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Nov 21, 2017

Presentation to the Fair Wage Commission of the Provincial Government

- The Kelowna Chamber had the opportunity to speak to the Fair Wage Commission about Chamber goals pertaining to minimum wage in BC on November 21, 2017. Below is the submission from Tom Dyas, Chamber Board President.

Our Chamber acts as a single voice for our 1,250 members and their 25,000 employees to promote local business interests.  Our mission is to foster a positive business environment, by providing leadership, advocacy and value-added services.

Our number one goal is to bring stability – and certainty – to BC’s minimum wage levels.

Business people need predictability.  They must budget short-, medium-, and long-term.  They care about their staff, but without business continuity, their business can fail, and staff have no employment.

Small businesses cannot accommodate any more large, unplanned increases to the minimum wage as have occurred in the recent past.

On February 27, 2017, the provincial government announced minimum wage increases which would be based on the Consumer Price Index (CPI).  Rises would be tied to the CPI until the $15/hour threshold is reached, predicted to be by 2021.  We went to $11.25 in September of this year. 

In BC, the percentage of employees earning minimum wage dropped from 7.5% in 2012 to 4.8% in 2016.  This reflects the growth in and stability of our provincial economy.  The national average for people earning minimum wage is 6.9%.

The change in provincial government did not change the February decision to tie minimum wage increases to CPI over a staged period.  Calling a commission, of which today’s input is part, may help everyone better understand how the process works, and the risks of untimely acceleration.

The Chamber recognizes that when minimum wage began, it was a mechanism to protect the most vulnerable workers from exploitation.

This move was taken at a time when workers had little to no recourse for unfair work practices - many were women and children, unprotected by legislation.

This reality is no longer the case.  The rhetoric has shifted.  Vestiges of this historic discussion try – in many cases – to generate public sympathy while ignoring the very real impact that an increase to wage rates have on employers.

Who earns minimum wage?

Part time workers            57%

Head of the family             7%

Youth living at home      52% - of which, 47% are attending school

Yes, minimum wage is important to protect the vulnerable members of our society, and youth.  However, minimum wage introduces a distortion into the wage market.  Government sets a rate that forces employers to pay a minimum rate of pay, irrespective of the type of work, with no relationship to the experience, training or skill level of the worker.

The distortive impact of minimum wage falls primarily on small business.  Minimum wage is NOT paid by employers who are exploiting their workers.  The employers are paying for positions that have little to no training. 

91% of minimum wage earners are employed in the service sector.

The Chamber believes the provincial government must take a leadership role: to move – and keep – the discussion on the level of a fact-based dialogue. 

An ongoing concern for business is that increases in the minimum wage – whether or not tied to the CPI – are not tied to any measurable outcomes.  Businesses are asked to carry ever higher minimum wage levels with no understanding as to whether the increase will lead to any improvement in social outcomes.

Is minimum wage related to poverty and affordability?  There is a significant lack of information to support this belief.  This information vacuum allows proponents of large increases to present a false picture to the public to gain public support based on a false premise. Deciding issues of importance to thousands of small businesses based on emotion, not fact, presents a very real danger to our social fabric, which is largely based on economic health and stability.

Decisions on minimum wage levels in other provinces put inflationary pressure on BC’s wage levels. 

We recommend that the provincial government:

  1. Introduce no increases to the minimum wage beyond increases that approximate the CPI
  2. Commit to publish a Minimum Wage Fact Sheet to ensure the public knows who earns minimum wage
  3. Work with their provincial counterparts to develop a consultation mechanism on minimum wage increases
  4. During periods of recession – when CPI and/or economic growth are negative – freeze the minimum wage until the inflation index catches up or returns to its pre-recession point
  5. Ensure that the Minister retains the ability to overrule the regulation and freeze the minimum wage if economic circumstances warrant it.

We thank you for this opportunity to contribute to this discussion, and we ask that Chambers of Commerce and small businesses across BC be seen as strong partners in creating a positive outcome as regards this issue.

Respectfully submitted

Tom Dyas

President, Kelowna Chamber of Commerce