Surviving the Minimum Wage Apocalypse

The Standing Committee on Finance and Economic Affairs has been holding meetings around the province to hear submissions from various interest groups on the Wynne government’s Bill 148.  The proposed minimum wage hike to $15.00 per hour by January 2019, appears to be a flash point at these meetings, with detractors claiming the sky will fall on many small businesses unable to absorb the sharp escalation in labour costs, and predicting that job cuts and closures will result.

The concerns of business groups in this regard are genuine and the risks for some could be very real, but their argument is flawed and based on false assumptions, including the inability of business to adapt.

There is something dreadfully wrong if a business is viable only because their labour costs are controlled at the expense of workers earning less than a living wage.  The stagnant minimum wage has been a ‘get out of jail free’ card for some business owners unwilling to build the necessary structure and efficiencies into their business operations that will drive worker performance, quality, productivity and customer service.  In these instances, operational inefficiencies are often overlooked, accepted and absorbed as a cost of doing business with minimum wage workers.  Some of these businesses will use draconian measures like cutting hours and services to deal with the coming minimum wage increase.

Consider, however, if the equation were to be turned on its head.  What if these same businesses were to drive revenues and bottom line results through better planning, organization and leadership, by actively directing and managing worker and operational performance.  The effect in many cases would on its own be enough to offset the higher labour costs from workers affected by the minimum wage hike.  Consider as well that such improvements to a company’s products, services or the customer experience would in many cases provide an avenue for a corresponding hike in prices.  As Warren Buffet said, “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.  And if you have to have a prayer session before raising the price by 10%, then you’ve got a terrible business.”

The sky will fall only on businesses determined to stand still, those unwilling to use higher but fairer labour costs at the minimum wage level as the impetus for change.  It is unfortunate that many small business owners spend too much of their time working in their business rather than on their business.  It’s time for them to get off the tools and move away from their comfort zones to become true business leaders.  Operational efficiencies combined with fair wages and the respectful treatment of workers will sustain any viable business and the people in it.

Terry Conley is the president of BBCi Performance Management Group. We are HR advisors to SMBs in Ontario.

You can email him at [email protected]

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