Minimum wage hike could boost Kitchener payroll by $1M or more
KITCHENER — The province’s decision to increase minimum wage will add at least $1 million to Kitchener’s payroll, city councillors heard at a budget meeting Monday.
The increase will have a significant impact on city costs, said Ryan Hagey, Kitchener’s director of financial planning, adding about $840,000 to the city’s payroll next year. But Kitchener is able to absorb the $840,000 wage hit without a big tax hike because rising interest rates will improve the return on the city’s investments, he said.
The size of the hit to the city’s payroll was “to be frank, a shock,” said finance committee chair Coun. Scott Davey.
On Jan. 1, 2018, minimum wage in Ontario is set to rise from $11.60 an hour to $14 an hour. That is expected to add about $770,000 to the city’s payroll in 2018. The legislation that boosts minimum wage also provides employees with 10 days of emergency leave, increases minimum paid vacation and minimum pay for on-call employees, which city officials estimate will add another $70,000 to the city’s wage bill.
Kitchener has about 1,150 part-time employees — people such as parking attendants, to ushers, cleaning staff and crossing guards — who are paid minimum wage, said Michael Goldrup, Kitchener’s director of human resources.
The actual cost could be much higher once the legislation is fully implemented, Goldrup said. Three other factors could boost the cost of the wage hikes over $1 million.
First, the legislation includes provisions for a second planned increase, which would push minimum wage to $15 an hour on Jan. 1, 2019. That could add about $320,000
more in payroll costs.
Second, increasing the wages paid to the lowest-paid employees could push up wages for those who were paid slightly more than them. Council will consider a report in a closeddoor meeting next month about how the minimum wage increase could affect wage grids.
Kitchener’s current wage agreements probably won’t be affected, Goldrup said. “There are other impacts upstream,” he warned.
“We’re looking at a bigger impact in the future, which is unfortunate,” agreed Coun. Bil Ioannidis.
Third, the $840,000 total doesn’t include the impact of the minimum wage increase on city contracts. Any companies bidding on city contracts will likely be facing higher wage costs, and those costs may push up the total cost of a contract, Goldrup said in an interview. “We could see a push-through of costs in the future that we can’t put an estimate on today.”
The city’s human relations department will carefully monitor the impact of the wage increase and the other changes and report back to council in advance of the 2019 budget, Goldrup said. “At this time next year, we’ll have a report that benefits from the experience we’ve had.”
But the increase to minimum wage still won’t provide the lowest-paid workers in the region with a living wage that’s adequate to cover basic expenses. Living Wage Waterloo Region pegs that wage at $15.42 an hour, Coun. Sarah Marsh pointed out. “I’m glad to have us increase that amount,” she said, even if the city is doing so because of a change in the law. “I would like to see us moving toward becoming a living wage employer in the future,” as Cambridge has done.
The preliminary budget councillors considered Monday would see taxes jump 1.7 per cent — equivalent to the inflation rate — in 2018 while water, sewer and storm water rates would jump a combined 6.5 per cent, adding $91 to the tax and utility bill of a typical home assessed at $300,000. Council won’t approve the final budget until Jan. 22.