Raising minimum wage during recession will not reduce poverty and may lead to job losses, Alberta forum told

Edmonton – At a sold-out event for Alberta’s restaurant industry hosted by Restaurants Canada, a labour and demographics expert shared his recent research into the impact of raising the minimum wage.

“If a third energy boom is not on the horizon for 2018… then policy makers should consider moving their intended goal of $15 back by a few years, until energy prices pick back up,” said Joseph Marchand, associate professor of labour and demographic economics at the University of Alberta.

As part of his independent academic analysis of the minimum wage issue in Alberta, Marchand said that “the magnitude of all of these increases under their relatively short time horizons is unprecedented.” The states of California and New York propose to raise their minimum wage to $15 by 2022, contingent on the economy, a key qualifier Alberta has thus far chosen to ignore. 

Based on the review conducted in Marchand’s working paper, recent research indicates that raising the minimum wage will not reduce poverty and may even increase it, Restaurants Canada said in a news release.

A panel of restaurant industry representatives from across Alberta who attended the event on June 21 at the Shaw Center echoed Marchand’s findings. They pointed to a host of negative impacts associated with raising the minimum wage in Alberta to $15 by 2018, including:

• pushing up costs beyond what can be recovered through price increases, forcing many operators to cut back staff or close their doors
• denying opportunities for first-time job seekers to get that all-important job experience by making it too expensive to hire and train new workers
• reducing overall take-home pay of many servers by eliminating the liquor server wage, resulting in cutbacks in shifts and a reduction in tipping

Restaurants Canada is requesting that the Alberta government take three measures:

• postpone minimum wage increases until the economy improves
• retain the liquor server wage (scheduled to be eliminated in October 2016)
• introduce a youth wage

“Professor Marchand’s research confirms what our members have consistently told us: a recession is the worst possible time to introduce minimum wage increases,” Mark von Schellwitz, Restaurants Canada’s vice-president for Western Canada, told the conference.

Restaurants Canada has provided some facts about the impact such a dramatic increase would have on the website www.NotTheTime.ca.

“Our industry is concerned about the unintended consequences of increasing the rate too quickly,” von Schellwitz said. “We will get to a $15 minimum wage in time, but imposing a 50 per cent increase in just three years (a whopping 63 per cent increase for liquor servers) is simply too much, too fast given the current state of Alberta’s economy.”

Over 120 people attended the interactive session. Alberta’s Minister of Labour declined Restaurants Canada’s invitation to attend the forum. Proceeds from the event are being donated to the efforts to help Fort McMurray residents recover from the devastation caused by recent wildfires.