This blog post is in response to an article in the Edmonton Journal on June 29th, 2015 (“Impact of unprecedented Alberta minimum wage increase disputed“). I was not able to post there since my response was too long.
Being a small business owner since 1991 and a business that I believe is more socially based than most, I would like to offer my perspective on the Alberta minimum wage.
Over the past ten years I have paid myself an average of about 36-48K a year. It was much less the years before. I also work about 5 thousand hours a year for this salary. I love doing what I do, and know I could be making 2 to three times more money working in my trade (which I also love doing) but that would not provide me with the fulfillment that owning my business provides to me, my community/customers and the planet.
A few years ago I asked one of the managers to research what would be a living wage for a person in Edmonton. At that time it was deemed to be about 15$/hour. We bumped up our rates a bit but I knew I could not reach this rate at that time and due to the financial situation I am presently in I am unable to bring this about so appreciate that the government was wise enough to do this in manageable stages.
I think the challenge has to do with the type of business I operate. A grocery store does not make huge profit margins (one of the lowest margins in all of retail) and though I sell predominantly organic food which can be higher than non-organic items it is not because we are making huge profits – it is the cost of the product to us that dictates the shelf price. We are trying to be sustainable – enough profit to stay in business and take care of all costs, be respectful to the staff through appropriate wages and responsibilities, repair and maintenance, etc while offering fair prices to our customers.
To be financially prudent we start a person at a lower rate (recently it was about 11.25$/hr-12.50$/hr but it is now $12.20-$13.50/hr) and after a period (based on hours worked – 140, 420 and 840 hours) they get stepped up to a higher rate. Note – that the stating rate was/is one dollar above the minimum wage. After about 12 months (1680 hours) they are earning 14$/hr. They receive a premium if they are assigned/take on additional responsibilities (scheduling, ordering, supervisory role, etc).
At present the average wage for our 31 staff is 14.26/$hr and range from 12.50$ to 22$/hour. It is my plan to be at least one year ahead of the raising of the minimum rate level as introduced by the Alberta Government.
Once the minimum starting wage of 15$/hr is implemented it will affect the rate that people that have longer work experience, skills, handling extra responsibilities, etc. will/may receive. It will flat line the wage progression and possibly remove financial acknowledgement because realistically there will not be any room for small businesses to move much higher.
The person that benefits the most from a 15$/hr starting rate is a person that has no real love for the business, no experience and will soon move on. The people that it will negatively impact are those that for financial responsibility the business owner might have to keep the person with 5 years’ experience at the 15$/hr rate since that is the top of the rate scale they can afford to pay.
Several of my newer staff came over from grocery stores that closed (Sobeys and Family Foods) and our starting rate was the same or greater than they were getting at these stores even though they had substantial time into these companies (one person had 6 years of time and was earning 11.50$ – shameful. She is now making $13.50/hr at our store).
A person that wrote a comment below suggested that if a business is not viable paying their staff 15$/hour, then they shouldn’t be in business. Perhaps that is true at some levels. Perhaps my business will not survive. Pity, because I think the places needing reform are the larger multinational businesses like WalMart where many of their staff are paid at a lower rate than our store, but the profit at the top end is great. They can afford to pay their staff a living wage, but have chosen not to. They have chosen to send the profit up the chain to the major shareholders and not invest in the front line people.
If WalMart is forced to pay their staff 15$/hr in Alberta then that will prove to EVERY other jurisdiction they operate in that they can operate paying their front line staff a living wage. The same goes for MacDonald’s, Tim Horton’s, and other multinational corporations operating in Alberta. It will mean just less profit flowing to the shareholders. Small businesses will be hurt and that is my only concern. Will this initiative put some small businesses out of business, thus losing diversity and choices for the citizens of Alberta? Will it be another instrument to funnel more people into the big box store who can more easily afford the 15$/hr rate?
We should not forget that small businesses create a significant number of jobs in Canada. Albeit—creating jobs with lower pay rates. An interesting thing is that small business has a much smaller disparity between all pay rates – starting wage to owner’s rate; compared to larger companies.
Oh and on another note: When I have gone to the bank for a personal loan they looked at the numbers and said they don’t work. That is because they are applying their model (points system) of what they assume is the average Canadian – wants a new car every 4 years, buys lots of stuff for their household, wastes food, etc. I am not a typical Canadian. I don’t have those extra expenses. So I figured ways around the banks, and still was able to do those things I wanted the money for. Except for the debt I own through the store, I am personally debt-free. What I am getting at here is that we all don’t need the same amount of income to be happy or to survive/flourish.
The store tends to attract people that choose to live a similar lifestyle.
Several of my staff are not only able to live comfortably, but able to go on holidays once or twice a year. They are saving in many other ways – no cars are a big part of their lifestyle and a big way to cut down on expenses. Most are vegetarian or vegan which is a great way to save money on their food bills. It is not their position at our store that dictates how they live, but how they live dictates whether they choose to work at the store and are comfortable living on what they are earning.
Of course there are other things that come into play to make even living on 15$/hr difficult – having one income in a household that has more than one person making demands on that income. Having to drive/operate a motor vehicle to get to their place of employment, daycare costs, rental costs, food costs, etc. are all real costs that need to be addressed. Raising the minimum wage to 15$/hr will really help lots of people and I am all for it, especially if it helps alleviate hardship.
There are things broken in our society, and if 15$/hr starting minimum wage helps to address some of these issues and challenges, then I am all for it. We need to start somewhere, and it is my desire that this new Alberta government works on many other aspects as well – affordable housing; help with the shift away from motor vehicles and more focus on public transportation, walking, and cycling; employment; life skills – gardening, cooking and preserving, communication, etc; a mental health initiative; the environment; etc. This is a good start to bringing around positive change and Earth’s General Store will be part of it.
I am impressed that the Alberta government will reintroduce a progressive tax thus ending the flat tax, raise the corporate tax, review natural resource royalties, etc.
It seems it is human nature to be focused on what we don’t have rather than what we have. I am sure we can all agree that if we had more justice, respect, and love with less disparity, anger/violence, and corruption/entitlement, then our society and world would be a much better place for everyone to live in.
We wish to be respectful to our staff and offer them financial compensation what the store can afford, not what I would like to pay them.
Unfortunately for our store, people don’t seem to value that we offer our staff a higher rate than most stores and take their purchases to those businesses that for corporate profit, rip off the staff on the front line.
“We all do better when we all do better.” Paul Wellstone