The minimum wage is a current hot topic. It likely had a significant impact in the current B.C. Election but I’m not a political analyst by any means. My evidence is purely anecdotal. It’s acquired by speaking to clients, friends, family and the public in general and they say they are tired of barely making ends meet. Especially when you live in Greater Vancouver. In the past, you could escape the unreasonable prices by moving a little further east and commuting in. Now there is no respite from the high housing and living costs.
Let’s say someone makes the current minimum wage in B.C., (http://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/factsheets/minimum-wage) of 10.85 per hour. If they work full time, at 40 hours per week, each month they will have earnings before tax of $1,880. A good rule of thumb for money management is to cap your housing costs at 30% of your gross income which is $564. I don’t know about you, but the last time I looked, the only rental suites available for $564 in Greater Vancouver are shared rooms and even then, maybe in not so great an area, never mind an area that is easily accessible by transit because there is no way you can afford a car!
Check out this cost of living calculator for Burnaby, B.C. Based on no car and a 500 sq ft apartment the average costs are over $3,000 per month! Try to do that on $10.85/ hour. No wonder kids are staying at home until they’re 25 or 30. They can’t afford to live anywhere else.(http://www.costofliving.welcomebc.ca)
Now that we’ve put the minimum wage into perspective and realized it’s really only for good for people in a multiple income household, let’s talk about some of the reasons why paying more is a good thing and not something to automatically fear as being too costly for your business.
1. You attract a higher caliber of employee. You get what you pay for. How many times have you said that over your life time? You want someone that is intelligent, self-motivated and has a good work ethic? You need to attract those people, and let’s face it, when you’re making close to minimum wage, every extra dollar counts. This is good for your business because an intelligent, hard working individual who has some ambition, can do the work of two unmotivated workers. It comes down to human nature, and the reality that people are driven to care for their basic needs of survival. If they aren’t meeting those needs they can become depressed and uninterested in what they are doing. When you have unmotivated depressed employees, your customers and clients can tell and who wants to interact with an unpleasant, depressed person?
2. It boosts the economy and that is good for business. More money being paid to people means they will spend more money. They still aren’t earning enough to start saving a significant amount of money. They will still spend it on meeting their basic survival needs plus perhaps move up the hierarchy of needs and start meeting other needs. https://www.simplypsychology.org/maslow.html
3. It’s good for your health. That wonderful employee you attracted because you were willing to pay just a little more? They can do the day to day things without you. Stress is one of the number one factors in determining health. How frustrated do you get when your employees just don’t “get it”. How often do you find yourself having to look for new employees? How much time do you have to spend making sure that everything is running smoothly? When was the last time you took a one or two week, uninterrupted holiday? Running on stress can seem effective at first because you get a lot done but the toll on the body is nasty and it’s just not sustainable. Never mind that it takes the business you once loved and were super excited about running and sucks ALL THE FUN out of it. All the fun and satisfaction gone…
Maybe the minimum wage increase isn’t a bad thing for business after all. The benefits? More time to work on your business instead of in it. More customers spending more money because the economy is recovering. The best of all in my opinion? The free time to enjoy it all.
If you’re worried about how to manage increasing costs, make sure to book an appointment with someone from your local Kemp Harvey Group office. We’re here to help you make the most of your business and don’t forget, there’s Strength in Numbers.
**Remember to seek the advice of your accountant. This information is for general informational purposes only and is not intended to replace the individualized advice you receive from them.