CBC Reported on the minimum wage increase on PEI.
Minimum wage is going up 40 cents this year over the next 7 months. Increasing a company's cost like minimum wage when the economy is in a downtown is a horrible idea.
Some people think, oh 40 cents is nothing out of the owners pockets. The big bad business owner(s) can afford to be out 40 cents. That's great and while people view the business owners as a bad person, that's a horrible point of view. Forty cents per hour is nothing if you have a small staff. It's $16 more a week for the employee, big deal.
But what most people are doing is looking at it as if every company only has one employee. It is hardly accurate to base companies on 1 employee when there are many employees.
A company with 20 employees will end up paying an extra $8 per hour out or $320 for a week's wage. The business owners will look at profit margins and fast foods joints often look at labor cost. If the labor cost is above x%, then it's time to send people home. If the labor cost continues to be over x% then they will start cutting back hours to ensure they make the profit margins, or increases the product's costs.
Sure some Islander business owners can afford the extra 40 cents per employee but the business owners will be looking at profit margins and labor cost. The last thing we want is for them to start cutting to boost profit margins. At the end of the day when these increase come into play the owners will be looking at profit margins and how to boost it
With the 40 cent increase, the labor costs will no doubt go up quicker and when companies go above the projected labor cost then it's time to send staff home or stop scheduling for so many hours.
With fewer hours being scheduled, it affects employees incomes of the lower income earners which affects the economy even more.
All this being said, The Charlottetown Chamber of Commerce always seems to be against minimum wage increases, but that's no surprise as it's a representation of it's members. Members who own businesses.
During a recession I think it is important that government does not increase the cost to run a business operation. Staffing typically is one of a restaurant's larger expenses. We don't want to increase it at a time when everyone is cutting back.
I think government should suspend this minimum wage increase and hold off until the economy starts to turn around. If the recession starts to turn around in a year, give them the raise then.
We have a delicate situation where job creation and job loss prevention is key, not making it more expensive for companies to do business.
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