NDP’s fight for $15 is arbitrary and reckless

Policy sounds nice, but it won’t have the desired effect, Mark von Schellwitz writes.

Instead of learning from the failed aggressive minimum-wage policies of the 1990s that resulted in the highest youth-unemployment rate in Canada of over 14 per cent, the B.C. NDP’s election platform once again focuses on implementing Big Labour’s agenda to the detriment of small, non-unionized businesses and their employees.

The main labour plank in the NDP’s platform is a 40 per cent increase in the minimum wage to $15. Why $15? There is no real policy rational for a $15 minimum wage as average wages and the cost of living varies dramatically in North American jurisdictions.

Big Labour’s $15-minimum-wage rallying cry may sound good, but it’s less about helping entry-level employees and more about ratcheting up wage inflation for unionized employees to increase union dues.

To be clear, Restaurants Canada doesn’t oppose minimum-wage increases. We support objective minimum-wage increases that link to economic measures like CPI, so wages keep up with cost of living. Most Canadian provinces are now doing just that.

For small businesses, a $15 minimum wage isn’t about politics, it’s about simple math.

B.C.’s minimum wage is in the middle of the pack among the provinces. The B.C. Liberal government has increased the minimum wage by more than the cost of living for 2016 and ’17.

The NDP’s platform says: “Once we reach $15 per hour, we will index the minimum wage to inflation to ensure that we don’t fall behind.” We are glad the NDP supports indexation, but why not do it now? This will protect thousands of small businesses and entry-level jobs, and keep the cost of goods and services affordable.

Big Labour falsely suggests a $15 minimum wage is necessary because most minimumwage earners are impoverished workers trying to support a family or part-time employees who can’t find full-time work. In reality, most minimum-wage employees are students working their first job to build experience while living in households with above-average family income, voluntary part-time supplemental income earners or gratuity-earning staff who earn more than a living wage.

For small businesses, a $15 minimum wage isn’t about politics, it’s about simple math. How does a small restaurateur whose labour cost represents more than 30 per cent of every revenue dollar, and whose average pre-tax profit is only 3.7 per cent, absorb a mandatory 40 per cent increase in entry-level wage costs? Restaurateurs have only two choices to absorb these dramatic labour-cost increases — significantly raise prices, which makes eating out a lot less affordable, or reduce labour costs by cutting hours or laying-off entry-level employees.

In Alberta, we are seeing both of these outcomes. Alberta is only half way to a $15 minimum wage — currently at $12.20 — and already small businesses and their employees are feeling the devastating impact of this inflationary policy. Many small businesses have closed. Others have been forced to reduce employment, through layoffs or fewer working hours, just to stay afloat. This is especially true in the highly competitive, low-margin, labour-intensive hospitality industry.

According to Statistics Canada, Alberta hospitality-industry employment alone has fallen 3.8 per cent — a whopping 4,700 jobs lost in the past year. Alberta youth unemployment skyrocketed to over 14 per cent. Sound familiar?

The wage for those 4,700 jobless Albertans is zero. For those lucky enough to still have a job, average weekly hours have dropped. This means any increase in wage income is offset by fewer hours of work and gratuities, leaving less — not more — money in their pockets to stimulate the local economy. Fewer working hours also results in poorer customer service. From owners and employees to customers, everyone is losing.

The NDP argues a $15 minimum wage won’t hurt jobs and will lead to more employment in minimum-wage sectors, but the opposite is true. Just look at our neighbours in Alberta. Their NDP government’s ideological $15 minimum-wage policy experiment is hurting the very people it’s intended to help. Mark von Schellwitz is Restaurants Canada’s vice-president for Western Canada.