Raising minimum wage is a double-edged sword for small business owners, says the 25-year owner and president of Hall Printing in Trail and Nelson.
Ingrid Hope, a member of B.C.’s Small Business Roundtable, was speaking about last week’s provincial announcement that a 40 cents per hour increase comes into effect mid-September, with another 30 cents raise next fall.
She acknowledges B.C. has the country’s second lowest minimum wage, making it difficult to attract workers from other provinces.
A higher wage may help bring in a new workforce, but will come at a cost, Hope added.
“The higher wage puts a burden on the small businesses as their expenses go up,” she explained. “Typically this increases their prices, so everyone pays. Or if they are in a highly competitive market they lose money and go out of business.”
Hope says 85 per cent of employers already pay higher than a minimum wage.
“But as the minimum wage increases it adds pressure to these employers to raise their salaries so they stay ahead of the game,” she said.
Minimum wage employees come at a lower skill level, so training is more extensive, which is why the Roundtable advocated for increased small business training allowances - to offset a higher wage for an unskilled employee.
“The retail and hospitality industries are really struggling to get employees so there is some extra training allowance for these sectors,” said Hope. “B.C. is trying to ramp up tourism but doesn’t have the trained manpower to give service. They have allowed travel expenses for trainers and consultants so training can be more affordable and attractive in remote locations.”
Last year, government announced a policy to index the minimum wage to British Columbia’s Consumer Price Index (CPI). Based on the province’s 2015 CPI, the minimum wage this year would increase by 10 cents per hour. With British Columbia expected to lead the country in economic growth this year and next, the government decided there is room for an adjustment to the minimum wage rate beyond B.C.’s CPI.
The first 40 cent increase brings the minimum wage rate to $10.85 per hour, effective Sept. 15, 2016. This new rate includes the 10 cents scheduled for the 2015 CPI, plus an additional 30 cents.
A second increase of 30 cents plus an amount based on the 2016 CPI (estimated to be 10 cents) will bring the minimum wage rate to $11.25, effective Sept. 15, 2017.
Smaller businesses can’t handle a large increase at once so the wage is being increased incrementally, Hope explained.
“The group advocated for Canadian cost of living only because B.C. was at the bottom, but the government thought the lower wage earners needed a bigger bump,” she said. “The economy in B.C. has been tops in Canada, so all earners would share in that because the CPI in B.C. was higher than the national average.”
Another advocate for small business, the BC Chamber of Commerce, voiced concerns about the impact of two larger-than-expected minimum wage increases.
Audry Lochrie of the Trail and District branch provided the Trail Times with a May 4 news release from the provincial chamber.
“There’s no denying that these two minimum wage increases will be tough for some of our 36,000 represented businesses across the province,” said Maureen Kirkbride, BC Chamber Interim CEO. “That said, we appreciate government’s efforts to offset negative impacts on business, notably by decreasing the small business tax to 1.5 per cent in 2017.”
The BC Chamber recognizes that the province has been clear about its intention to raise B.C.’s minimum wage relative to other Canadian jurisdictions, to match B.C.’s strong recent economic performance. However, going forward, the chamber is urging government to return to tying minimum wage increases to the CPI.
“For our businesses, the bottom line is the need for certainty and predictability,” said Kirkbride. “Quite simply, we need to take the politics out of minimum wage increases.”
The province also announced a $2.88 million commitment in new training programs to help with labour shortages in the province. The programs target young people, small businesses and employers in the retail, hospitality, agriculture and aquaculture sectors.
The first program is a $2.38-million investment through the Canada-BC Job Grant. The new funding stream will help businesses invest in training by covering the cost of training a<span class="Apple-converted-