On October 1, 2016, Alberta’s minimum wage was increased from $11.20 an hour to $12.20 an hour. The wage increase led Alberta to provide the third highest minimum wage in the country, with Nunavut being first paying $13.00 an hour, and the Northwest Territories being second and paying $12.50 an hour.
For some, especially students and young adults still living at home, the increase was extremely beneficial, but for others, such as business owners, the increase is causing huge problems. In order to understand both the good and the bad of the minimum wage increase, you must keep an open mind and be able to look at the effects on both the workers and the employers.
For those of us that get paid minimum wage in our full or part time jobs, the increase really kicked off our October. An entire dollar increase meant more money per pay cheque, which in turn means more spending or saving money in the long run. Students already have an extremely high amount of costs, especially those who live on their own and pay living expenses on top of it all. According to Statistics Canada, the average income of a part time employee (possibly a student) is $322.50 per week, taking taxes into account (based on a bi weekly payment system) they would be making on average just under $1100 a month. This seems realistic, but the major problem with this calculation is that it is based off of a fifteen-hour work week with an average hourly wage of $21, which is very unrealistic for most of us. If we were to calculate the same amount of hours at the current minimum wage rate in Alberta, the part time worker would only be making $183 per week ($732 a month before taxes). Even with the minimum wage increase, part time workers are still making a very small amount. Fortunately for some, by October 1, 2018 premier Rachel Notley plans to have the minimum wage rate be at $15.00 per hour, increasing by $1 increments over the next two years.
In retrospect to the increased wage of workers is the increase in costs for companies in the province to make up for some of their employees new wages. The service industry is in an extremely tough spot due to the fact that not only did their workers making minimum wage get a raise, but servers and bartenders who were never originally making minimum wage did so as well. Originally, because of the amount of cash tips that servers and bartenders make on top of their hourly wage, they were only paid $10.70 an hour. The minimum wage increase in October of this year was the second step to eliminate the differential rate altogether, bringing server and bartender wages to $12.20 as well. This is an extremely high increase in labor costs for companies in the service industry, especially all at once.
A huge increase in labor costs for some companies, as well as already lowered amounts of revenue throughout 2016 due to the recession, means that companies will have to increase their costs in order to make ends meet. Many restaurants have resorted to increasing the prices of the entrees that they offer, or even cutting back on complimentary items such as bread or refills in order to save any money that they are capable of saving. In the long run, the increase in labor costs will lead to the increase in service costs. On October 3, 2016 Cineplex Odeon announced that they had increased their movie ticket prices, and some believe that the increase in minimum wage is to blame. This was one of the many public reactions that were made that provided the first look at how the economy will change in correlation to this new change in earnings.
The cost of living today is extremely high, whether it’s rent, buying a house or general expenses. In simple math, it would make sense for an increase in minimum wage to occur in order to balance out earnings and expenses, but in reality, companies still need to earn revenue in order to keep their business operating. It is a highly controversial move on the NDP government’s part, but it is something that was bound to happen eventually. By looking at and understanding both ends of the spectrum, most would be able to easily form an opinion on the costs and benefits of the minimum wage increase in the long run.