This is not the time for major hikes to Alberta’s minimum wage.
Minimum wage will rise by one dollar to $12.20 per hour on Oct. 1. The NDP government is also making good on its promise to increase minimum wage to $15 by 2018.
It may not end up being as much benefit to low income workers as its proponents intend and it may simply be too much for some businesses to handle at a time when many are on shaky ground.
One of the main arguments in favour of increasing minimum wage is that people will have more money in their pockets to spend. This will only go so far. For anyone struggling to make ends meet on $11.20 per hour, an extra dollar per hour will in all likelihood go to basic necessities. Minimum wage earners who work full time will get as much as $2,000 more a year, before taxes. It will be a welcome boost, but realistically there won’t be much left over each month for discretionary spending.
This will benefit the Walmarts of the world more than it will small businesses.
And, a $15 minimum wage will be too hard for many of those small businesses to swallow.
Prices will definitely go up, but some businesses will only be able to raise them so much before they risk losing customers.
Those who can will find ways to automate their processes and reduce their labour costs, while others may choose to cut back on how much is reinvested in the business. Those that can’t bear a higher minimum wage will have little choice but to cut hours or reduce staffing.
It’s not being a Grinch, it’s basic business.
Last year’s minimum wage increase was a welcome boost for low wage earners and helped Alberta to catch up compared to other provinces, but the provincial government needs to back down.
Minimum wage should rise with the times, but is should be indexed it to the consumer price index. It’s a balanced approach for both businesses and workers.