Business group worried over minimum-wage hike
Pay boost would help create more jobs, Notley maintains
CALGARY — As a provincial business group warned of job cuts and higher prices if the NDP government goes ahead with its plan to significantly boost the minimum wage, Premier Rachel Notley insisted the wage hike will boost job creation in Alberta.
The NDP won election last month pledging to increase the current $10.20-an-hour minimum wage to $15 by 2018, with the next increase slated for Oct. 1.
In the legislature Monday, Notley backed comments made by Jobs Minister Lori Sigurdson last week — remarks derided by a business group as “rubbish” — that increasing the minimum wage will help ease rising unemployment in the province.
“I absolutely believe that increasing the minimum wage will lead to more jobs,” the premier said, responding to a question from Wildrose Leader Brian Jean.
“Whenyouputmoremoney into the pockets of low-income people, they spend it and they spend it in their local economy faster than anybody else does. In fact, study after study shows that this actually grows jobs and it grows economic activity.”
Asked about the studies cited by Notley, the government pointed to a Canadian Centre for Policy Alternatives report released last October.
The study, Dispelling Minimum Wage Mythology, by Unifor economists Jim Stanford and Jordan Brennan, reviewed minimum wage increases in all 10 Canadian provinces between 1983 and 2010.
It found almost no evidence of any connection between higher minimum wages and employment levels, and that “in many cases higher minimum wages were associated with higher employment.”
However, a report released in 2014 by the Ontario government found academic studies were mixed on the relationship between increasing the minimum wage and unemployment, with some studies showing job losses, especially for young workers.
In the legislature, Jean suggested up to 118,000 workers in the province could lose their jobs because of the NDP’s plans.
“This government is committed to radical policy ideas that will simply cost Albertans their job,” he said.
On Monday, the Alberta Chambers of Commerce called on the government to back away from its plans on minimum wage. A survey with 1,430 business respondents conducted by the umbrella group for local chambers of commerce showed 70 percentofrespondentssaying itwaseitherveryorsomewhat likely they would raise prices or downsize staff in response to the wage hike.
Just more than 60 per cent said increasing minimum wage would make them unable to grow their business, while a quarter said they would be very or somewhat likely to close their business.
“A dramatic increase to the minimum wage at this point of time would have a dramatic effect,” said Alberta Chambers of Commerce president Ken Kobly. “Businesses will have a tough time adapting.”
More than two-third of respondents to the survey only paidminimumwageto10per cent or fewer of their employees. About half of the businesses surveyed said the cost of bringing minimum wage workers up to the new level would be less than $10,000.
However, a third of respondents said the total financial impact of the hike — including pressure to raise the pay of workers who don’t make minimum wage — would be more than $50,000.
In its submission to Sigurdson, the Alberta business group said it did not object to a “modest” minimum wage increase, but the government’s focus should be on other supports, such as tax changes, for low-wage earners.
Alberta has the lowest minimum wage in the country, tied with Saskatchewan.
Kobly said an increase slightly higher than three per cent might be acceptable, but a possible 20 per cent jump this fall — as the first step toward the $15 hourly rate — would be “way too high.” The chamber wants the government to go slow on and suggests the creation of an employee-employer group to study how best to help low-wage earners.
The Canadian Federation of Independent Business, which criticized Sigurdson’s remarks as “rubbish,” maintains up to 183,300 positions could be cut or never created over three years if the government proceeds as planned.
Butthegovernmentappears unlikely to back down.
Notley said earlier this month she favours scrapping the province’s two-tiered minimum wage system, introduced in 2011, which sees the minimum wage for employees who serve alcohol set at $9.20 an hour.
In a statement responding to the Alberta Chambers’ report, Sigurdson said “we are mindful of the effects it could have on business owners and workers.”
“We plan on taking our time to implement these increases and work with employers.”