BC’s $15 minimum wage “terrible” for business

Small companies and younger workers will suffer most, despite longer phase-in period, lobby group says

BC’s $15 minimum wage “terrible” for business
British Columbia will follow Ontario and Alberta in lifting its minimum wage to $15 an hour, but despite a longer lead-in period, a business group says employers and workers will both suffer.

The province’s new NDP government will stick with its Liberal predecessors’ plans to raise the wage by 50 cents an hour to $11.35 on September 15.

However, new Labour Minister Harry Bains has announced the fall increase is just a “stepping stone” to a $15-an-hour wage by 2021.

“What we are doing is going with a responsible, fair approach so that the businesses know that it’s predictable, it’s incremental increases going forward so they can look at their structure, their costs ahead of time and knowing fully well what their costs will be,” he said.

The government hasn’t yet laid out a timeline for further rises; however, it will have a longer phase-in period than that of Ontario – which will lift its minimum hourly wage from $11.40 currently to $15 an hour in January 2018 – and Alberta, which will rise from the current $12.20 an hour to $15 by October 2018.

But even with an extra three years, a nationwide lobby group says BC will still feel a squeeze from the pay hike.

Richard Truscott, the Canadian Federation of Independent Business’ vice president for BC and Alberta, spoke to HRD about what BC’s minimum wage rise will mean for employers and workers.

Do you support the plan to increase the wage to $15? Why or why not?
The so-called Fight for 15 may make for a snappy election slogan, but it is terrible economic policy that will put the squeeze on small business by piling on a ton of new operating costs. It will also do more harm than good to those people, especially youth, who may be looking to get their foot in the door and find that first entry-level job. Governments can best help by helping people acquire the skills, training, and job market information they need to find new opportunities. Simply raising the floor on wages may make the politicians feel like they are doing something positive, but the impact on job creators will definitely be negative. 

How do businesses feel about it? Who’ll be hardest hit, and how?
Many business owners are feeling squeezed. Employers have said loud and clear they will respond to these massive new costs by making adjustments. They will look at reducing hours of work for existing employees, perhaps not do some hiring they had planned, maybe dip into the training budget, or not purchasing new, safer, and more productive equipment. In some cases they will try to hike prices. But let’s not forget small businesses typically operate in highly competitive markets, on very thin margins, and any time government moves to impose new costs, entrepreneurs have limited ability to adjust. Even employers who don’t have those entry-level jobs will feel pressure to increase wages across their payroll.

BC employers have got a much longer lead-in time than Ontario employers – how much does that help?
In reality, the key issue is how to adjust the floor on wages in a predictable way, that allows for modest increases small business can afford. It may be easy for Walmart to sustain a huge increase in wage costs, but for small business, it can be very difficult. If the minimum wage rises too far, too fast, it could be the last straw for some small businesses that will be forced to close down, especially considering there is a growing list of other federal, provincial, and municipal  policies that are adding costs and headaches for entrepreneurs.

Related stories:
185,000 jobs ‘at risk’ from minimum wage hike
Employers push back at minimum wage hike

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