The Effects of Minimum Wage Laws

The Effects of Minimum Wage Laws

Your Opinion is Appreciated

A few years back, I witnessed a restaurant owner being interviewed on TV advocating an increase in minimum wage laws, which were in the process of being raised by more than 10% by the then current government. A few years later, that restaurant was closed. I wonder if there is any connection.

Let me be clear. I do not under any circumstances advocate the implementation of minimum wage laws because of my belief that coercion in human relations is wrong whether one to another or as dictated by governments.


There are all kinds of studies arguing for and against minimum wage laws. Some look at the effect on unemployment; some the effect on small business; others the impact on poverty.

The fact is that wages and benefits constitute the largest portion of overhead costs for most businesses. So whether you have employees at the minimum wage or not, the likelihood is that all hourly employees will want an upward adjustment in wages to reflect the new minimum.

These higher costs of doing business will require either the raising of prices, the deferment of capital reinvestment, the reduction of costs in other flexible areas of the business such as advertising and inventory levels, the increase of debt and interest costs or some combination of the above.

But complaining won’t change things. As long as there is a majority government in Alberta, the minimum wage train will keep chugging along to its promised conclusion of raising minimum wages from $10.20 to $15 an hour over the next few years, starting with a whopping $1 hike on October 1, 2015.


In researching for this article I discovered one possible benefit to employers.

That is that higher wages attract more skilled workers from other jurisdictions creating a more experienced pool of potential employees.

That does not offset any increased unemployment of those whose skills do not warrant the minimum wage dictated by edict. Nor the need then, for the government to provide more funds for the unemployed. Nor does it alleviate the need for business owners to increase prices or make other cost adjustments in their companies.

But in the near future, it can mean that you can operate more efficiently and more profitably because of the higher levels of skill of your new employees.


I’d like to hear your opinions on this. How will the proposed increase in the minimum wage affect your business?

And what can I do to help you survive and thrive in spite of it.

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