Young work­ers will bear brunt of in­creased busi­ness costs

Nor'wester (Springdale) - - EDITORIAL -

On Oct. 1, the min­i­mum wage in New­found­land and Labrador in­creased to $11/hour. This is the sec­ond in­crease in a year.

Yet, many lament it is the low­est in the coun­try and are push­ing for $15/hour with­out any eco­nomic jus­ti­fi­ca­tion for it.

Small- and medium-sized busi­ness own­ers in the prov­ince are do­ing every­thing they can to keep their busi­nesses afloat and peo­ple em­ployed. To deal with the in­crease in min­i­mum wage (and any other cost in­creases for that mat­ter), busi­ness own­ers will in­crease prices or re­duce costs ac­cord­ingly.

For own­ers of con­ve­nience stores or gas sta­tions – where many min­i­mum wage jobs can be found – the gov­ern­ment dic­tates how much profit they make. For ex­am­ple, profit from beer sold in bot­tles is $1.65 per dozen, while the con­sumer pays about $25. A gas sta­tion owner is al­lowed nearly nine cents per litre profit on ga­so­line sales, though driv­ers are pay­ing in ex­cess of 110 cents per litre.

From their per­spec­tive, it is in­her­ently un­fair for the gov­ern­ment to in­crease their busi­ness costs, but re­strict their abil­ity to gen­er­ate rev­enue.

An­other con­cern ex­pressed by those who own li­cenced restau­rants and con­ve­nience stores is mi­nors are un­able to sell or serve al­co­hol. This means an em­ployee over the age of 19 has to be present at all times. As the costs of op­er­at­ing a busi­ness in­crease, restaurant and con­ve­nience store own­ers are ad­just­ing by hir­ing fewer youth un­der the age of 19. If you trav­elled across the prov­ince this summer, you may have seen job ads posted by some busi­nesses with “Over 19 only please.” This is the rea­son why.

Any busi­ness own­ers un­able to in­crease prices will have to ab­sorb the costs some­how. Un­for­tu­nately, it will be youth and in­ex­pe­ri­enced work­ers who will feel the brunt.

A third of small busi­ness own­ers would re­duce hir­ing of youth or in­ex­pe­ri­enced work­ers if the min­i­mum wage was $15/hour to­day. Re­cent CFIB re­search shows that if the min­i­mum wage was to rise to $15/ hour, at least 2,700 youth in the prov­ince would not be able to find work. This is dis­heart­en­ing con­sid­er­ing a youth un­em­ploy­ment rate in New­found­land and Labrador that ranges be­tween 15 and 20 per cent in any given month. If youth are to be en­cour­aged to stay in New­found­land and Labrador, they have to be gain­fully em­ployed.

Ide­ally, the gov­ern­ment will use the tax sys­tem to put more money in the pock­ets of low­in­come work­ers rather than re­ly­ing on in­creases to the min­i­mum wage. How­ever, the pro­vin­cial gov­ern­ment has been look­ing at in­dex­ing min­i­mum wage to some sort of eco­nomic in­di­ca­tor; it has yet to make a de­ci­sion.

Many small busi­ness own­ers are con­cerned about in­dex­ing min­i­mum wage, and to ease the bur­den, there should be offsetting mea­sures. Specif­i­cally, CFIB rec­om­mends the fol­low­ing if in­dex­a­tion oc­curs:

- en­sure the work­ers’ com­pen­sa­tion as­sess­ment rate is re­duced by the same per­cent­age value as the eco­nomic in­di­ca­tor cho­sen;

- con­sider au­to­matic in­creases for gov­ern­ment-man­dated profit mar­gins equal to the per­cent­age value of the eco­nomic in­di­ca­tor cho­sen; and

- review the pos­si­bil­ity of an en­force­ment mech­a­nism al­low­ing mi­nors to sell and serve al­co­hol in li­cenced es­tab­lish­ments.

Small busi­nesses are play­ing their role in sus­tain­ing the lo­cal econ­omy. How­ever, as long as pol­i­tics con­tinue to trump eco­nom­ics, that will be harder and harder to do.

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