Back in May, the Ontario’s Liberal government announced that after two years of independent review, an amendment would be made to the Employment Standards Act raising minimum wage to $15 an hour by 2019, ensuring equal pay for part-time employees and increasing vacation entitlements.
The announcement was seen as a win for many, especially those activists who had long been fighting for a minimum wage increase to take place. But for some small business owners, it was seen as a strike against their business. Many owners warned that it would force them to slash jobs, raise prices of goods or even worse yet, shut down all together.
While those who are against the raise saying their businesses could be shut down may seem dramatic, they bring up some good points. I spoke to Shelley Westgarth, owner of Belly Ice Cream Company who flatly explains, “The increase is too much, too fast and impossible to absorb.” Throughout our conversation, Westgarth points out that because she is an independent ice cream business, she is unable to price her goods and produce at the same volume as someone like Nestle can. “I absolutely cannot compete with national and multinational brands on price. The advantage is that a company like Nestle will be fully automated, so fewer employees will be present for a shift producing thousands upon thousands of units per shift.”
On the flip side, Nick Kennedy, co-owner of Civil Liberties, feels quite the opposite. While he agrees with Shelley that the roll-out is coming twice as fast as it should, he believes that the increase has been a long time coming, sharing, “I’m not an economist, but international and historical examples of similar wage shifts seem to show us we have very little to worry about.” According to this report, Kennedy is right and the results are clear: basic economic indicators show no correlation between federal minimum-wage increases and lower employment levels, even in the industries that are most impacted by higher minimum wages. To the contrary, in the substantial majority of instances (68 percent), overall employment increased after a federal minimum-wage increase.
According to the The Changing Workplaces review, a shrinking manufacturing sector and fewer union jobs have left approximately one-third of Ontario’s 6.6 million workers vulnerable. Westgarth explains, “If the Ontario Government wants to raise people’s standards of living, they should reinstate free apprenticeship or make education accessible to low income households, give income tax breaks to low income earners. In my opinion, the Ontario Government is the problem here, not the introduction of new wages!”
While the proposals are a step in the right direction, it could see businesses who are currently struggling unable to keep up. Kennedy explains, “This will surely put struggling business in jeopardy, particularly if they are unable to increase their sales. Society is being arranged for people to live in, not for businesses to thrive in.” If you’re running a business, always best to get business advice from outside experts.
How do you feel about the $15 wage increase? Are you for or against it and do you think it will help or hurt small businesses? Tweet us at @ViewtheVibe.