Minimum Wage in Prince Edward Island: 2024 Updates

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Minimum Wage in Prince Edward Island: 2024 Updates

Prince Edward Island (PEI) is Canada’s smallest province on the east coast. As in all provinces, employers in PEI are required to pay their employees at least the legislated minimum wage.

Minimum wage in Prince Edward Island are reviewed annually and increased incrementally to support the cost of living.

This article will provide an in-depth look at the current minimum wage in PEI, its history, how it compares nationally, rules and exceptions, its impact on living costs, future increases, and more.

Brief Background on Prince Edward Island

Prince Edward Island is located in the Gulf of St. Lawrence, separated from New Brunswick and Nova Scotia by the Northumberland Strait. As of 2021, the population of PEI was just over 160,000 people.

The largest city and capital is Charlottetown, with a population of just under 40,000. Outside of Charlottetown, the island has a largely rural landscape.

Fishing, agriculture, and tourism are significant industries in PEI. The province has struggled with outmigration, especially of youth looking for jobs. As a result, PEI often has an older population demographic.

PEI is currently governed by the Progressive Conservative Party, led by Premier Dennis King. The province has four seats in the Canadian House of Commons.

Source: https://en.wikipedia.org/wiki/Prince_Edward_Island

History of Minimum Wage in Prince Edward Island

PEI first introduced a minimum wage in 1960, 14 years after the initial minimum wages were established nationally in Canada.

Up until 1974, PEI had different minimum wage rates for men and women:

PEI Minimum Wage Rates in 1974

Category	Wage
Adult males over 18	$1.25/hour
Adult females over 18	$0.70/hour
Minors under 18	$0.50/hour

On January 1, 1974, the same minimum wage of $1.65 per hour was applied equally for males and females over 18 years old in PEI.

Source: https://moneygenius.ca/blog/minimum-wage-pei

PEI’s minimum wage has steadily risen over the decades to account for inflation and higher living costs. Recent years have seen more accelerated increases.

Minimum Wage in PEI 2024

For 2024, the minimum wage in PEI will increase twice:

On April 1, 2024, it will rise to $15.40 per hour.
Another $16 per hour increase is expected on October 1, 2024.

These increases are recommendations made by the PEI Employment Standards Board, based on the support of the cost of living and inflation.

PEI Minimum Wage Hourly Rate Increases

Year	Minimum Wage
October 1, 2023	$15.00
April 1, 2024	$15.40
October 1, 2024	$16.00 (projected)

Source: https://www.savvynewcanadians.com/prince-edward-island-minimum-wage/

Rules and Exceptions for Minimum Wage in Prince Edward Island

Prince Edward Island’s minimum wage legislation applies equally to all provincial employees, regardless of full-time or part-time status.

There are special exceptions for piecework employees. Employers must pay the equivalent minimum wage rate for the total hours worked, even if the piecework itself is paid below minimum wage per piece.

PEI also has standard overtime rules requiring 1.5x regular pay for hours worked above 48 per week. There are also detailed rules around statutory holiday and vacation pay eligibility.

Some of the key regulations include:

Employees qualify for public holiday pay if they meet eligibility criteria, including working their last scheduled shift before and after the holiday.
Allowable payroll deductions include statutory deductions, court orders, and employee-authorized amounts.
Prohibited deductions include costs for employer-required uniforms or cash shortages.
After 8 years of service, employees are entitled to 3 weeks of vacation with 4% vacation pay.

Impact of Minimum Wage in PEI on Cost of Living

Minimum wage increases aim to ensure that low-income workers can afford basic living costs.

However, some data indicates that PEI’s minimum wage still falls short of an actual “living wage.” According to the Canadian Centre for Policy Alternatives, Charlottetown’s living wage as of 2020 was $19.30 per hour (Source). This reflects the higher costs of necessities like food, rent, transportation, childcare, etc. in the city.

The living wage is meant to provide employees with a modest standard of living and participation in community life. At the current $15 minimum wage, a full-time minimum wage worker in Charlottetown would earn approximately $31,200 per year before tax.

While minimum wage increases provide support, there is still debate as to whether they have fully kept pace with the rising cost of living in Prince Edward Island. Housing and rental costs, in particular, have spiked in recent years.

Economic Impact of Rising Minimum Wage

While employees have welcomed PEI’s rising minimum wage, some concerns have been raised by small business owners.

Higher payroll costs put more significant pressure on the bottom line for many companies, especially in low-margin industries like retail and food service. As a result, some argue that dramatic minimum wage hikes could lead to reduced work hours or job losses.

However, economic research on minimum wage increases provides mixed conclusions. Some studies show little impact on employment, as businesses find efficiencies to offset or pass some of the costs to consumers.

