This column was published in the July 1st edition of the Business in Calgary and Business in Edmonton Magazines.
The Alberta government constantly uses fairness as a justification for its sweeping labour reforms. But the fairness principle needs to apply to small business owners as well. One policy in particular that needs to be examined through the small business lens is the drastic 50 percent increase in entry level wages. The rate has increased too far too fast over three short years and business owners providing entry level jobs are struggling to cope.
Using Statistics Canada and Bank of Canada data, analysis from the Canadian Federation of Independent Business (CFIB) shows a stark reality: inflation rose 30 per cent from 2005 to 2018, while the minimum wage skyrocketed by 114 per cent. Increasing entry level wages at this rate is simply unsustainable for employers, with the rate increasing almost four times faster than inflation over the past decade and a half.
It has been three years or 1095 days to the day since the policy was announced on June 29 2015, and the government still hasn’t released a stitch of economic impact analysis to validate that this policy is having its intended impact. Where’s the fairness in that?
To top it off, there haven’t been any mitigating measure linked to offsetting the negative effects. A CFIB survey of 1040 Alberta business owners asked: Which of the following changes has your business already made as Alberta moves to a $15 an hour minimum wage? 55 per cent have reduced or eliminated plans to hire new workers, 52 per cent have reduced or eliminated plans to hire young workers, 46 per cent raised prices, 43 per cent reduced overall staffing hours and 42 per cent have reduced the number of employees, to name just a few of the implications.
Small business owners are in the business of fairness. They have to be fair in setting their prices or their customers will find an alternative. They have to be fair in compensating their workers to attract talented people at the right level throughout the wage scale.
Is it fair that all the risk of a small business is all on the owner? Yes. It’s also fair for them to earn a living and reward for the opportunities they took on.
Is it fair that many small business owners work 50+ hour weeks and get no overtime? Yes. They are investing in a better future for themselves and their family.
Is it fair that the owner is the last one paid in a business? Yes. It’s also fair for them to have the flexibility to decide what wages to offer.
Is it fair that one-in-three small business owners effectively earn less than $15 an hour themselves? Yes. As they hone their craft, gain experience, and build a reputation they will have the opportunity to earn more.
But fairness is a two way street. When the Alberta government imposes new taxes, regulations and labour laws on small businesses under the guise of fairness, they should remember that the fairest outcomes are determined by free and voluntary exchange in the marketplace.
The Alberta government’s message on labour reforms and minimum wage has cast small business owners as being “unfair”. With many small business owners donating money, time, and goods and services to local charitable and community causes, nothing could be further from the truth.
CFIB is Canada’s largest association of small and medium-sized businesses with 110,000 members across every sector and region. Learn more at cfib.ca