Part one in a series.
When is it ever a good time to raise the minimum wage?
According to some, slowly, over the course of a long time. For others, probably never; the argument being that it’ll hurt small business. And for those struggling to pay the bills, not soon enough.
The sad reality of a minimum wage increase is that if fundamental changes aren’t made to the profit-making structure of businesses, it’ll end up hurting the employees anyways.
We’ve already seen how businesses are modifying practices to adjust to changes in Ontario. The minimum wage jumped to $14 from $11.60 on Jan. 1. A Tim Hortons franchise took the political hit after reports that it was removing paid breaks.
There are reports that other companies are handling the increase by slashing benefits to ensure the bottom line gets met.
Alberta’s minimum wage jumped to $13.60 from $12.20 last October and while there may not be as many reports on similar practices, they are probably happening. Alberta’s minimum wage is set to jump to $15 per hour this October.
Businesses want to ensure profit margins are high, which in turn helps the company and its shareholders. At some point, however, when does that profit become too much?
I know if I was in a position to increase dividends and profits in my company, I would argue that the sky is the limit when it comes to profits. It’s never too much.
That’s one question that isn’t being asked. That, and when does one have enough money that they don’t need any more?
When it comes to the minimum wage, people should get paid appropriately and while they will with this increase, companies are going to modify practices to ensure those profit margins remain where they are.
Slashing benefits and removing paid breaks are the low hanging fruit but the other area that could affect a person’s salary will be in automation. We’ve already seen those changes in the likes of automatic tellers and touch screen ordering at fast food restaurants.
Kudos to the businesses for changing the business model to see increased profits but what about investing in employees?
For the small business owner I do see the wage hike as a source of uncertainty, but for the larger corporations, where every 15 minutes of an hour is timed, tracked, labelled, followed and forecast, this is a time to embrace the change and see the disparity of the wealthy and not-so-wealthy balance out.
If a company has to pay staff more then the cost of their product is most likely going to go up. At some point, though, that profit will slow down and the profit margin will reduce. But they’ll still make some money.
The goal to make as much money as possible in the name of the Great Company must change. Consider a recent study by the Canadian Centre for Policy Alternatives, which found that of the top 100 CEOs in Canada made on average $10.4 million.
That’s $200,000 per week. A full-time employee making the $15 minimum wage would earn $600 per week.
Granted, a person should be paid what they’re worth but there’s a major difference in salaries here that no one seems to want to talk about.
Where this will also hurt is in the small business area.
These smaller companies are competing against larger corporations, the big global players. The big corporations have so much of an advantage over the little guy and it appears there’s little in the way of protection for the smaller companies.
This is the first part in a series of editorials related to minimum wage increases. Next week’s discussion will look at countries where there is no minimum wage.
This story was corrected to reflect the proper minimum wage rates in Alberta which are at $13.60 per hour, not $15 as was originally stated.