As minimum wage increases continue in PEI, monitoring their impact on individual small businesses and overall employment trends in the province will be necessary.

Tax Brackets and Deductions for Minimum Wage Earners

Given PEI’s growing minimum wage, it is helpful to understand how income taxes apply to low-income earners:

PEI Personal Income Tax Brackets for 2023

Taxable Income	Tax Rate
Up to $31,984	9.8%
$31,985 to $63,969	13.8%
Over $63,969	16.7%

Federal Personal Income Tax Brackets for 2023

Taxable Income	Tax Rate
Up to $50,197	15%
$50,198 to $100,392	20.5%
$100,393 to $155,625	26%
$155,626 to $221,708	29%
Above $221,708	33%

Source: https://www.savvynewcanadians.com/prince-edward-island-minimum-wage/

In addition to income taxes, employers make payroll deductions for CPP, EI, and other standard amounts. Sources of allowable deductions include court orders, benefits plans, and employee-approved contributions.

Future Outlook for Minimum Wage in Prince Edward Island

All signs point to ongoing incremental increases to the minimum wage in Prince Edward Island each year moving forward. The PEI Employment Standards Board conducts annual reviews to determine rate hikes.

For 2024, the two scheduled increases are:

April 1, 2024 – increase to $15.40 per hour.
October 1, 2024 – increase to $16.00 per hour

Further increases are expected for 2025 and beyond. The Employment Standards Board aims to provide reasonable but not dramatic yearly increases to allow businesses to adjust.

Some employee advocates continue to argue that more significant hikes are needed to match living wages. However, the government appears to prefer an incremental approach.

Key Takeaways

The minimum wage in Prince Edward Island has seen steady growth over the past decade, to support the cost of living. Some key takeaways include:

PEI minimum wage sits at $15.00 per hour as of October 2023.
Minimum wage applies equally to all employees, with limited exceptions.
PEI has overtime pay requirements after 48 hours worked per week.
Even at $15, the minimum wage falls well short of “living wage” calculations for cities like Charlottetown.
Further increases to $15.40 and $16.00 are scheduled in 2024 to match inflation.
Small businesses have raised concerns about the impact of rising minimum wage rates.

The minimum wage in PEI will likely continue with gradual increases aimed at balancing employee needs and business capabilities. It remains a frequently debated subject as all sides aim for fair working conditions.

In Canada, each province and territory has the autonomy to set its own minimum wage rate that applies to provincially-regulated workers. Provincial/territorial minimum wages may be higher or lower than the federal rate based on local economic conditions, business factors, and cost of living. Currently, minimum wage in Canada vary across the different provinces and territories.

FAQs related to minimum wage in Prince Edward Island, Canada

What is the current minimum wage in PEI?

The current minimum wage in PEI is $15.00 per hour as of October 1, 2023.

How much will minimum wage increase to in April 2024 in PEI?

The minimum wage in PEI will increase to $15.40 per hour on April 1, 2024.

When was the last increase to minimum wage in PEI?

The last increase to minimum wage in PEI was on October 1, 2023 when it rose from $13.70 to $15.00 per hour.

How does PEI's minimum wage compare to other provinces?

PEI has one of the highest minimum wages in Canada at $15.00 per hour. It is higher than all the prairie and central provinces but lower than western provinces like BC and Yukon.

Who sets the minimum wage in Prince Edward Island?

The minimum wage in PEI is set by the Employment Standards Board, an independent tripartite body with labor, employer and government representatives.

Are there exemptions to the minimum wage in PEI?

There are limited exemptions in PEI like piecework employees who are paid for production rather than hours worked. Farm workers are also exempt from some provisions.

How often is the minimum wage increased in Prince Edward Island?

Recently, PEI's minimum wage has increased annually in April. There are also occasional additional increases approved in October to match inflation.

What are the rules for overtime pay in PEI?

PEI requires overtime pay at 1.5 times the regular wage for any hours worked above 48 per week. Employees can opt to bank overtime hours.

Will the minimum wage keep rising annually in PEI?

The outlook is for ongoing incremental minimum wage increases of 3-5% annually in PEI based on recommendations by the Employment Standards Board.

How much has PEI's minimum wage increased in the last 10 years?

PEI's minimum wage has increased by over 40% in the last decade, rising from $9.60 in 2011 to the current $15.00 per hour.

Article Sources

At Ebsource, we adhere to strict editorial principles and only reference credible sources in our content. This allows us to provide trusted insights readers can rely on when making important benefits decisions. For transparency, please find links to the referenced sources below.

Minimum Wage in Prince Edward Island: 2024 Updates
Ben Nguyen