Business leaders fear 'cost increases' ahead of B.C. minimum wage increase
Some business experts are concerned about the rising costs B.C. businesses are facing, the latest being a 2.1 per cent minimum wage increase.
Last week, the provincial government announced that it is increasing B.C.’s minimum wage on June 1 by 0.40 cents an hour, from $17.85 to $18.25. This is based on the province’s average inflation rate from 2025.
Jairo Yunis, director of policy for the Business Council of British Columbia (BCBC), said he understands the goal of this policy and the importance of helping workers keep up with rising costs.
“My concern is more about the unintended consequences of this in the current economic environment,” he told Daily Hive in an interview.
“Wage policy doesn’t operate in isolation. Businesses are facing rising costs and there are broader labour market dynamics here to consider, particularly for entry-level employment and youth employment,” he said.
Yunis said that BCBC wants to both support workers’ incomes and ensure that businesses can continue to create jobs, especially for young people entering the workforce. He said B.C. is the only province where youth employment levels have not recovered since 2019.
When the cost of hiring increases, he said, employers tend to become more selective with who they hire. Instead of hiring someone who’s never had a job before, they might choose to hire someone with more experience or who can immediately be productive.
“That can make it harder for people who are just entering the labour market for the first time, particularly young workers, who overwhelmingly are minimum wage earners, to get that initial opportunity to get that entry-level job,” Yunis said.
Ian Tostenson, the president and CEO of the British Columbia Restaurant Association, agreed.
“This is particularly evidence in quick service restaurants, where you have somebody that walks in and they have no experience, and they’re getting $18.25 an hour and they’re not productive — and that’s not a criticism, just… they don’t know — so, it probably takes them two or three months, perhaps, to become efficient and productive,” he said.
Does 0.40 an hour really impact businesses?
Businesses, especially in hospitality, retail, and food services, tend to operate on thin margins, with minimum wage one of the largest cost components in their operations, said Yunis.
“So, when the minimum wage increases automatically each year, it raises the labour cost across a large portion of their workforce. Of course, not all of their workforce are on minimum wage, but the vast majority are.”
While this doesn’t mean that businesses will immediately reduce jobs, he said it shapes hiring decisions, scheduling decisions, and how they think about productivity over time.
For example, if the economy isn’t doing well, a business might become more selective about who they hire, invest in labour-saving technology, or work on productivity improvements.
Tostenson said that labour is the highest expense in the restaurant industry, and they find that the 0.40 cents an hour increase “a real challenge for us right now in a market that is basically flat.”
“In isolation, if this was all we had to deal with, then I guess that’s fine, but we’ve had to deal with a whole bunch of cost increases,” he said.
He pointed out things like B.C.’s expansion of PST and tariffs, causing uncertainty when buying products from the U.S.
A recent survey from Restaurants Canada found that 44 per cent of restaurants are running at a loss or breaking even.
Tostenson added that their employees earn gratuities, which he thinks should be considered.
“Do we really want to be adding 40 cents? I think you’d find that a lot of servers would say, ‘That doesn’t really make any difference to us. What we’re really interested in is making sure that we’re getting lots of customers, and we’re earning good gratuities.'”
The bigger picture
Yunis emphasized that wage increases don’t happen in isolation, but interact with other policies around wages, taxes, and hiring incentives.
He wants the government to focus on measures that attract companies to B.C. and kickstart private sector activity, which could improve wages and create more entry-level jobs.
Private sector investment and hiring have been “weak,” he said. Since 2019, private sector employment growth has been seven per cent, compared to 34 per cent for public sector employment growth.
“And that actually is where the government should turn their focus to,” he said.
He said B.C.’s goal should be to create an economy that is conducive to higher wages and investment, thus attracting more companies and creating more jobs.
Yunis said that policies that affect wages, taxes, and hiring incentives all interact with each other.
While there have been a number of major projects in B.C. in recent years, like the Site C Dam, there hasn’t been a lot of private sector activity since. Yunis said this has exposed some of the province’s economic flaws.
“We have a very uncompetitive PST that taxes capital investment, that taxes business inputs.”
Further, he added that B.C. businesses cannot claim an income tax credit (which they can do in other provinces), making B.C. uncompetitive for attracting new businesses.
Yunis said BCBC’s advice to the provincial government is to ensure conditions are right for businesses to invest and grow in the province, and remove barriers that “are hampering” private sector investment.
“Whether that’s tax competitiveness, whether that’s making sure that our regulatory regime is not onerous or it’s not slow,” he said. “And making sure that our fiscal situation is also stable and predictable.”