With the current tough economic times, local business owners are concerned about the added burden a minimum wage increase would bring.
“For employers like myself that rely on the minimum wage or close to it, it puts us at a big disadvantage,” said Sal Naim, co-owner of Mr. Mikes. “It will only service to cut back hours for the services in our community. There'll be less hours available for people to work.”
Barely a month after being voted in, the NDP government recently announced their plans to implement a substantial minimum wage increase in Alberta. The proposal states the current wage of $10.20 per hour would jump to $15 per hour in three years.
Naim expressed that, particularly for small businesses, the increase is too much, too quick.
“I think it's the biggest increase we've ever seen and in a time where there's so much economic uncertainty. Companies are struggling just to make ends meet at some points, the last six months have been very difficult on a lot of businesses across industries.”
On the heels of the NDP's announcement, the Alberta Chambers of Commerce have showed their displeasure with the policy deciding to conduct a survey with businesses across the province. The Bonnyville and District Chamber of Commerce will be administering the survey locally, in hopes of gathering concrete information on the impact the increase could have. Once compiled, the survey data will be taken to the provincial government to ensure they fully understand the concerns of the province's businesses.
The reason for the proposed increase comes with claims that an individual cannot sustain a quality of life on minimum wage. However, Naim said there are a lot of misconceptions surrounding minimum wage that need to be cleared up before decisions are made.
“There has to be a distinction between what's referred to as a living wage an a minimum wage. I think a lot of people don't necessarily differentiate between the two.”
A living wage is determined based on the average cost of living and what a person needs to make to cover all of their basic necessities. The minimum wage on the other hand, wasn't designed to be sustained for an extended period as a career path wage but rather for an entry-level position.
“A minimum wage is what you pay somebody if they're just raining or transitions into another job; minimum wage jobs aren't designed to be a career path. Our industry is not necessarily viewed upon as a career path for people and to have to pay career path type wages I think would be very detrimental,” said Naim.
The other main point that isn't being considered, Naim noted is that many minimum wage earners collect tips on top.
“What gets missed on a lof of people is that some of these folks, particularly in the service industry, rely heavily on tips. That's not something we can state as part of their income. Some of them make well north of $15 per hour.”
Following the announcement of the proposed wage increase, Minister of Jobs, Skills, Training and Labour Lori Sigurdson issued a statement saying that the government will be undertaking consultations with key stakeholders. The process is expected to be completed and a report regarding the increases to minimum wage should be released in early July.
Naim expressed that this could spell disaster for local businesses and large corporations alike.
“I think it really puts the kibosh on growth, particularly in the service industry. (There won't be) the desire for any multi-national company that relies heavily on minimum wage to set up in Alberta.”
With labour making up a substantial portion of a businesses fixed expenses. Being a business owner himself, Naim noted that businesses generally don't have the huge margins that many think they do, particularly in the service industry. Having extra costs piled on would cause a blow to the business and consumer.
“What that means is those increased costs will be essentially passed on to the consumers so it would most likely result in increased prices on many items we consume of a daily basis.”
However, the local businessman wanted to make it clear that he's not opposed to an increase in minimum wage as long as the research has gone into the decision ahead of time. In a time where prices on amenities are starting to drop, this sizable increase may not be justified.
“I believe that there's this $15 an hour movement that's being talked about but a lot of people don't understand it. I would encourage people to look into it a little bit and see the effect it's having in certain jurisdictions in the U.S.,” Naim said.
Last June, Seattle started the process of raising their minimum wage to $15 per hour by 2021 for small business and 2017 for corporations with over 500 employees. While Seattle's phase-in is less ambitious than Alberta's proposed plan, the city is already feeling the effects of an increased minimum wage with local media reporting many businesses plan on closing their doors or reducing hours.
The other common effect being felt by consumers in Seattle is an increased price on goods, an issue Naim feels will be mirrored locally should the NDP's plan proceed. Those potential effects are what the Alberta Chambers of Commerce are hoping to show the provincial government through their survey.
Should the NDPs move forward with their current proposal, the phased minimum wage increases would take effect Oct. 1 with business being required to pay $15 per hour by 2018.
To participate in the Alberta Chambers of Commerce minimum wage increase survey, visit http://business.abchamber.ca/news/details/minimum-wage-increase-survey.
