MARK MACDONALD
With the new United States government announcing its march towards a $15 minimum wage, and Canada on again/off again about doing the same, minimum wage earners are ecstatic. But should they be?
Hiking the minimum wage is an amazingly simplistic way to woo voters – with the promises of increased income. Somehow, the conversation never winds its way around to explain that with wage costs rising, so will the price of goods and services. All such mandated increases are never usually borne by the business owner – the consumer at the end of the line pays. And pays. And pays.
Despite current popular thought suggesting that business owners are rolling in the money (“their” money, really, since it’s the workers that make it all happen) the pandemic has revealed the true state of the economy, especially small business. And that is this:
Without deep subsidies and assistance, an alarming number of Canadian companies would have already closed.
By the way, we’re not suggesting that these are hand-outs, but rather repayment of the thousands of dollars that businesses have already paid in taxes and fees to governments. It’s getting some of the money back they’ve had to inject into the “system”.
So, while wage earners and voters buy into the $15 minimum wage mirage, how many bother to notice that the price of groceries and restaurant foods and gas have incrementally risen? Why are they more expensive? Because affected businesses must make sure their costs are covered to keep their doors open. Who really pays? Consumers.
Minimum wage raises and other pro-labour socialist-minded government legislation, while garnering votes, actually make it more necessary for business owners to adjust to protect their investments.
When the NDP government strongly hints about removing secret ballots for union registration, they are most definitely pleasing their most ardent fiscal supporters – the unions themselves that bankroll their elections, while the private sector shudders. Owners know how much more union-represented workers cost, not to mention the increased lack of flexibility of operation.
What is a business owner to do? What do they do in environments like this?
They adjust, in clever ways.
Restaurants have been pounded by the government’s prolonged restrictions, but you can see how many have adjusted by focusing on take-out and delivery. Skip The Dishes, DoorDash and others have slid into the market to get restaurant food to customers at their homes and offices.
Some eateries have simply hired their own drivers to deliver.
Is this a temporary fix? What if the restaurant owner likes the results of utilizing out-sourced delivery companies – read contractors – for which they pay either flat fees or commission. They have less staff, thus less to pay out in terms of benefits, and minimum staff issues. If they’re not happy with a contractor, then it’s “next”.
The end result could be less restaurant jobs, especially if they’re $15 an hour. Those serving jobs, which include huge tip opportunities, could be gone forever.
Self-checkouts at grocery and department stores started slowly, with one or two per store. Count how many there are now, and where the larger lineups linger. While it costs more up front for technology, that investment will pay off as the machines are paid for. And again, less staff – and related problems.
Outsourcing to other countries – or out of province – also presents tempting opportunities. Employ someone in BC and typical benefits and related expenses total an extra 20 per cent each to the payroll. Using labour and contractors from lesser developed countries means lower wage costs, no minimum wage standards, and no benefits to be paid.
These survival tactics and more become genuine solutions to protect investment, and come with tangible payback. The negative? Less workers employed in British Columbia, which means non-positive payback somewhere down the economic cycle.
What else is a business owner to do to survive tough times and unfair, anti-owner policies? They’ll do what they must. Ultimately, the voters who applaud when their government of choice implements policies that please only them, will pay the price.
Talk about a lack of political foresight: Buying votes via job-killing policies to please workers today, which forfeit future employments by ultimately eliminating jobs, especially those paying minimum wage.
Mark MacDonald is President of Communication Ink Media & Public Relations Ltd. and can be reached at mark@communicationink.ca