The Alberta Chamber of Commerce is asking the province to hold off on further changes to the provincial minimum wage.
The Alberta Chamber of Commerce is asking the province to hold off on further changes to the provincial minimum wage.
In a document submitted to the provincial Minister of Labour Christina Gray, the chamber outlines the effects that the recent hike in minimum wage had on businesses across the province and suggests a compromise going forward.
On October 1, the government increased the provincial minimum wage from $10.20 to $11.20 per hour, $9.20 to 10.70 per hour for liquor servers, bumping Alberta's minimum wage from second lowest to third highest in the country.
The chamber wants the government to rethink its plan to increase minimum wage to $15 by 2018, arguing that given the current economic situation this would place further cost pressures on job creators.
“Minimum wage is a layered cost on top of those other issues businesses are dealing with,” said president and CEO Ken Kobly. “This is not a particularly great time to ahead with a dramatic increase. As the economy improves there could be some opportunity for that, but we want the government at this time to realize that they have to be very cautious with the economy the way it is.”
The chamber is asking the provincial government to consider both minimum wage earners and job creators in the way it proceeds and proposes two policy options going forward.
It is asking the province to hold the minimum wage at the current level of $11.20 per hour – indexing increases to the Consumer Price Index – and to bear some of the cost related to ensuring Albertans receive a living wage, by enhancing the Alberta Family Employment Benefit and implementing a provincial version of the Working Income Tax Benefit.
The report suggests that if the provincial government was to redirect funds from the Job Incentive Creation Program – which allocated up to $5,000 for employers to hire new workers – that $178 million could be used to increase provincial tax benefits. Those benefits would be equivalent to $1.71 an hour or a wage of $12.90 an hour.
An equivalent wage of $12.90 would make Alberta the top-paying jurisdiction for minimum wage earners, but would not affect Albertans access to federal benefits.
The report goes on to suggest that keeping the provincial minimum wage at $11.20 would save workers money that would otherwise be paid to the federal government as taxes at higher income thresholds.
The chamber conducted a tax analysis that concludes that one-third of the additional wages earned through a $15 minimum wage would be transferred as taxes to the federal government “with reduced benefits such as those available under the Working Income Tax Benefit, GST (exemptions) and Canadian Child Tax Benefit.”
“This approach would raise the effective minimum wage for adult earners and enable job creators to focus on addressing other pressures hurting Albertans' labour market outcomes,” reads the report.
More than 63 per cent of the 800 survey respondents indicated they would support an increase of three per cent or less.
The survey also found that 57 per cent of employers expected to lay off more employees if the province increases the minimum wage to $15 per hour and nearly half answered that they would limit employee advancement and benefits.
About 46 per cent of businesses have already reduced staffing.
The two biggest factors for changes since Oct. 1 were the slowdown in the economy and the increase to minimum wage. Within that framework were reductions in staffing of 46 per cent, in profits of 55.6 per cent and an increase in prices of 38.9 per cent.
The survey also found that the recent increase in minimum wage resulted in an additional cost of $21,456 to businesses, with an average cost of $836.76 per employee each year.
For businesses that hire 50 or fewer employees, the cost per employee was significantly higher at $1,224.91, and is expected to increase nearly 285 per cent to $3,490.24 per employee once the minimum wage reaches $15 per hour.
Small business makes up 95 per cent of the businesses in Alberta, said Kobly.
