Gen Z Now Powers Small Businesses in Canada

Small Businesses in Canada look very different than they did before the pandemic. New payroll data released this week shows that Gen Z now makes up nearly four in ten workers at the country's small businesses, a workforce transformation that arrived alongside bigger teams, rising pay and far less churn.

The findings come from a fresh comparison of payroll records spanning 2019 to 2025, published Thursday by Wagepoint, a Canadian payroll software company. The data suggests that the small-business economy many young Canadians know as a patchwork of gigs and part-time shifts has quietly turned into something more stable, according to the company's workforce report.

A younger, bigger, more stable workforce

The headline shift is generational. Gen Z's share of the small-business workforce more than doubled over the six-year window, climbing from eighteen percent to thirty-eight percent, while the millennial share slid from fifty-five percent to forty-one percent. Together, the two generations now account for roughly eight in ten small-business workers in Canada.

That youth wave did not bring the churn employers often fear. The annual separation rate dropped eleven points, settling at twenty-seven percent, even as young workers flooded in. Small Businesses in Canada are not just hiring younger people, in other words, they are keeping them longer.

Teams also got substantially larger. Average headcount per business grew forty-four percent, from about thirteen employees to about nineteen. And the mix of work shifted toward steadier schedules: part-time roles fell from seventy-nine percent of headcount to sixty-nine percent as businesses expanded, a sign that more of these jobs are becoming full-time positions.

Wages kept pace with rising prices

Pay moved in workers' favor as well. Median hourly pay rose twenty-seven percent over the period, compared with roughly twenty percent inflation, landing near twenty-seven Canadian dollars an hour. Median full-time salaries climbed about fourteen percent. For a generation routinely told its wages cannot keep up with the cost of living, that gap matters, and it echoes what young Canadian banking customers have been demanding from the institutions that hold their money.

The regional picture adds texture. In Western Canada, average headcount grew the fastest of the three regions, rising fifty-three percent, and the West now carries the country's highest median hourly pay at nearly twenty-eight dollars an hour. Central Canada hosts the largest businesses on average, with about twenty employees each, and its separation rate fell from thirty-nine percent to twenty-six percent.

The Atlantic provinces tell the most striking story. Despite having the country's oldest population, the region saw the largest generational swing: Gen Z's share of the workforce jumped from fourteen percent to thirty-seven percent, the biggest increase anywhere in Canada. Median hourly pay there rose thirty-three percent, from under nineteen dollars to just over twenty-five dollars.

What it means if you are starting out

For young job seekers, the read is encouraging. Small Businesses in Canada, long framed as a fallback between gigs, look increasingly like places where careers begin: bigger teams, more full-time hours and pay that has outpaced inflation for six straight years. The data undercuts the assumption that a younger workforce automatically means higher turnover, a finding that pairs with recent research showing many workplace gig arrangements are becoming primary income rather than side income.

"Payroll data gives us a real-world view of how Canada's small businesses are changing, from who they hire to how they pay and retain their people," said Ben Richmond, the company's chief executive, in a statement accompanying the release. He argued that small employers are a major part of the Canadian economy whose workforce realities often get overlooked in broader employment statistics.

One caveat worth keeping: the numbers reflect the roughly sixty-eight hundred businesses and one hundred six thousand employees that run payroll through Wagepoint, not every small business in the country. Still, because the figures come from actual hiring, departures and pay rather than survey responses, they offer a rare ground-level view of a sector that usually shows up in national data only as a blur, a point Canadian tech coverage of the release also highlighted. For Gen Z workers deciding where to build their early careers, that view points in one clear direction: toward the smaller end of town.