A planned increase in the minimum wage to $15.65 from $15.20 an hour this June will come at a difficult time for many operators, according to business leaders.
Noting many small businesses are still reeling from the economic effects of the pandemic, some business advocates say the 45-cent-an-hour hour increase will eat into the bottom line.
“We appreciate the government followed through on its commitment to tie minimum wage to inflation, but the timing, given where inflation is at, is somewhat problematic,” said Mark Von Schellwitz, vice-president for Restaurants Canada.
The June hike is the first in the province to be tied to the inflation rate ,and is based on a rate of 2.8 per cent. It follows a 60-cent-an-hour increase last year and a 75 cent increase in 2020.
Von Schellwitz said the last thing the restaurant industry needs is more inflationary cost pressure after a nearly six per cent increase in food costs last year and an expected five per cent rise again this year.
While he acknowledged the industry supported the move to tie wage increases to inflation, which he called “still the best way to handle minimum wage,” Von Schellwitz said for many businesses, the pandemic “hangover” continues.
“Our sales are way down to the point many are just not profitable,” he said. “We’ve got more than half of our members that are still incurring debt every single month.”
While he called the increase reasonable, he said it would have been preferable to put the hike off for a while.
“We would just have preferred no increase this year given our other challenges.”
Bruce Williams, chief executive of the Greater Victoria Chamber of Commerce, agreed the rate is reasonable, but said it represents one more cost for businesses already operating with tight margins. “Raising wages contributes to rising prices, and we can’t take economic recovery for granted.”
Several restaurant owners in the city said the increase in wages will likely be reflected in higher menu prices this year, though most noted they have been paying most of their kitchen staff well above minimum wage, while serving staff have tip pools on top of their wage packets.
In fact, a number of businesses said the increase is unlikely to make much difference to their current wage bill, given the tight labour market in B.C. and the need to offer competitive wages to attract and retain quality staff.
“I couldn’t pay someone minimum wage with a straight face, not in this very expensive city,” said Dale Olsen, owner of Outlooks for Men.
Olsen said he walks a fine line between trying to pay staff a decent wage while keeping his prices reasonable.
“People are price sensitive. Retailers like myself can’t afford $40 per hour staff — shirts would have to sell for $300 and nobody wants to pay that,” he said. “Look at what’s happening to the prices in restaurants these days. That’s a reflection of what’s going on with wages.”
But Olsen said there’s no question people need to make more money when they are faced with the prospect of paying $1,800 a month for a mediocre apartment.
Reid James, general manager of the Hotel Grand Pacific, said minimum wage is a distant memory for workers in higher-end hotels — at his hotel, new workers start at the rate for those who have been there a year.
James noted, however, that when the minimum wage goes up, it ripples through an entire payroll, as other wages are based on that number, and unions will use it as a benchmark in bargaining.
Rory Kulmala, chief executive at the Vancouver Island Construction Association, said B.C. is one of the most expensive places in Canada to live, so that should be reflected in higher wages.
“But we must be mindful that many businesses that depend on minimum-wage workers are still trying to get their footing following the last two years of the pandemic,” he said. “The cost of doing business is continually increasing on so many fronts — labour, logistics, materials — which, ultimately, the consumer will end up absorbing.”
Labour Minister Harry Bains said B.C. had one of the lowest minimum wages in the country before 2017, despite being one of the most expensive places to live.
“We do not want our lowest-paid workers to fall behind. The minimum-wage increases tied to inflation are part of our plan to build an economy that works for everyone,” he said.
Last year, six per cent of British Columbians earned minimum wage or less.
