Despite intense pressure to keep costs low, HotBlack Coffee on Toronto’s bustling Queen Street West will raise its wage for new employees to $15 on Jan. 1, the day Ontario’s minimum wage would have risen from $14 to $15 under previous government legislation. The shop is among a small group of Ontario businesses planning to stick with rules from the Liberal government’s Bill 148, the Fair Workplaces, Better Jobs Act, even though they are no longer obligated to do so.
Raising wages is not an easy move for HotBlack Coffee, which needs to sell more than 300 coffees a day just to cover the $11,500 monthly rent, according to co-owner Jimson Bienenstock. The high-traffic strip a few blocks west of University Avenue sees businesses frequently come and go, as ever-soaring rents make fast success an important survival factor.
At HotBlack, which opened in May, 2015, workers who make above the minimum will also get a $1-an-hour raise. Mr. Bienenstock says he promised raises to keep his current work force above minimum wage, but felt it was unfair to take them off the table after the current government cancelled the hike.
Mr. Bienenstock says it was always part of the business plan to pay workers above minimum wage. He says it costs about $4,000 to train a new employee, so it’s efficient to make sure people stick around. His high overhead meant stomaching $4,000 to $5,000 a week in losses for several months when the business first opened.
“After 10 months, we hit cash-flow positive. Now it’s catch-up and payback,” said Mr. Bienenstock, perched at the back of the jam-packed, steamy coffee shop on a brisk December day. The company is also sticking with provisions from Bill 148 that required workers to get two paid sick days a year.
While workers’ groups lauded Bill 148, many business-focused organizations said the new provisions were onerous and expensive. In response, the Progressive Conservative government introduced Bill 47, the Making Ontario Open for Business Act, in October. It became law in November, eliminating provisions including a requirement to pay temporary workers the same as full-time staff, a minimum of three hours' pay for on-call workers and the right to refuse last-minute shifts – in addition to the minimum-wage increase and paid sick days.
“The many unprecedented provisions in Bill 148 have led to a substantial decrease in staff hours and capital investment as well as an increased reliance on automation,” Ontario Chamber of Commerce president Rocco Rossi said in a fall news release, issued as the government was preparing to introduce Bill 47.
At organic grocery store Full Circle Foods in Kitchener, Ont., employees got a raise to $15 an hour in July. When Sam Nabi and Julia Gogoleva bought the store in January, 2018, minimum wage had just jumped to $14 from $11.60, and was still set to go to $15 the following year. Once they’d figured out how to accommodate the extra dollar an hour in their budget, they decided to roll out the raise right away instead of waiting for Jan. 1. To offset the increase, they eliminated products that had low profit margins, developed a better inventory-control system and began renting out a parking spot.
“If you’re an employer who cares about paying your staff more, you can probably find a way to make it happen,” said Mr. Nabi, noting Full Circle is sticking with all of the employment standards changes included in Bill 148. “Most small businesses treat their employees pretty well.”
According to a 2014 report by Social Planning Toronto, nearly half of Ontario’s minimum-wage workers were employed by companies with more than 500 employees. One-quarter were employed by firms of less than 20 workers.
Full Circle and HotBlack are both members of the Better Way Alliance, a body of about 50 businesses across Ontario promoting the benefits of “decent” jobs. The organization wants to counter the narrative that improving working conditions is expensive and impractical for small businesses.
“We feel that the minimum-wage payers/high-turnover businesses (think massive food and beverage chains, for instance) have disproportionate sway on public policy, and we are left to unjustly compete with them,” spokesperson Gilleen Pearce, who owns Walk My Dog Toronto, wrote in an e-mail.
Snack producer Neal Brothers Foods Inc., based in Richmond Hill, Ont., is also raising its minimum wage on Jan. 1. Co-owner Pete Neal says the company will start new workers at $14.50, going to $15 after they’ve been there for three months. Reliable employees have been a key factor in the snack company’s success, he says. Mr. Neal believes perks such as a health plan, flexible time off and a decent wage have made his employees very committed to the business.
“We’ve had many opportunities to sell our business and walk away, but I think there’s so much more we can be doing as a steward of good practices,” he said. “We can do better than average. I think more people can, too.”
Mr. Neal says he’s spoken with business owners on both sides of this issue, but doesn’t sympathize with those who say they can’t afford better wages.
“We were at a friend’s home that is worth a lot of money, and they have a cottage worth a lot of money and two nice cars. I got into an argument and almost left the table when they were talking about how hurtful [Bill 148] would be to them. It’s ugly.”