Business Community Warns Job Losses, Inflation Would Follow Minimum-Wage Hike

Last month, Knowledge Bureau issued the results of a poll indicating that financial professionals are firmly divided on the prospect of $15-an-hour minimum wage. Now the business community is having a similar debate

with a high-profile back-and-forth on the matter that’s reaching a fever pitch.

The latest round of analysis and commentary kicked off early last week, when the Keep Ontario Working Coalition — an umbrella group of business stakeholders including the Ontario Chamber of Commerce and Retail Council of Canada — released a report on the potential impact of Ontario’s Bill 148, which would raise the hourly minimum wage in the province to $15 by 2019. The report concludes that, if implemented, the reforms in Bill 148 will cost Ontario businesses $23 billion in the first two years alone, and would put about 185,000 jobs at risk.

“Making $15 an hour is great, but only if you have a job,” Karl Baldauf, vice-president of policy and government relations at the Ontario Chamber of Commerce, told the press.

According to the independent study, conducted by the Canadian Centre for Economic Analysis, a $15 hourly minimum wage would also lead to a 50 per cent rise in inflation, with the cost of everyday consumer goods and services increasing by an average of $1,300 per household annually.

Ontario and Quebec grocery chain Metro Inc. echoed those sentiments, with CEO Eric La Fleche telling investors that companies would likely download their cost increases from higher wages on to consumers. Having said that, he plans to fast-track Metro’s use of automation to get ahead of the $45-million to $50-million annual hit the retailer would face if Ontario’s higher mandated wages come to pass. For its part, Loblaw Companies Ltd. announced it’s preparing for a $190-million cost hike when the minimum wage increases are implemented in Ontario and Alberta.

In response to the comments made by Loblaw and Metro, Unifor, Canada’s largest private sector union, issued its own statement criticizing the stance taken by “big, profitable grocery retailers” it says are best positioned to absorb the increases. “All employers — especially those in the low-wage retail industry — have a responsibility to step up efforts to improve living standards,” says Unifor Ontario Regional Director Naureen Rizvi.

Meanwhile, British Columbia’s announcement last week that it intends to bring in a $15-an-hour minimum wage to the province by 2021 was met with mixed feedback. The Canadian Federation of Independent Business was against it, asking the government to instead tie any minimum wage hikes to inflation, while Restaurants Canada was pleased that the province is keeping to its previously announced 2017 minimum wage increase of 50 cents, to $11.35, rather than moving more quickly to a $15 hourly minimum wage.

Regardless of one’s position on this issue, all businesses and individuals need to consider and plan for the potential economic impacts of rising minimum wages — and tax and financial advisors can assist by examining all the what-if scenarios with their client companies, who must adjust their budgets for these changes, while helping employees get the most out of their raised wages.

“What matters is what your clients keep, after taxes and inflation,” says Evelyn Jacks, President of Knowledge Bureau. “And that’s true of both employers, employees and, ultimately, consumers. Increased costs resulting from a higher minimum wage, together with tax hikes and CPP changes proposed over the next few years, will make it more expensive to buy food, eat out, justify expense accounts, invest in the future and stretch retirement dollars. Your proactive help to clients in anticipation of these changes will cement your value proposition.” 

Advisors interested in learning how to better prepare their clients in the face of rapid economic and technological disruption should consider becoming qualified as Real Wealth Managers, and earning Knowledge Bureau’s new RWM™ certification marks. 

The Real Wealth Manager practices with a pre-eminent standard: a strategic, holistic and multi-stakeholder approach to family wealth management. The RWM™ certification will help you position yourself as the Primary Advisor of a multi-stakeholder team of professionals and family members. 

The program is designed to empower you to offer a multi-stakeholder approach to family wealth management, so you can help your clients to make the best financial decisions to meet their long-term financial goals, particularly in the areas of tax, finance, estate and end-of-life planning. 

For more information on becoming a Real Wealth Manager, review the course outline online or call Knowledge Bureau at 1-866-953-4769.

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