Minimum Wage Hike Too Fast

Jun 30, 2016

Minimum Wage Hike Too Fast and May Hurt Those It Aims to Help, Say Edmonton and Calgary Chambers

June 30, 2016

With increasing rates of business closures and bankruptcies, it’s the wrong time to add to the burdens faced by Alberta businesses with a significant increase to the minimum wage. The provincial government announced that the minimum wage will increase to $12.20 on Oct. 1, 2016, as part of its move to raise the minimum wage to $15 per hour by 2018.

The announced increase means that as of October, Alberta will have the highest minimum wage rate of any province in Canada, moving from $11.20 to $12.20. By comparison, Ontario’s minimum wage will increase from $11.25 to $11.40 in October.

The government has stated it is raising the minimum wage to $15 per hour to give low-income Albertans the ability to support their families.

“We support Albertans being paid a fair wage,” said Janet Riopel, President & CEO of the Edmonton Chamber of Commerce. “Our concern is the rapid increase to a $15 minimum wage could have unintended and harmful consequences for the very people it’s trying to help.”

“What we want is a minimum wage that reflects Alberta’s current economic reality,” said Adam Legge, President & CEO of the Calgary Chamber of Commerce. “Increases to the minimum wage should be supported by research and tied to economic indicators, and the effect of increases should be monitored and analyzed.”

“We want the Alberta government to use the right tool for the job,” said Legge. “If the goal is to help low-income Albertans, the blunt tool of a minimum wage increase is not the best way to do it.”

The Edmonton and Calgary Chambers urged the provincial government to consider mitigating factors such as a differential for trainees. This would have ensured young people would still have access to entry-level career opportunities.

“Ultimately, businesses and non-profits may be faced with cutting staff or reducing hours in order to survive impacts of the minimum wage increase to their bottom line,” said Riopel. “That won’t help low-income Albertans. We want businesses, and the employees who depend on them, to thrive.”

The Edmonton and Calgary Chambers of Commerce recommend the provincial government:

Conduct a comprehensive and transparent cost-benefit analysis of the $15 dollar minimum wage.
Phase-in the $15 per hour minimum wage over a longer period for non-profits and small businesses where payroll represents a substantial portion of operating costs.
Tie future minimum wage increases to economic growth indicators.
Establish a training period exemption from the minimum wage to help reduce the risk of hiring and training new employees, especially in seasonal positions.
Explore tax breaks for businesses that provide benefits not included in the minimum wage rate, such as training, matching RRSP programs and extended health benefits.
Make use of targeted social programs to tackle poverty in Alberta.
Minimum Wage in Alberta

Only 3.1 per cent of the workforce earns minimum wage, compared to the Canadian average of 6.9 per cent. Any benefits of the minimum wage increase would be limited to a very small percentage of Alberta workers.
Minimum wage increases would not benefit the most economically disadvantaged Albertans who are not currently part of the workforce.
Minimum wage earners in the province already have the highest take-home pay relative to minimum wage earners across the country. Thanks to Alberta’s low personal taxes and no provincial sales tax, minimum wage earners already have more left on their paycheques than their counterparts across Canada.
Research on the effects on employment of a $15 per hour minimum wage is limited since to date it hasn’t been implemented anywhere in Canada. Recent estimates based on economic research suggest a loss in employment among low-wage workers from five to 24 per cent.

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