Minimum wage increase bad for employers
The minimum wage in B.C. went from $13.85 per hour to $14.60 per hour, effective, June 1, 2020, a 5.4 per cent increase.
The cost of living came in at a minus, because of the economic situation in B.C. The employee is paid $14.60 per hour but the actual cost to the employer is $18.85 per hour when you add in the benefits the employer pays on behalf of its employees. The new B.C. minimum wage now makes B.C. having the second highest paid minimum wage in Canada.
This latest wage increase with the current situation of the employment scene in B.C. will create to the added unemployment rate.
In February, 2020, the unemployment rate in B.C. was five per cent, the lowest in Canada.
In March, 2020, the unemployment rate in B.C. was 7.2 per cent.
In April, 2020, the unemployment rate in B.C. was 11.5 per cent making B.C. no longer having the lowest unemployment rate in Canada.
B.C. now has the fifth lowest unemployment rate in Canada. When May rates are published, the unemployment rate will again be higher than 11.5 per cent.
This increase in the minimum wage will now increase employer portions of Canada Pension Plan, Employment Insurance, Worksafe premiums, vacation pay, employer health care tax, and increases to group insurance benefits for employers that do have these benefit programs.
This increase is very wrong, especially to the food service industry. Some restaurants have recently opened again, but are obligated to operating at a 50 per cent capacity. Having to operate already at a 50 per cent capacity and having to pay more in wages is a no win situation, and to some employers, they might be thinking, why bother, and just stay closed.
Owners of fast food franchises will now have to absorb this wage increase out of their own bottom line operating profits as these franchises are not allowed to increase their menu prices, as that would be in violation of their franchise agreements.
This wage increase would have been put on hold if the B.C. Minister of Labour had owned some fast food franchises, as he would then admit that the wage is not economical to any employer with the current employment situation in B.C.
Facts and reality always prevail, but this is not the case with this June 1, wage increase.