Small businesses prepare for wage hike

By Patrick Barrios

Small businesses across Ontario are scrambling to adapt as the provincial government’s proposed minimum wage hike – the steepest increase in the province’s history – looms.

But not all small-business owners oppose the coming minimum wage hike, which will see the pay rate reach $15 an hour by January 2019.

“I personally think the increase in minimum wage is a good move,” said Amir Rahim, owner of Grounded Kitchen and Coffeehouse in downtown Ottawa.

Rahim has been part of the food industry for 30 years, starting out as a dishwasher and moving up until he opened his own restaurant seven years ago on Gloucester Street in Centretown.

“If $15 is a fair living wage – and I don’t think the Liberal government pulled the number out of a hat – it must be what’s needed to make a minimum decent living,” he said. “I wish my employees that and more.”

Jennifer Heagle, co-owner of Red Apron, a gourmet food shop and restaurant on Gladstone Avenue in Centretown, holds a similar viewpoint.

“We feel really strongly that people who work in the food industry deserve to be paid a fair living wage,” she said. “That includes our farmers, our growers and producers, and the people who work for them.”

Heagle said the reason some businesses are in a difficult situation is that the government is moving so quickly to make up for lost ground when it comes to worker’s wages.

“Had we been doing a better job as a country of increasing the minimum wage over the years, then the impact would be less significant on those businesses that are generally paying only minimum wage,” she says.

According to a report released on Sept. 19 by the Fraser Institute, the negative economic consequences of the wage hike would be felt particularly harshly in areas with low average wages, such as rural communities.

“Some people will benefit from having a higher wage,” explained Charles Lammam, director of fiscal studies at the Vancouver-based conservative think tank. “But other people lose, because they no longer have the employment, or they have less employment.”

The Ontario Liberal government introduced Bill 148, also known as the Fair Workplaces, Better Jobs Act, in May. The plan would see the province’s minimum wage increase by a third, from the current hourly rate of $11.40 to $15 in 2019. For more than half a million Ontario workers who presently earn minimum wage, that could represent more than $7,000 in additional annual income.

Some critics depict Bill 148 as an overly hasty re-election strategy, with the next provincial vote less than a year away. And although Ontario’s Progressive Conservative party has stated its support of a $15 minimum wage, it claims the government’s plan is being implemented too abruptly.

“It’s terrible. It is unbelievable,” said Julie Kwiecinski, the director of provincial affairs at the Canadian Federation of Independent Business. “We keep reminding the provincial government like a broken record: jobs are going to be lost.”

The Ontario branch of CFIB represents a membership of 42,000 Ontario businesses, almost nine-tenths of which are small firms with fewer than 20 employees.

In July, CFIB issued a survey asking its members what their response would be to the proposed minimum wage increase. The preliminary results, published later that month, represent the views of some 3,500 respondents. Two-thirds of them said they would increase prices and hire fewer new employees once the wage hike kicks in. More than 40 per cent indicated they would cut jobs, while 53 per cent reported they would reduce their employees’ working hours.

Long story short, Kwiecinski says, Bill 148 will harm workers.

“Scenario one: You still have a job, but your hours are cut, and prices all around you go up,” she says. “Scenario two: You lose your job, and that’s the end result.”

The Fraser Institute’s report says businesses would feel the most financial squeeze in communities where the $15 minimum wage exceeds 45 per cent of the average wage. Expected consequences include job cuts and reduced hours, especially among youth and low-skilled workers.