By Greg Mcneil February 6, 2020
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.”