B.C. will have one of the highest minimum wages in the country come June 1, but the Richmond business community thinks any increases should come in gradually.
The provincial government announced on Wednesday the minimum wage will increase from $15.65 to $16.75 per hour starting in June. The 6.9-per-cent increase will reflect the province’s average annual inflation rate in 2022.
The Richmond Chamber of Commerce, however, is warning this “significant” increase may pose potential challenges to local businesses and is urging the province to provide support to employers for offsetting additional costs.
“A 6.9-per-cent increase to labour costs is a large burden with less than 60-days notice,” said Shaena Furlong, president and CEO of the Richmond Chamber of Commerce, in a media release.
“Most employers I speak to are in favour of regular increases to the minimum wage, but more time and a graduated approach would help them adjust accordingly.”
Businesses may also face additional expenses such as the employer health tax, which applies to employers who incur more than $500,000 a year in payroll expenses, Furlong noted.
“When we aggressively layer costs onto employers, we don’t only risk losing their tax contribution, but also the local jobs they create and the vibrancy they add to our communities,” said Furlong.
Advocates for workers’ rights, on the other hand, disagree.
“(Businesses have) had lots of warning,” said David Fairey, co-chair of the BC Employment Standards Coalition.
“The Minister (of Labour) announced this formula last year… They’ve known for at least the past year that the cost of living has been going up significantly for most of British Columbia.”
What does increasing minimum wage do for businesses?
Fairey also warns against overstating the impact of minimum wage increases on businesses and unemployment.
“We’ve seen over the past five years, there have been significant increases in the minimum wage, and the evidence is that businesses have been able to adjust to it… Significant increases in minimum wages have not resulted in significant job losses,” he said.
The provincial minimum wage has increased continuously year-over-year since 2015. Notwithstanding the effects of the COVID-19 pandemic, which saw an increase in B.C.’s unemployment rate from 4.7 per cent in 2019 to 8.9 per cent in 2020, unemployment in B.C. has remained at the low end in Canada.
B.C.’s unemployment rate was 4.6 per cent in February, the latest figures reported by the province.
It’s also important to remember who this increase is meant for, said Fairey.
“The minimum wage only impacts those that are on the lowest income levels. And we hear complaints from particularly the hospitality industry, restaurant industry, hotels and so on, that they’re having difficulty recruiting people,” he said.
“Labour economics tells you if there is a shortage in the supply of labour, then you increase the price of labour, you increase the wage, and that will attract more people to those sectors.”
And although Fairey is in favour of the increase, he believes changes should be made when calculating the amount for the increase.
“The problem with this is that 6.9 per cent doesn’t reflect the increase in the CPI (consumer price index) over the past two years. So, the cost-of-living index for B.C. really doesn’t provide a good measure of the real cost of living for working families,” he said.
According to Living Wage for Families BC’s 2022 report, the living wage in Metro Vancouver was $24.08 an hour. The main essential needs considered were food and shelter.
A provincial government CPI report issued last month showed a 6.2-per-cent increase in B.C.’s CPI, with a 9.8-per-cent increase in the price for food compared to last year. The cost of shelter also went up 6.5 per cent compared to last year.
“The increase, in our view, it shouldn’t just be linked to the cost-of-living index, it should be more reflective of the real-cost-of-living increase for working families.”