Small-business owners are bracing for political uncertainty and the potential double whammy of a rapidly rising minimum wage and a new payroll tax as B.C.’s Green and NDP political parties ready to become the new provincial government.
If the new legislature is able to elect a speaker and the Christy Clark government falls on a confidence motion, with 44 NDP and Green members outvoting the 43 Liberal MLAs, the prevailing opinion is that B.C.’s lieutenant-governor, Judith Guichon, will call on BC NDP Leader John Horgan to be the premier, supported by BC Green Party Leader Andrew Weaver and his three MLAs.
That slim majority could fall within a year if any of the government’s MLAs die, decide to cross the floor to join the Opposition or are unable to vote in the legislature in favour of the government.
But, assuming the new alliance lasts a full four years, many policies that its two parties have agreed to in the alliance’s “confidence and supply agreement” have small-business owners concerned.
Fast hikes to the minimum wage are likely to be the biggest hit to the bottom line for most small businesses, although the spectre of a new payroll tax is similarly ominous.
The Green-NDP agreement vows to “eliminate regressive MSP [Medical Services Plan] premiums” – something that will put money in the pockets of employees and employers as individuals.
Weaver, however, said during the campaign that to help pay for the elimination of MSP premiums, he could implement a new payroll tax that employers would pay.
Small-business owners would then pay the new tax despite most of them not previously paying for any part of their employees’ MSP premiums.
As for the minimum wage, business owners have become used to the BC Liberals’ policy of pegging minimum-wage increases to the consumer price index.
The Green-NDP agreement promises to immediately establish a commission that will devise a way to implement a $15 minimum wage and report that strategy within 90 days.
With Alberta set to have a $15 minimum wage by October 1, 2018, and Ontario set to have the same thing by January 1, 2019, retail and political watchers believe the B.C. government will feel pressure to enact a similar timeline.
“I had assumed the NDP would come to power and raise the minimum wage to $12 or $13 per hour in 2018, $14 per hour in 2019 and $15 in 2020,” Retail Council of Canada’s director of government relations, Greg Wilson, told Business in Vancouver.
“Now, since the Ontario government is going to $14 next year, I would argue that it puts the pressure on B.C. to go to $14 or $15 earlier than they might have otherwise done – just because Ontario is doing it.”
Abrupt increases are likely to crimp small-business owners’ willingness to hire novice employees or even to keep production in the province.
Reckless Bike Stores owner Paul Dragan told BIV he pays minimum wage to high school students who work in his stores during the summer. If the minimum wage were to quickly rise 38.2%, to $15, from the current $10.85, Dragan said he would rethink those hires.
“We will look at whether we really need a young, unskilled guy in our store at $15, when most of my skilled guys are making $15 to $22. I can’t give a guy with two years’ experience as a bike mechanic the same wage as some kid who shows up and says that he wants to learn about bikes.”
BC Restaurant and Food Services Association CEO Ian Tostenson said restaurant owners feel the same way.
Wage inflation is a serious risk given that anyone who now makes $15 will want a significant raise so as not to be making the same as a novice hire, he said.
That, in turn, will force owners to raise prices.
Even entrepreneurs who don’t pay minimum wage fear negative fallout.
Anderssen’s Flax Rolls owner Tarjei Anderssen pays all his employees at least $16 per hour, but he could feel an impact because his Surrey manufacturing facility is close to being at maximum capacity, and Anderssen is considering contracting out excess production.
A $15 minimum wage in B.C. could make it more viable for Anderssen to shift production to the U.S. and focus on sales south of the border, he said.
On the positive side, Tostenson said more money in low-income residents’ pockets will mean more spending at restaurants.
He added that B.C.’s NDP government in the 1990s was more active than previous governments at promoting buying local products and eating local foods.
“[NDP MLA] David Eby is knowledgeable about liquor policy in the province,” Tostenson said.
“As a critic, he was impressive with his understanding of the complexities and I would hope that we could take that understanding and move the needle on issues such as wholesale [wine and liquor] pricing for restaurants if he becomes the minister.” •
