BC's minimum wage is going up but it has "unintended consequences"

BC is set to increase its general minimum wage on June 1 by 3.9% from $16.75 to $17.40 per hour, but some BC businesses are less than enthused. 

For BC residents who are earning minimum wage and struggling with Metro Vancouver’s high cost of living, this increase is definitely good news.

Some business owners say the hike will do more harm than good.

“It really does end up hurting us in the long run,” said Jaspal Mahil, owner of London Cafe in Richmond, in response to the new minimum wage increase.

Small business owners, especially in the service industry, are feeling the pinch from minimum wage increases as more restaurants across Metro Vancouver are shutting down.

“Every time the minimum wage goes up, I end up working more hours to try and offset the increase,” said Mahil.

London Cafe is a quaint location operated by a small team of workers. It is located inside the larger London Drugs Head Office building, pumping out cafe favourites at affordable prices.

“I know the increase is a good thing because it’s so expensive to live nowadays, but it does hurt us in our operations,” said Mahil.

The minimum wage in BC has steadily increased over the past decade, rising from $11.35 in 2018 to $16.75 in 2023, as the province says it’s needed to address inflation and the rising cost of living.

Canada Employment Insurance Commission (CEIC BC)

“Minimum wage policies from the government really fall short in addressing the root causes of the rising cost of living while simultaneously increasing costs on small businesses,” said Jairo Yunis, the director for British Columbia and Western Economic Policy at the Canadian Federation of Independent Business (CFIB).

Yet, not everyone’s thrilled. 

“Mandatory wage policies have unintended consequences, despite their good intentions,” said Yunis.

CFIB isn’t alone in its concern over the increase. Several BC business organizations have also spoken out, including the Surrey Board of Trade.

“Depending on what inflation metric is used, minimum wage increases could still be unsustainable as inflation is in itself unpredictable,” said Anita Huberman, president and CEO of Surrey Board of Trade, in a press release. 

Following a spike in 2023, the BC Chamber of Commerce also posted a news release indicating that minimum wage increases, in particular, affect those in the service industry, leaving them at a disadvantage. 

“Around 60% of the restaurants in British Columbia, are either breaking even or losing money,” said Ian Tostenson, CEO of British Columbia Restaurant and Foodservice Association. 

“The problem we’re having right now is that when our costs went up 20% last year, we’ve only been able to pass on about 7 or 8% of a price increase. And so we were at a 13% gap in our profitability, and that’s why you’re seeing most restaurants not making any money or shutting down.”  

When asked how the BC government can help both residents in adapting to higher costs of living while also benefiting business owners, Tostenson said that the government needs to forgo unnecessary red tape and regulation.

“What we are asking the government to do is all around red tape and regulation; that’s what they can control,” said Tostenson.

This was also echoed by Yunis, who said, “The government needs to step up on their policies on taxes and regulations.” 

Red tape and regulations refer to all the bureaucratic procedures businesses, especially small ones, have to deal with to get permits, licences, and approvals. This can involve lots of paperwork, complex forms, repeated steps, and delays.

When comparing BC’s regulatory framework with that of other Canadian provinces, it becomes clear that our processes tend to be more drawn out, explained Tostenson.

Retail Council of Canada

“It takes about 10 to 11 months in BC to bring in a skilled foreign worker, which we use in our kitchens because we have a labour shortage,” said Tostenson. “In Alberta, because they have less red tape and regulation, it only takes about four and a half months.”

Tostenson said that while minimum wage increases are intended to help workers keep up with inflation and rising living costs, they also present significant challenges for businesses, particularly small and medium-sized ones.

“When we say that mandatory wage policies are hurting small businesses, what we mean is that it’s another pile on top of all the stacked costs that they have to deal with, and they are unpredictable,” said Yunis. 

Balancing these competing interests remains a complex and ongoing challenge for policymakers, according to CFIB’s latest report.

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“The problem is because inflation went up, then that formula meant that wages went up close to 7% last year, which was killer because our businesses are so weak coming out of the pandemic,” said Tostenson.

He went on to say that these yearly accumulating increases are becoming detrimental to restaurant owners who are most likely already struggling with debt. 

Additionally, the 2024 minimum wage hike falls well short of a living wage in BC.

AndriiKoval/Shutterstock

Living Wage for Families BC reported that in 2023, the living wage in Metro Vancouver rose to $25.68, marking a 6.6% increase from the previous year. That is almost $9 above the minimum wage in BC. 

With inflation rates considered, the living wage is suspected to increase in 2024, indicating a substantial gap between the minimum wage and the cost of living in BC. 

But not everyone’s convinced. 

Some studies suggest that even in small businesses, minimum wage hikes don’t cause job losses. 

Research at UC Berkeley and reports from the Canadian Centre for Policy Alternatives (CCPA) both confer that many fears are misrepresented and that “a minimum wage increase doesn’t kill jobs,” said Michael Reich, chair of UC Berkeley’s Center on Wage and Employment Dynamics (CWED). 

In its report, CCPA suggests that a minimum wage increase would benefit both residents and business owners. 

“BC has gone from having one of the lowest minimum wages in the country to the highest of all the provinces. We made a commitment to tie minimum-wage increases to the rate of inflation to prevent BC’s lowest-paid workers from falling behind,” said Minister of Labour Harry Bains. “Having a minimum wage that keeps up with inflation is a key step to prevent the lowest-paid workers from falling behind.”

BC’s approach to minimum wage is relatively aggressive compared to other provinces like Alberta, where it has remained static at $15 since 2018. In contrast, Ontario has seen more gradual increases, aiming to balance the interests of workers and businesses.

Looking ahead, BC’s minimum wage is expected to continue rising in line with inflation. Businesses and workers alike are preparing for these changes, with many hoping for a balanced approach that supports economic growth and fair wages.