Cambridge Chamber of Commerce

The minimum wage in Ontario will increase on Oct. 1 to $16.55 an hour and could impact many businesses and their customers.

 

“I think we’ll be fine because I’m confident with our business model and location, but I think it’s going to affect some businesses dramatically because there is no way there can’t be an increase in prices on goods and services,” says Matt Rolleman, a Chamber Member and co-owner of Thirteen at the corner of Water and Main streets in Galt, noting like many restaurants the majority of his staff currently is paid above minimum wage.

 

While the same holds true for many tourism and hospitality businesses, the Tourism Industry of Association of Ontario (TIAO) says it will continue to advocate for tax reforms and other measures to help offset rising commercial costs and supply chain disruptions while promoting business growth.

 

“We’re constantly hearing from businesses about the rising cost of doing business, from paying down pandemic debt to supply chain disruptions that affect the availability of key goods and products, unaffordable commercial insurance premiums, and reduced liability coverage that may impact the scope of what operators can offer in the visitor experience,” says Dr. Jessica Ng, Director, Policy & Government Affairs for TIAO. “The labour crisis has only added to these costs, as businesses look for ways to recruit and retain the staff they need.”

 

She says reviewing compensation structures is one strategy to make tourism and hospitality jobs more attractive and sustainable.

 

“You have to try and pay people for their value, or perceived value,” says Matt, adding it is likely increases will be implemented for all his staff as minimum wage hikes close the salary gap between employees. “We’re doing our best to keep our prices where they are right now, but costs have gone through the roof and trying to manage all these things for all businesses has just become more tougher.”

 

Matt says the timing of the wage hike this coming fall so close to the December 2023 CEBA (Canadian Emergency Business Account) loan repayment deadline may also be an issue for many small businesses.

 

“For businesses that rely on part-time minimum wage workers there’s no way they cannot raise their prices,” he says, adding while boosting minimum wage is necessary to help ensure people can pay their bills, the way increases are introduced leaves a lot to be desired.

 

“It’s become too politicized,” says Matt, noting if it was indexed with a cost of living increase it may be easier to plan for it. “Businesses would expect it every year and maybe we wouldn’t have to have these huge increases that sensationalize the whole issue.”

 

 

We reached out to Chamber Member Jason Kingston, partner at the accounting firm Grant Thornton LLP, to get his perspective on this latest minimum wage hike:

 

Q.  What do you see as one of the biggest impacts raising Ontario’s minimum wage will have on businesses?

 

A.  Minimum wage increases are always a hot-button topic, with researchers and think tanks releasing contradictory articles and papers ranging from an increase causing either complete economic collapse or being the gateway to an economic utopia. That being said, the largest impact on businesses will be that those who rely on minimum wage earners as their employment pool will need to plan on how they are going to absorb the additional cost.

 

Q.  Are most businesses prepared for this minimum wage boost?

 

A.  I would say that many small businesses are not prepared. Could they have been? Undoubtedly. If a business is dependent on the portion of the labour pool who earn the minimum wage, then that business should always be prepared for increases. I think if you look back over the last decade, it’s easy to see more momentum towards increasing minimum wages and aiming towards a living wage, which is still projected as being much higher than the newly increased minimum wage point.

 

Q.  Could the Province have implemented a minimum wage increase in another way?

 

A.  An increase in the minimum wage does make sense, though the extent of the increase can be argued. The average wage increase, across the Ontario labour market in 2022 has been pegged by many as approximately 4%.

A minimum wage increase is an easy solution for the government. It allows them to say that they’re doing their part to combat poverty and wealth inequality. But ultimately it puts the burden on employers, not the government itself, and it still falls far short. For example, under the increased minimum wage the monthly gross income of a full-time employee will be about $2,800. The average cost of a one-bedroom apartment in our region is $1,950 per month. It isn’t hard to see the challenges here.

I think there are larger issues surrounding minimum wage and its purpose and policy reasons which the government should examine.

Common alternatives to minimum wages which are commonly discussed are introducing more collective bargaining options for employee groups, introducing a universal basic income or other government supports for low-income individuals, etc., but these also introduce challenges and differing opinions.

 

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