THE REAL COST OF MINIMUM WAGE: How will businesses adjust?

Karl Wirtz has been up nights thinking up about it.

He isn't sure the co-packing business he founded 24 years ago can survive Ontario's push to a $15/hour minimum wage.

"I'm absolutely praying they change their mind. I literally am praying," Wirtz tells NEWSTALK 1010.

Right now Ontario's minimum wage is $11.40/hour with a pre-planned bump next month to $11.60. The province plans to further increase minimum wage to $14 on January 1, 2018 and to $15 on January 1, 2019.

Today NEWSTALK 1010 launches a new series: "THE REAL COST OF MINIMUM WAGE". Over the next three days, we will take a closer look at what effect the government plan is likely to have on employers, workers and the broader economy.

 

 

 

 

video by Justine Lewkowicz

Steve Mastoras expects to pay $60,000 more every year on the labour that keeps East York's Whistler's Grille and the McNeil Room going.

To make up for it, Mastoras says he will have to consider raising menu prices, shortening Whistler's hours of operation, revisiting scheduling and hiring, exploring automation and layoffs on his staff of 40. He also cautions higher labour costs will leave business owners with less money to contribute to their communities through sponsorships or offering prizes to fundraising efforts.

Premier Kathleen Wynne has promised to introduce proposals this fall to help support businesses through the transition.

Mastoras dismisses it as a bunch of "mumbo jumbo" and remains convinced businesses will close.

WG Pro Manufacturing/YouTube

 

Karl Wirtz can't make the math work.

The payroll for his company, WG Pro, which bundles and packages consumer goods, is $3.8 million. Wirtz says a $15/hour minimum wage amounts to a $1 million hit. Passing on the cost to clients is not an option with pricing locked into existing contracts.

And Wirtz stresses the jump in pay will be applied across his staff, not only to those earning a minimum wage.

"Employees that have been here for 10 years and are at $13.50 now...you can't just move them to $14 and they're going to be happy. They went the same differential that they were enjoying between what they were at and what minimum wage was."

Wirtz says picking and choosing would create dissension among employees and perhaps prompt them to leave for a more stress-free minimum wage job.

Walk My Dog Toronto/Instagram

 

Gilleen Witkowski believes she's reaping the benefits of paying her small team more than the absolute minimum.

When starting her dog-walking and sitting business, Walk My Dog Toronto, Witkowski made a conscious effort to start her employees at about $15/hour which she feels is a minimum livable wage for the city.

"I just didn't want to start a company where people had precarious employment or weren't really being paid enough because I didn't think they would stick around," Witkowski said.

She admits the decision was pricey one, with labour accounting for 80% of the company's costs. But Witkowski believes it's paid off in helping her cultivate a dedicated, reliable team who love their work.

"I'm glad we did it and it's time now for everybody to step up to the challenge to pay that minimum living wage."

Witkowski doesn't appear to be concerned about the cost of scaling up what her staff earns as the wage basement rises. She expects to be able to cover the difference with regular pre-planned "modest" price increases and taking on more clients.

Still, Witkowski concedes her own paycheque may shrink.

"If I'm making a little bit less and they're making a little bit more, I'm okay with that. Especially as we grow as a company, we're becoming a lot more efficient and good at what we do. So it all kind of balances out."