It’s just an extra couple bucks. Employers will barely notice the added cost. For those businesses that offer entry-level positions, nothing could be further from the truth.
According to analysis from the Canadian Federation of Independent Business (CFIB), provincial employers are facing a $10,739 increase annually per entry-level, minimum wage job compared to 2015. This is due to added wage costs and the higher payroll taxes (i.e. CPP, EI, WCB) that go along with it. That means a small business with 10 minimum wage employees will see their annual costs skyrocket by more than $107,000 as a result of the government’s policy.
Across the province, the rapid rise in the minimum wage to $15 an hour is costing private sector employers an additional $284 million each year.
For decades, Alberta’ job market experienced a massive net influx of young people who were ready to work hard for the opportunity to get their foot in the door. Alberta was a place where a young person could make a start, learn a trade or a skill, and feel secure about their first steps into the working world. Young people didn’t come for the minimum wage – they came for the opportunity to begin a career.
Since the move to $15 began, the minimum wage has increased 47 per cent in just a few short years. Ultimately, the rapid increase in Alberta’s minimum wage has unintended consequences. Who is hurt by higher minimum wages? It’s young workers with limited skills. It’s small business owners who have to trim back plans for growth. It’s employees who face a reduction in hours or losing their jobs altogether.
When business owners were asked, “what are the barriers to hiring more youth in your business?,” 65 per cent of Alberta businesses responded that minimum wage increases have been the biggest obstacle, ahead of general motivation and attitude of youth in the workforce (57 per cent) and the cost of training (56 per cent).
However, it’s not too late for the Alberta government to modify minimum wage policy to help jobseekers and small business owners. For example, a training wage could be introduced for new employees as a way to facilitate job creation for low-skilled youth and recognize the big investment small businesses make in entry-level jobs. Alberta could also freeze the minimum wage for the next term of the government to grant some predictability and reprieve to business owners who have been scrambling to keep up with such a big jump in the minimum wage during a recessionary economy that is struggling to turn the corner.
If the Alberta government decides to remain firm in this punitive approach, they should immediately act to help employers in other ways. For example, the province could increase education and training opportunities to help employees upgrade their skills to obtain better-paying positions, or offer additional tax relief to low-income earners so they may keep more of their hard-earned dollars.
No matter what the minimum wage is, small business owners won’t create jobs if they can’t afford the employees. At a time when small business optimism levels in Alberta remain subdued, the last thing the provincial government should be pursuing are policies that add big new costs for job creators.
Amber Ruddy is the director of provincial affairs for the Canadian Federation of Independent Business. She can be reached at email@example.com. Follow her on Twitter @aruddy.