Globe International Cuisine restaurant owner Dave Cluderay has run his business for one year and currently has more staff than he did one year ago.
As a result of the B.C. government’s decision to increase minimum wage to $15 an hour in 2021, starting with a 50-cent increase next month, Cluderay has to consider how his bottom line will change.
“I’m not too concerned about it, I mean, this one’s only 50 cents. It’s just gradually going up,” he said. “As owners, we’re basically just going to have to work harder.”
According to data in AdvantageHOPE’s 2016 annual report, there are 1,211 businesses in Hope. The majority of them are owner-operator businesses. The next biggest category are businesses that hire one to four employees.
Businesspeople have pointed out that an increase in minimum wage would lead to increased prices that eventually get passed onto the customers. Hope and District Chamber of Commerce president Lloyd Forman agrees, but also points out “there’s no easy answer.”
“They’re going to have $15 in four years. You know what’s going to happen. Inflation is going move up, and that $15 isn’t going to be much,” said Forman. “From a business perspective, there’s no way a small business can eat the increase … They’re working tight margins as it is and so it’s going to incrementally put the price up.”
Asked if an increase in minimum wage will help the bottom-end of wage earners have a higher quality of life, Forman said it would not help them very much. He elaborated that increased inflation would ebb away at the increase in wage.
Forman said minimum wage should not something a breadwinner subsists on — adding that “it’s good for kids starting out” or “a second income.”
He said that the bigger problem here is the “one per cent controlling 99 per cent of the wealth.”
“We’ve allowed that to happen,” said Forman.
“We’ve allowed corporations to get larger and larger, control more and more.
“So, the Costcos of the world that can sell things a little bit less, but they end up controlling everything, and the small businesses are just sucked in the wind because they don’t have enough volume… and yet they’re having to hire these people.”
Forman sees $15 per hour as a ideal minimum wage, however, he also said that because Hope’s businesses face tight margins, it would be challenging.
“If a small business here were producing raw logs or oil or something, where there was some profit margin, then we could say, ‘Hey, you guys, smarten up, nobody can live less than $15, pay it.’ ”
Fraser-Nicola MLA Jackie Tegart said she’s focusing on a balance between the quality of life for people making minimum wage and businesses’ interest. She highlighted that the Liberals had announced an increase in September, which is similar to what the NDP government announced.
“But they’re also saying that they want a $15 minimum wage by a certain date and they’re not telling small businesses how exactly they’re going to achieve that,” said Tegart. “I think that’s the issue. Can small businesses afford a $15 minimum wage?”
Tegart warned that if labour is too expensive, small business owners will work longer hours and not hire anyone else.
Other Lower Mainland chambers of commerce have also given their disapproval to the $15 minimum wage plan.
Costs will be out-of-reach for some already-struggling businesses, according to South Surrey and White Rock Chamber of Commerce executive director Cliff Annable.
“The main business we have are the mom and pop shops,” said Annable. “And the more wages you pay, the more you have to contribute to Canadian Pension Plan and such.”
Greater Langley Chamber of Commerce president Jack Nicholson said he worries their members won’t be able to keep their businesses staffed.
“How does the government feel this will not have a negative impact on small business, in their ability to cover costs in small operations such as a corner grocer or coffee shop?” Nicholson wrote in an email. “Small businesses are not going to be able to afford to hire someone at $15 an hour with no skill.”
In making the announcement last Tuesday, Labour Minister Harry Bains said employees earning more money would in turn spend more in their own backyards.
B.C. Federation of Labour president Irene Lanziger agreed.
“These workers are not earning enough money to have a Swiss bank account,” she said. “They will spend their extra wages in their communities.”
But Annable was unsure.
“My first gut reaction is that it won’t be spent in their community,” Annable said. “In South Surrey-White Rock people go across the States to shop.”
Neither Annable nor Nicholson say the minimum wage shouldn’t ever go up, but both said it should be tied to the consumer price index.
“I don’t have a problem with that,” said Annable, “but when you start going to over $4 in the next few years, then that’s a huge increase.”
The province has released few details on its plan, but said it will set up a commission to help determine how fast the rate will go up over time.