B.C. is poised to become the third Canadian province to hike its minimum wage to $15 an hour, a move small businesses argue will make it even more difficult for them to make ends meet amid a growing number of rising costs.
If the BC NDP and Green Party coalition takes power in B.C., as is expected is the coming days, the province will join Alberta and Ontario as part of a trend to raise the minimum wage in jurisdictions across North America.
Alberta’s NDP government announced its plans in 2015 to increase its minimum wage to $15 from $10.20 over four years. Ontario’s Liberal government has a more rapid timeline: Last month, it announced a hike to $14 an hour from $11.40 next year, and then to $15 on Jan. 1, 2019.
The BC NDP campaigned on bringing in a $15 an hour minimum wage by 2021, with increases each year. That’s up from $10.45 today, or $9.60 for people who serve liquor. (Both categories were scheduled to see a hike of 50 cents an hour in September, under the Liberals.) The BC Green Party’s platform was to set up a minimum-wage commission. The two parties have combined platforms as part of an alliance struck last month to topple Premier Christy Clark’s minority government.
Small-business owners in B.C. say a minimum-wage hike will likely force them to cut costs, including jobs, and potentially raise prices of their products and services.
Uwe Boll, a former filmmaker who now owns the Bauhaus restaurant in Vancouver, says a $4 hike “will be devastating” to many small businesses, especially in the restaurant industry.
“It will eat up any possible profit,” Mr. Boll says, adding that many restaurants have profit margins of about 5 per cent to 8 per cent.
Mr. Boll believes restaurants should be exempt from a hike since servers receive tips on top of their wages. Kitchen staff also receive a percentage of that money, at least at his restaurant.
If the minimum wage rises, Mr. Boll expects he’ll have to cut costs and raise prices to maintain his business.
Higher prices could just be one result of a minimum-wage increase, says Dan Kelly, president of the Canadian Federation of Independent Business. He says many small businesses, especially those who can’t increase prices, will likely have to reduce staff or freeze hiring.
“There is no way this is not going to affect employment in a negative way,” says Mr. Kelly, adding that wages are the largest expense for many small businesses. “[A wage increase] is intrinsically linked to their payroll. That’s where business owners are going to have to look first.”
Mr. Kelly says the minimum wage has already been rising faster than inflation across many provinces and a jump to $15 will be a big blow to many operations.
“I don’t know anybody who can withstand such an increase in costs in such a short period of time,” Mr. Kelly says.
He says there’s a misconception that small-business owners are “too cheap or mean-spirited” to pay their employees more.
“Many small businesses would love to be able to do better for their employees,” Mr. Kelly says. “But often the margins in their business just don’t allow that to happen. I really do believe this will push some players already struggling over the edge, that this will mean the model for their business no longer works.”
Another worry for small businesses is labour-law reforms. In Ontario, for example, the government is proposing changes that would require part-time, contract and temporary workers to make the same wage as full-time workers for equal work, as well as more rigid scheduling rules that ensure workers get paid for at least three hours if a shift is cancelled within 48 hours.
Mr. Kelly says moves such as these will force employers to be less flexible with employees. “Employers will have to have a more rigid, higher-cost operating structure,” he says.
Mark Thompson, professor emeritus at UBC’s Sauder School of Business, says many small companies develop their business plans with a reliance on low-income workers.
“That’s going to change,” he says. “A $15 minimum wage is here.”
Mr. Thompson says businesses will be forced to adjust either by changing their service level or finding ways to improve productivity.
“Capitalism is a wonderfully flexible system,” Mr. Thompson says. “Smart businesses will take advantage of that.”Report Typo/Error