By Lethbridge Herald Opinon on January 13, 2018.
There must be a better way to help low-income earners than
by putting squeeze on small-business owners
PUBLISHER, LETHBRIDGE HERALD
Before I even get started I want to make something clear: I understand that living off minimum wage is tough, maybe even impossible. $12.20 an hour (before tax) didn’t get you ahead in life; it barely keeps you alive and is not what any of us want to go through.
My concern lies in the issues raising minimum wage has caused and who is really benefiting from the increases. I’ve talked to many business owners who launched and live their entrepreneurial dream and almost every one of them is very concerned that their dream may be coming to an end. There has to be a better option.
There are many industries that have traditionally paid minimum wage; the food and beverage industry and grocery stores are a couple that come to mind right away. They are also prime examples of business being affected greatly.
Grocery stores have few choices: raise prices to offset increased costs or decrease costs to offset lower margins. Raising prices? May as well say goodbye to your business overnight. Price is the single biggest key to grocery sales; stretching the income is everyone’s priority. Think about it … if you made $12.20 per hour and it bought you one bag of groceries before, and now you make $13.60 an hour but the price of groceries had to go up, you still buy the same bag of groceries but you pay more. You are no further ahead. Sadly, the only option left is decreasing costs. Some will cut staff completely, others will reduce full-time staff to part-time. I know of one local grocery store that will be shortening their hours of operation to reduce staff costs. The end result? Less paid hours to staff in the hopes of keeping their razor-thin margins.
The fast-food industry saw the increased costs coming – you’ve seen the automated machines to order your burger from. If you think this is the end of it, you’re wrong. That machine doesn’t want a raise, take holidays, get sick or need time off to study. It will not support a local business with its paycheque or greet you at the door; there are a couple of full-time jobs cut right away. I spoke to a local owner who just said, “Looks to me like a couple of staff will be gone and we will have to work a full shift behind the till as well as our managerial duties.”
Restaurants have long been the home of minimum-wage staff; great servers were happy to take the base pay as they knew their tips would far outweigh their base. This one is a double-edged sword. The staff don’t want the raises as they are smart enough to realize a few things: the owner will be the one facing the increased base cost; he has to increase prices or reduce staff levels. Increased prices on the menu mean customers don’t eat out as often; less traffic means more hours cut as staffing is not needed for empty tables.
Then add in the other factor: customers who do eat out are paying more; they know the staff is getting paid more and do not feel the necessity to tip as much. Serving staff have hidden tips from income tax for years; now their base is higher (more tax) and their tips are lower (reluctant customers and less of them) so their take-home pay drops. Funny how a minimum-wage increase in the restaurant industry is going to hurt everyone involved. Again, a local owner I spoke to is going to close a half hour earlier each day to cut costs; he estimated an increase of $108,000 per year in staff wages if he doesn’t. He hopes sales don’t drop too much or he will have to raise his prices as well.
Put yourself in a business owner’s shoes: a 23 per cent increase in staffing costs over two years that they are supposed to just “absorb.” If you were to have your personal costs like cellphone bill, groceries, car payment, gas for your car, mortgage, post-secondary fees increased by 23 per cent, what would you do? Why can’t you “make do” on the same income? You can’t ask for a raise at work or you’re “greedy.” You can’t cut a bill or you’re selfish; can’t ask for help or you’re “pathetic” – and keep in mind that anyone working for $15 an hour last year is going to ask for a raise because they are not willing to work for minimum wage. Something has to be cut; that’s just the real world.
The minimum-wage increase is based on the premise that business owners are lazy fat cats making too much money at the expense of their staff; why else would the burden be placed on them rather than on the government to accept lower tax revenue and help low-income earners?
Not raising an employer’s costs and increasing employees’ take-home pay seems like a much better way to help minimum-wage earners. Making their income go further was stated as the original goal. Surely we can do this without hurting the entrepreneurial dream.
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