Minimum wage increases will hit food and beverage industries the hardest, but it’ll be customers who end up eating it, says Audry Durham from the Trail and District Chamber of Commerce.
The province announced on Tuesday it would be raising the minimum wage by 50 cents in September and up to $15 by 2021.
“When I first heard of it, because I have a hospitality and tourism background, I thought it’s going to be passed on to the consumer,” Durham told the Trail Times.
She says generally, the cost of food is 30 per cent, wage costs are 30 per cent and overhead eats up another 30 per cent.
“Theoretically, that leaves a 10 per cent margin,” Durham explained. “And because we don’t have much control over product costs, service or overhead there’s going to be a shortage somewhere when (up to) 30 per cent is added on to the wages, that’s all there is to it … so it’s really going to affect tourism, and the food and beverage industry big time.”
Businesses, especially small businesses, have been preparing to implement a 50 cent increase since the spring of 2016, when the previous B.C. government announced its planned minimum wage increase.
So it’s not this first raise that has Durham as concerned as the wage increments over the next four years - because what may happen is jobs at the Trail chamber, like the front desk and summer students positions for example, will no longer be competitive.
In other words, raising the minimum wage narrows the margin for summer student jobs as well as entry level positions, both which pay a few more dollars per hour than the current minimum.
“That’s the other thing I thought of,” said Durham. “We’ve had summer students forever, they are going to university and need the money, so we top up what the federal government gives us, which is $10.85 an hour,” she added.
“So when the minimum wage goes up we are going to have to look at that, and ‘Are we going to be able to be competitive at that point of it?” Durham said.
“And people who have been here for awhile, like our membership service manager who has been to university, is going to be way closer to minimum wage that she ever was before.”
Notably, it’s not just 50 cents an hour employers are mandated to pay out. Business owners typically pay another 21 to 25 per cent per employee on top of respective wages, such as five per cent toward CPP, two per cent to EI, a minimum four per cent to WCB, and four per cent for both vacation and statutory holiday pay.
On Aug. 15, the province re-affirmed its commitment to a “fair wages commission” and a $15-an-hour minimum wage by 2021.
Effective Sept. 15, minimum-wage earners will see their pay increase to $11.35 per hour from $10.85 per hour, giving B.C. the third-highest minimum wage among Canada’s provinces - up from seventh position.
The province noted that 93,800 people in B.C. were earning minimum wage last year - out of a total 1.96 million paid employees, excluding self-employed. Of that sector, 13 per cent had a university degree and 25 per cent did not. Additionally, the most common minimum wage earners, 54 per cent, were youth aged 15 to 24 years and 14 per cent were aged 55 or older.
“The BC chamber has been working with the province, so we already knew this first one was coming up,” said Durham. “But to go up to $15 an hour, it would have been nice for the province to have some input from the business world, instead of just getting slammed with it - because in B.C. 75 per cent of businesses are small business, and this is really going to affect profits margins.”
As a whole, the chamber states, “For our businesses, the bottom line is the need for certainty and predictability.”
The organization, which represents more than 36,000 businesses across B.C., says a more measured increase to a $15 minimum wage would allow business owners to gradually build the corresponding cost into their business without having to decide whether to put off new hires, reduce hours of their employees, let employees go or to pass the cost onto their customers.
The B.C. chamber maintains its commitment to seeing minimum wage increases tied to the Consumer Price Index (CPI). In 2015, the BC Chamber’s membership passed a policy advocating the need for predictability in minimum wage increases, and calling for only minimum wage increases tied to CPI.