Myths cloud minimum wage debate, argues Alberta business owner
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Our family business has proudly been manufacturing consumer products in Alberta since the 1950s. We currently employ about 20 people, of which around 15 are on our manufacturing line.
We offer good, entry-level jobs to young people in our town looking for workforce experience. Moreover, we offer jobs that allow them to enjoy their work, their colleagues, the health benefits, the flexibility, their hours and their work environment.
All our employees earn above the current minimum wage.
Rachel Notley and her NDP government have pledged to raise that minimum wage from $10.20 an hour to $15 an hour over the next three years. That's close to a 50-per cent increase.
Thankfully, the NDP government announced a relative compromise last month and will start increasing the minimum wage by $1 an hour to $11.20 an hour — effective October. This will allow more time for small businesses to adapt and allow for a better analysis of both the positive and negative effects of an increase. I applaud the new government for taking a little more of a prudent, balanced approach with their first hike rather than one of much higher risk advocated by labour groups.
Truth be known, no one knows exactly what the impact of a large minimum wage increase would be in Alberta. But, as a small business owner, I would like to challenge some of the arguments I often hear supporting such a large and quick increase.
Myth 1: Only minimum wage earners affected
I believe the term "minimum wage" is a bit misleading. Yes, it is the minimum wage in which employers can legally pay their employees. However, it is more often the rate in which businesses index their own compensation rates.
If $15 an hour becomes the new "indexed rate," wages will increase quickly, not only for entry-level or unskilled workers but for skilled or experienced labour. If a plumber, electrician, teacher or social worker knows that a worker at McDonalds received a $5 increase, they will likely surmise their own value has increased $5 an hour as well.
Most small business owners simply cannot absorb these wage increases. Their only option will be to charge more for their products and services.
Very soon, you'll see cost increases on everything from your daily cup of Tim Hortons coffee to fresh fruits and vegetables to getting your furnace repaired. These cost increases will burden all Albertans — especially the workers the policy is designed to help.
Myth 2: Owners only care about profit
If you are unable to find a way to bring in more money, you must decide to make cuts instead. This scenario is what small businesses fear most.-Brad Pallister, small business owner
Profits don't come easy. Owners often work long hours, make middle class wages and can struggle to make the business successful in a competitive local and global environment.
And it's not us versus them in the workplace.
Small businesses owners and their employees are often tight groups of people who work very closely together. We truly care for our employees' well-being.
Myth 3: Small businesses can afford it
Think of a small business as your own household. You go to work, bring home your wages, pay your expenses and, hopefully, have extra money left over at the end of the year to put into savings or invest into something tangible. To most small businesses, wages are the first or second largest expense.
To most homeowners, their mortgage or rent is their first or second largest expense. Imagine the provincial government decided that your mortgage or rent was going up 50 per cent of what you currently pay in three years.
Most households would have an incredibly difficult time making that work within their budget in such a short time frame. If you are unable to find a way to bring in more money, you must decide to make cuts instead. This scenario is what small businesses fear most.
Myth 4: Small businesses can adapt
This may be true. Indeed, small businesses are often more nimble than big business and carry a seemingly unlimited amount of ambition, passion and tenacity.
Although there will likely be some casualties from this decision, I personally do not believe a minimum wage increase will cause a large amount of business closures or job losses. But there will most definitely be consequences.
Young or inexperienced people will find it even more challenging to locate employment. Hiring freezes will become more common as companies struggle with costs. Companies will begin to explore other jurisdictions for growth opportunities.
The level of service and hours of operation will decrease as small businesses look for savings. Small business will not have as many resources available to invest in or grow their businesses. Goods and services will increase in cost. Government small business tax revenue will decrease due to less taxable income being earned.
Myth 5: Change needs to happen quickly
Small business is a big part of our economy. As of 2013, there were nearly 160,000 small businesses in Alberta that employed about 35 per cent of all private sector workers, according to a government survey.
If the NDP government plans to dramatically increase the minimum wage, so be it. It is the elected government's responsibility for putting forward what it believes is right for the province. However, it is also the government's responsibility to help minimize the impact of its actions.
A well-planned, well-communicated minimum wage increase over a more extended timeline could potentially work. However, this is absolutely not a decision that should be rushed through solely because of the political belief it will solve more problems than it will cause. Analysis, compromise and an open-minded discussion on both sides of the argument absolutely must be part of any future decisions.
Albertans cannot afford the alternative.
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