Alberta’s labour market braces for wage-hike fallout

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When Alberta decided to raise the minimum wage to $15 an hour, the owner of a Calgary wine bar knew she had to change her business model.

Like many in the restaurant industry, Phoebe Fung had already faced high staff turnaround. Staff would get trained only to leave after less than a year.

With the province's minimum wage rising almost 50 per cent over a four-year period, Ms. Fung decided to look for workers who would make a longer commitment – people who wanted a career in the restaurant industry.

She offered more staff a salary instead of an hourly wage. She also provided additional health benefits – including benefits for their pets – for salaried and for full-time hourly employees.

Read more: Trudeau says Liberals not looking at raising federal minimum wage

"I wanted to reduce my turnover," said Ms. Fung, the owner of Vin Room wine bar and restaurant. "I am looking more long-term."

Ms. Fung is one of thousands of small-business owners grappling with higher labour costs. The hourly minimum wage in Alberta rose to $12.20 from $11.20 in October, the second increase in two years. By 2018, the minimum wage will reach $15 an hour, the highest in the country – forcing some proprietors to change the way they operate as a result.

It comes as the province struggles to recover from the two-year collapse in oil prices and slowdown in the economy, and as some employers say they are also bracing for the new outlays that will accompany a province-wide carbon levy to be enacted Jan. 1.

The province was once responsible for driving wage gains across the country. But now it is a drag on Canada's labour market. Alberta's unemployment rate hit 9 per cent in November, the highest level since 1994.

The minimum-wage hike will likely affect about a fifth of Alberta's labour market and most of the hospitality sector. Two-thirds of the accommodation and food-services industry currently earn less than $15 an hour. The minimum wage has increased costs for Ms. Fung's business, as well as those for other owners such as Nathan Satanove, of the Pasta Pantry & Trattoria in Sherwood Park, just outside of Edmonton.

"Wages are up. And with that, everything else goes up," said Mr. Satanove, whose 33-person operation includes a restaurant, catering and take-out business.

"It's not just the wages in our store. It's the truck drivers that bring us our produce. It's the workers in manufacturing that process other products that come into the store."

He said he already pays his entry-level workers a few dollars above minimum wage but felt compelled to raise everyone's rates in October, when the new hike took effect.

"To retain quality talent, you have to compensate appropriately," Mr. Satanove said.

At the Kensington Wine Bar in Calgary, owner Cam Dobranski said his payroll has shot up by $1,400 bi-weekly since the minimum wage increased.

Mr. Dobranski has chosen not to replace departing employees and is working more than 70-hours a week to compensate for the loss of staff. "If a dishwasher quits, I don't hire a dishwasher. I wash the dishes."

Amber Ruddy of the Canadian Federation of Independent Business in Alberta said the climate is already tough, but the provincial government's decision to add new taxes and higher costs such as the minimum-wage increase makes it even more difficult for business owners. Ms. Ruddy added that her group has been conducting a monthly survey of hiring intentions for 15 years, and this November the Alberta numbers hit a "new rock-bottom low," with 45 per cent of employers reporting they plan to lay off staff within three months.

Still, data continues to show no direct correlation between increasing the minimum wage and job losses in the industry. Since 1999, the minimum wage in Alberta has increased 11 times and over the same period there has been job creation and job losses in the sector.

In the accommodation and food-services industry, the average number of hours worked a week increased to 28.8 in November from 28.5 a year ago, according to data from Statistics Canada.

And there are certainly supporters of the hike. Pizza-chain worker Wade Dougall, 31, said the minimum-wage boost has helped him afford his rent and pay his utility bills in Chestermere, Alta.

"It didn't have a big impact like I expected. But it did help a little bit," Mr. Dougall said. "I'm trying to survive here."

Before Alberta started increasing the minimum wage, Ms. Fung said about 10 per cent of her staff received a salary. Today, 20 per cent of her staff earns a salary and the rest are paid by the hour.

"I am attracting people who want to be in the industry," said Ms. Fung, who owns a wine store and three restaurants, one of which was recently opened in the Calgary airport.

"Time will tell whether it was a smart move or not, or whether I have layered on more fixed costs to my business," she said.

With a report from Kelly Cryderman in Calgary