Business sector reacts to hike in minimum wage

  • Wed Jul 8th, 2015 3:27pm
  • News

The local business sector continues to react to the province’s recent announcement of gradual increases to Alberta’s minimum wage.

As of October 2015 the nearly 2% of Albertans who make minimum wage will see an increase in their wages from $10.20 to $11.20 an hour following Premier Rachel Notley’s campaign promise to raise the minimum wage to $15 an hour by 2018.

On top of the raising of minimum wage, the separate wage for those who serve liquor will also rise from $9.20 to $10.70 in October, with the differential being eliminated entirely by 2016.

Following the announcement both the local Red Deer Chamber of Commerce, the Alberta Chamber of Commerce and businesses across the province were busy crunching numbers in an attempt to forecast the outcome of both the first round of wage increases which will make Alberta’s minimum wage the second highest in the country after the North West Territories, as well as the long term effects of a $15 dollar minimum wage which will make it the highest.

“The idea of minimum wage isn’t a bad thing and raising the minimum wage isn’t a scary concept for most businesses,” explained Reginald Warkentin, policy coordinator for the Red Deer Chamber of Commerce. “However before the initial announcement the fear of an overnight $15 minimum wage scared a few people – it is a dramatic jump when you are talking a 50 per cent increase.

“We understand it’s a campaign promise, but we think it’s for the best they didn’t go too far with the initial hike considering our province’s current economic climate.”

Warkentin stated Chambers across the province predict the largest impacts over the course of the next three years will be visible in the restaurant sector. This leads many to wonder whether the owners will absorb the costs associated with paying employees more or if they will pass costs along to customers in the form of price hikes.

“The restaurant sector itself has never have the widest margins at the best of times, so when you are talking about this kind of increase it really is a significant change,” he said.

“I think if we would have seen the straight to $15 jump we would have seen many businesses readjust how they work their tip system and it likely would have involved restaurants taking tips in and instead paying servers a flat rate similar to how Australia is.”

Local business owner Glenn Simon, owner of Glenn’s Family Restaurant on Gasoline Alley agreed he isn’t worried after this first initial round of wage increases as currently all of his employees make above $11 an hour upon starting.

“However, if you take the $1 raise that’s almost a 10 per cent increase so you’ll have to cover that cost some how,” explained Simon. “The following year we will likely see a raise up to $12.50 until we finally hit that $15 mark around 2018.

“This time last year I could put an ad out for a month and not get a single response, so I ended up having to pay more when there were labour shortages just so I could get good quality staff.”

Both Warkentin and Simon agreed consumers should expect to see a rise in prices throughout the restaurant sector as businesses adjust to the costs of paying employees more.

“All we as the Chamber are saying is that maybe we as a province should slow down and take a closer look at the impacts a $15 minimum wage has had on other places such as California,” added Warkentin. “The lay-offs in Alberta are still happening and it’s important to remember this raise in minimum wage is happening at a time of economic downturn.”

jswan@reddeerexpress.com