Just a few days ago I posted how the new minimum wage in Ontario would not help the economy but would result in added burdens to small businesses operating in the province. Some of the feedback I received suggested that hiking the minimum rate to $15 was justified and people were entitled to a ‘living wage’. You can find this article here:
As it turns out, the restaurant industry in Ontario it considering fighting back and adding what they refer to as a ‘Wynne Tax’ to the bottom of every dining tab for their customers. This would somewhat accurately display the reasoning behind the cost increases and how in the end it will be the consumer who ultimately picks up the tab. After all, the money has to come from somewhere and most restaurants already operate on low margins.
“This increase will have a paralyzing effect on the restaurant industry. Average profit margins of restaurants in Canada are 4.6 per cent of sales revenue,” the firm said. “This labour increase without any other changes (e.g. price increases) will take that average profit down to a staggering profit loss of 6.0 per cent of sales revenue.”
Yes, it would be wonderful if everyone was guaranteed a comfortable standard of living but this logic actually causes more problems than it solves. By demanding small businesses and employers pay higher wages results in less economic activity. Since the consumer must now pay MORE for goods and services, their spending decreases and in the case of dining out, the consumer will dine less. The restaurant owner’s business is not growing and therefore will not hire additional staff to service growing demand.
The underlying problem isn’t necessarily a minimum wage issue. It is government involvement in almost every aspect of our economy. By increasing social services (more gov employees), regulatory bodies to govern everything and spending like drunkin sailors, the government’s only solution is to tax current and future generations to feed this growing bureaucracy. This is the root of the problem that hinders the comfortable ‘living wage’ not the free market.