SYDNEY, N.S. — A higher minimum wage is better for the economy, according to a Cape Breton University professor, but expect a minimal impact from the province’s $1 per hour hike that will come into effect on April 1.
Last week, the province announced it would increase the minimum wage in April to $12.55 per hour — the largest annual increase in the provincial minimum wage since 2010.
“My own take on this is obviously people need at least to be able to have a life, a living wage that will be at least $15 per hour. That’s a fact,” said George Karaphillis, dean of the Shannon School of Business at CBU.
“It’s good overall for the economy when people make a living wage because they are able to spend more, so it is all good for the economy where everybody does well.”
Though good for the economy, Karaphillis said some labour-intensive sectors will feel the effects of a higher minimum wage more than others. The food service industry was one example cited, where employers rely on customer tipping to increase the wages of employees.
“Basically, when you go to a restaurant and everybody is expected to pay 15 per cent for tipping and that subsidizes the wages for the employees because these are a very labour intensive kind of industry. You cannot automate that.”
In other labour-intensive industries, any possible burden created on an employer could result in the hiring of fewer people, reducing the use of part-time employees or increasing the use of part-time employees while using fewer full-time employees.
“It increases the cost of operations and normally you expect that the business is going to increase the price of their goods and services to compensate that. That is normally what will happen. In some cases they are not able to do that.”
QUICK FACTS
• A $12.55 per hour minimum wage means Nova Scotia will have the second highest minimum wage in Atlantic Canada
• The increase brings Nova Scotia closer to the highest minimum wage in the country, which is $15 per hour
• Nova Scotia has the lowest business incorporation fee in the country and there is no fee to register in the first year of business
• In 2017, government committed to reducing regulatory burden to businesses by $25 million.
However, in Nova Scotia’s most recent case he reiterated that the $1 per hour hike in the minimum wage likely won’t create a huge reaction.
Michelle Wilson, executive director of the Sydney Downtown Development Association, hasn’t had the chance to thoroughly gauge reaction from business owners downtown just yet but can recall a time when she was a small business owner and may have found the hike initially difficult to handle.
“It might not be as bad for a business with a couple of employees, but when you look at larger businesses with hundreds of employees, that is very impactful,” said Wilson, who noted she supports people making a decent wage.
“There’s a thousand ways to look at it. There are absolutely positives for people who are living on minimum wage and other sides from the business community where it might cause layoffs. I’ll guess we’ll have to wait and see what happens when it goes up.”
Downtown Sydney business owner Peggy MacAdam is in favour of the wage increase even though it will likely mean an impact her business will have to absorb over time.
“I support it and it’ll make little differences, more than little differences,” said the owner of the Cape Breton Curiosity Shop on Charlotte Street.
“I think what will happen now is that freight to bring things in will be a little bit more because those guys will have to be paid a little more. It’s a domino effect all the way through. But the bottom line is that everybody deserves a living wage.”
MacAdam said the wage increase brings Nova Scotia closer to par with other provinces, which she considers a good thing.
“It’ll take a little bit of getting used to like it always does, but it is really important to remember that minimum wage is the safeguard for the worker. It doesn’t mean that is what they should be paid, it means they shouldn’t be paid any less than that.”
