Raising the BC minimum wage leads to labor cuts, rising prices and warnings for small businesses

Vancouver restaurant owners have expressed concern about unintended consequences as consumers bear the brunt of rising costs

Vancouver — As the Labor Group praises the British Columbia government for raising the minimum wage from $ 15.20 to $ 15.65 per hour, small businesses say the move is a consumer in the face of labor cuts and rising inflation. It states that it will lead to unintended results, such as further price increases in Vancouver.

“It was very difficult, especially in an environment with tight margins from the beginning,” said Matti Rikkinen, owner of the Robba Da Matti restaurant in Vancouver, in a telephone interview.

“And without considering the struggles we have experienced over the last two years, the state has put an additional burden on us without consultation.”

Fiona Famrak, president and chief executive officer of the BC Chamber of Commerce, warns that BC SMEs will bear the brunt of rising wages.

The Chamber of Commerce “strongly supports” fair wages, but Famrack said he was also concerned about the timing of the announcement.

“When a company is upset by a pandemic, rising costs due to supply chain problems, BC paid sick leave programAnd, from historical gas prices, we strongly believe that raising the minimum wage must be taken into account for all costs, surcharges and taxes already imposed on businesses by the government, “she said. I mentioned in the email.

March 14, Labor Minister Harry Bain announcement British Columbia’s hourly wage will rise 45 cents from June 1st, making it the highest minimum wage in a Canadian province.

This is the first time British Columbia has linked wage increases to the state’s average annual inflation rate, according to Baines, last year’s report at 2.8% compared to 2021’s national inflation rate. 3.4%..

The government said higher wages are expected to attract more workers to the state while providing certain costs to businesses.

“We fully understand that businesses are still struggling to get out of the pandemic, and workers living in one of the areas with the highest cost of living are still struggling,” Baines said in a press conference. ..

The BC Labor Union said it welcomed the news, but said the minimum wage was “still well below the living wage, which is what the family needs to cover the basic costs.”

“Every worker should be able to earn wages that make communities affordable and livable no matter where they live in British Columbia,” said Federal Secretary Treasurer Sussanne Skidmore. Is stated in. news release..

But small businesses say this is yet another financial blow from the state government, which has already restricted its business and raised taxes during the COVID-19 pandemic.

Rising wages in addition to rising inflation can ultimately reduce small business employers’ time for workers and the number of new hires in entry-level positions.

Epoch Times Photo
Staff prepare food with file photos at Robba Da Matti Restaurant in Vancouver. (Provided by Robba Da Matti)

You can’t keep working with loss “

Justin Tisdall, co-owner of the Cross the Road Hospitality Group, employs approximately 30 people in three restaurants and lounges in Vancouver, including the popular restaurant Juke Fried Chicken.

According to Tisdall, his business recorded a profit margin of about 7% by 2020. However, total operating costs have increased since the state raised its health tax in 2019, before the COVID-19 pandemic began, and today it has increased by about 20%.

“We can’t keep running at a loss, so we need to creatively understand what we need to do to survive,” Tisdall told The Epoch Times.

Rickinen, who has about 60 employees, said he is currently raising the price of the menu for the second time since Christmas. He said the conflict between Russia and Ukraine has hit record highs in food and energy prices, with inflation in Canada’s shelter costs rising the most. Since 1983..

He said he was still balancing his salary budget with heavy sick leave payments after the state’s paid sick leave program began on January 1 during the recent outbreak of COVID-19 Omicron. .. He added that his company had already had to adjust when the minimum wage was raised on June 1, 2021. $ 15.20 per hourIncreased from $ 14.60.

For small businesses, rising wages mean shorter working hours for workers, which can lead to fewer staff in the long run. Raising the minimum wage not only affects the wages of beginner-level workers, but also boosts the salary of the entire workforce of the company.

“The increase of 45 cents per hour is not a really difficult aspect for small businesses,” says Rikkinen. “Skilled workers feel that they are worth raising their salaries compared to beginner level workers, which pushes up the overall cost structure.”

Rikkinen estimates that wage increases will bring the company’s operating costs up to $ 200 per day during the next busy summer season.

To make up for this, he said he needed to reduce staff, employee working hours, or shifts. Another menu price increase is scheduled for June.

“I think what happens is an unintended consequence, where some of the state’s least skilled workers will actually be fired,” Rickinen said.

The policy also added that SMEs would be forced to hire fewer entry-level workers and instead redistribute their work to existing employees. It will hurt those who are most desperate for entry-level work, such as high school students and new immigrants.

Broader impact

As BC SMEs struggle to stay alive, the state’s lowest-income earners are also working on higher living costs.

2021 report According to the British Columbia Living Wage Group, two full-time parents with two young children living in Metro Vancouver will pay one tax on basic expenses such as rent, childcare, meals, and transportation. You’ll need to earn $ 20.52 per hour each to cover it. , Credits, deductions, and subsidies are considered.

Rikkinen argues that British Columbia’s affordability problem was exacerbated by government policy during the pandemic.

“And the government is trying to deal with the consequences of their bad policies and the higher costs of living with them,” he said.

Epoch Times Photo
File photo of Justin Tisdal (L), co-owner of Vancouver’s Juke Fried Chicken. (Juke’s courtesy)

Tisdall says he and his business partners are currently considering removing labor-intensive menu items to save salaries.

However, he predicts that state-wide consumers will bear the brunt of rising wages and that the cost at checkout counters will be higher.

He is currently discussing raising menu prices, but Tisdall says he doesn’t want to get rid of loyal customers.

“We’re just looking at different ways to stay competitive as an independent company,” he said. “When people go to a large restaurant chain, they don’t mind raising the price, but raising the price of an item like $ 1 can be very upsetting.”

Tisdall said government policies, in addition to rising costs, have already driven some people considering starting their own businesses.

Both entrepreneurs support fair wages, but they point out that the scheduled wage increase scheduled for June 1 could be devastating.

“The most important thing for us is to keep our staff safe and obviously keep hiring them,” he said. “But without a restaurant, they wouldn’t be hired.”

Both Tisdall and Rikkinen, as entrepreneurs, state that they are eternal optimists and will continue to fight to balance their budgets in search of the best interests of their staff.

“Our employees are huge to us. We are trying to build a small community within a larger community,” says Tisdall.

“So, with more barricades in front of you, it’s easy to get out of a simple route, but that’s not the way we’re trying.”

Jared Gnam


Jared Gnam is a Vancouver-based reporter.