for New Brunswickers workers should be a top priority. But the way to achieve this is through policies that will attract investment, incentivize entrepreneurship and economic growth, which will lead to rising wages in the market. The facts are undeniable—when government determines wage rates, many workers pay the price.