Much like the recent ban on the trophy hunt of grizzly bears, the NDP’s decision to increase BC’s minimum wage by $0.50 to $11.35 has been met with mixed feelings.
David D. Hull, executive director of the Cranbrook Chamber of Commerce, said that though the minimum wage hike wasn’t a surprise, as it was initially scheduled by the previous government, and the NDP had been lobbying for it throughout their election campaign, it still comes as a “tough pill to swallow for the business community.”
Hull said that though he believes that the $8-an-hour minimum wage BC had in 2011 was too low, indeed the lowest in the province, the NDP’s plan to increase it to $15-an-hour by 2021, a 72 per cent increase over a ten year period, is “crazy.”
“From now, September 2017, to implementation of $15-an-hour minimum wage, that’s a 34 per cent rise,” Hull said. “And this is all during a period of time when inflation has been running at about two per cent so the pressure on businesses is going to be I think in many cases insurmountable.”
One of the factors he mentioned is that the increase doesn’t just impact minimum wage workers. He said it pushes pressure up through the ranks of a business, so people that hypothetically make just over the minimum wage that have put in time with a company now could feel that if those below than them are getting a pay rise, they deserve one as well.
Hull said that the Chamber of Commerce both locally and provincially have been calling for a predictable system of increases to the wage, so that businesses can accurately forecast ahead and know what to anticipate. For example, if the cost of living index increases by three per cent, the minimum wage increases accordingly.
“This isn’t rocket science this is just common sense,” Hull said. “And arbitrarily moving to a 15 minimum wage really isn’t common sense. The minimum wage should have some basis in reality and some basis in common sense and the economy.”
Hull said that with wages and employee benefits being the greatest expense to businesses, these increases are problematic.
“The reality is businesses have to remain profitable or they don’t survive,” he said. “And if businesses don’t survive there’s no jobs for anybody, whether you’re the minimum wage worker or you’re the CEO.”
“You’ve got to remember,” he continued, “the very best thing for everyone in British Columbia of working age is a job. And the only way you have a job is with successful, sustainable companies and continuous upward pressure on the wage and benefit costs is not a recipe for longterm, successful businesses.”
Hull mentioned that many of the people working in BC making minimum wage are part time workers, with the vast majority of those being youth who live at home, many of whom are in school.
“91 per cent of the minimum wage earners are employed the service sector so you think about an industry where the failure rate of hospitality businesses, especially restaurants and pubs, in the first two years is ridiculous,” said Hull. “The failure rate is just sky-high, now let’s put another 34 per cent increase on the cost of wages to those businesses. The whole thing is just really going to be a fiscal disaster.”
Finally, Hull stressed the importance of knowing the difference between the living wage and the poverty level with the minimum wage.
“They’re really actually not related significantly,” he said. “Usually the minimum wage as a poverty reduction tool is crude, blunt tool that isn’t going to work and many, many studies have stated that.”
He indicated one Ontario study that found the vast majority of households that were collecting minimum wage were above the national recognition of poverty.
“So if that’s your concern then you should be looking at different taxation structures and different policies to help people that are the so-called working poor.”