Minimum Wage Increase Having Ripple Effects

On October 1, 2018, the minimum wage in Alberta was raised to $15.00/hr, making it the highest in the country by a wide margin. For anyone making less than that figure, the hike was cause for celebration. Others—most notably (and vocally) local business owners—were wary about the effects the increase would have on the economy.

In theory, a higher minimum wage is a very good thing. Those making minimum wage are some of the hardest working and most under-appreciated people in the province, and fattening their wallets should be considered a victory. However, our economy is enormously complex, and even simple policy changes can set off an unpredictable chain reaction, sometimes producing results that are contrary to their intended effect.

The increased wages are coming out of the pockets of business-owners, a group whose primary motivation has to be the bottom line. The two most obvious ways to offset their increased operating costs are raising prices and hiring fewer employees, both of which negatively impact the customer experience. This means that when dining out, you can expect to pay more for your meal and wait longer for it to be served. This has some people wondering: what good is a larger paycheck if the prices of goods and services rise correspondingly?

On the flip side, the substantial amount of Albertans who benefited from the wage increase (roughly 11% of workers) are helping local businesses by reinvesting their extra money into the economy. It’s a complicated issue, but Labour Minister Christina Gray is confident that it’s for the best. “We know what this policy does,” she said at a news conference. “Increasing the minimum wage puts more money in the pockets of families, women [and] working people who are trying to survive in our province.”