Minimum wage: Worst is yet to come?
Full financial impact still months away, the region’s business leaders warn
WATERLOO REGION — Changes to the province’s Employment Standards Act — including a substantial increase to the minimum wage — are about two weeks old, but many small businesses say it will be several months before the full financial implications are clear.
Retail store or restaurant owners know the immediate impact on their payroll, and what they may have to do to manage the extra costs, from increasing prices to reducing benefits or staffing levels and hours.
But it could be a while before they see the trickle-down effects of increased prices on the goods and services they rely on to run their businesses.
“You won’t see it right away,” said Chuck McMullan, who runs the restaurant McMullan’s on Highland Road in Kitchener.
“Most businesses are going to be monitoring what impact the minimum wage is going to have on their cost of doing business.”
He’s already heard from one
service provider whose prices are doubling. To get a complete picture for his business, “it’s going to take six months for it to filter down,” he said.
Even though many of his 24 employees make more than minimum wage, their wages are increasing in step to reflect experience and responsibilities.
The general minimum wage rose to $14 an hour from $11.60. The minimum wage for liquor servers (including wait staff at licensed restaurants) went from $10.10 to $12.20 per hour. These workers regularly receive tips, which is why their base wage is lower.
McMullan is forecasting $106,000 in extra expenses this year.
“Where does that money come from?” he said. “Businesses don’t have the luxury of being able to spend more than they earn.”
They’ll have to be much more frugal in their scheduling, and reduce expenses wherever they can, he said. Menu prices are rising, too.
It’s a similar story at Matter of Taste’s two locations in Kitchener and Waterloo.
“You’re looking at a huge jump in payroll expenses that surpasses any other costs,” said Dawn Tran, a partner in the business. “You have to adjust for that increase.”
Prices have gone up; Tran said most customers don’t seem surprised, given the attention that’s been paid to the issue in recent months as the changes loomed.
“You have to look at some of the back-end operation as well,” she said. “Try to trim and be more efficient.”
While there used to be some differences in wages for the business’s 10 employees to account for differences in experience, everyone is at the new $14 minimum now, Tran said. She’s the first to admit that’s not necessarily fair, but she says she doesn’t have a choice.
Hiring plans are on hold, and some staffing levels and hours were reduced leading up to the Jan. 1 implementation.
And, like McMullan, Tran is still waiting to see what the full impact will be as suppliers adjust their prices.
“I’m just kind of frustrated that every time the government makes changes, they say it’s good for everybody but it’s not,” she said. While the intention may be good, “the onus is on us to carry the burden … It’s really testing our ability as entrepreneurs.”
At The Neighbourhood Group of restaurants, which includes Borealis Grille & Bar in Kitchener and Guelph and two other Guelph spots, servers voted overwhelmingly to increase their “tip out,” or the amount of their tips pooled for distribution among the workers who don’t get gratuities, said chief operating officer Neil Robinson.
“We’re trying to reduce the gap between what the ‘front of house’ and ‘heart of house’ are making on an hourly basis,” he said. “There was quite an inequality between the two.”
When gratuities are factored in, servers are generally making between $20 and $30 an hour, he said. The company is striving to become a living wage employer, where a higher-than-minimum wage is earned that better reflects the true cost of living in a community.
Understanding that an increase in the tip out means less in a server’s pocket, the company is introducing a health and wellness program, and is starting to purchase bus passes for those who don’t have a vehicle.
“We want to make this a place of business that people would really want to work in,” Robinson said.
To offset rising costs of goods and labour, “modest” price increases are being introduced. The company has promised not to cut hours or staff, Robinson said.
“We’re not running with one less person in the kitchen,” he said. “We want to provide the same experience for our guests.”
Waterloo Regional Labour Council president Dave Eales said his group has fielded about two dozen calls over the past two weeks — primarily from employees, but even from a couple of small business owners who voiced support for the changes, believing that more money in employees’ pockets means more money to spend in establishments like theirs.
A few employees reporting potentially illegal actions by employers were pointed in the right direction to seek assistance; others reported practices that are “scummy” but not necessarily illegal.
Employee concerns ranged from an end to free food for restaurant workers, to being told they could no longer keep their tips (which is illegal, unless the tips are pooled for redistribution among some or all of the employees).
But Eales said the labour council wasn’t inundated with complaints. “I think this community has embraced the new minimum wage better than most. I don’t think businesses in this community want people living in abject poverty,” he said.
While there are still a few “bad actors” among local businesses, “I’m not hearing the sheer number of horror stories out of this community,” he said.
Some cities saw labour protests this week in front of Tim Hortons outlets where employees reportedly faced wage and benefit rollbacks, but Eales said there was no concrete example of that happening in Waterloo Region.
Lost in the focus on minimum wage are other changes that improve health and safety for workers and provide such things as paid emergency days, Eales said. “This isn’t just about dollars and cents,” he said. “This piece of legislation is about bettering the lives of working people.”
At the same time, many small business owners are questioning how they’ll afford to do it.
McMullan said he’s annoyed with Premier Kathleen Wynne’s assertion that certain hospitality businesses are bullying employees by doing things such as taking away paid breaks in response to the legislative changes.
“She’s getting pushback and she’s calling the industry bullies?” he said.
“She’s got a lot of nerve calling businesses bullies when all they’re trying to do is stay in business and keep people employed.”