Minimum Wage Increases Job Losses
That statement might seem confusing and it is. You would think that when the minimum wage increases, that things would get better for employees. Sadly, however, this is not typically the case. And the ones who realize it the greatest are those minimum wage earners just like you.
If raising the minimum wage really worked at improving your living conditions, then it should have already worked.
Don’t get me wrong—I fully support the idea that people need more spendable cash funds. I really do. It is just that raising the minimum wage doesn’t accomplish this. In fact, it has the opposite effect.
How many times has the minimum wage been increased over the recent years? Then why does the gap between wages and the notion of a “living wage” keep getting wider?
Barry and I start shuddering every time we hear of another minimum wage increase. We may no longer be drawing a wage as such. Our only source of income to live on is the money we make from a small rental property. As long as there are no extensive repairs needed there in a year, we know we have approximately $12,000 a year to survive on. (2016 total combined family taxable income $12,728)
Yes, survive on. Because it certainly is not a living wage either. So although we are not employed in the minimum wage service sector as many of our Free Stuff 4 Daily Needs clients are, we know the pain of financial stress as small business owners. Because even with Free Stuff 4 Daily Needs with an annual operating budget of $15,000 there is not enough money there for even 1 minimum wage employee, let alone any money for Barry and I.
Lost Jobs Is A Reality
Even with the larger corporations, lost jobs is a reality of the minimum wage increase. The fear is even more intensified when our Provincial Government is set on quickly raising it within the next few months.
Currently it is set to raise to $11.60/hour on October 1, 2017. That is not nearly so bad as that is only a $0.20/ hour increase. The job loss repercussions will be minimal and as a result, unless it directly affects you, most financial economists won’t even overly consider these losses.
The minimum wage increases that have both large and the small business owner fearful is the sudden increase on January 1, 2018 to $14/hour and then a year later to $15/hour.
In addition, the Provincial Government is imposing other wage items such as:
- increasing to 10 days paid vacation
- 48 hour shift cancellation notification or a penalty of paying 3 hours full wages
- short shift increased payments
- and other items
As a result, this is a real fear for employees, especially the most recently hired.
Businesses Have To Survive Too
Back in 2010, as Barry and I worked primarily for seniors with fixed incomes, we had to let our employees go. We could not afford to increase the wages and still keep costs to our clients down. As a direct result, Barry and I had to start working harder, longer, and for less disposable income.
This was in direct action to the minimum wages that started to increase drastically in 2010.
There is a bit of dispute as to how many lost jobs will arise as to this latest leap in wages. Some, like the FOA (Financial Accountability Office) for the province of Ontario is estimating 50,000 job losses. While on the other hand, the business community itself is saying it could be as high as 185,000 jobs that may have to be cut.
Job losses will occur, all in an effort, to keep these businesses running at all in the future. Because if businesses don’t trim their expenses, one of the largest expenses being staff wages, then there will be more businesses having to shut their doors once and for all. Resulting in no more jobs for anyone in that business.
Small Business Struggles
Take small businesses such as Barry and I had up until 2015. Our Painting and General Maintenance business had minimal overhead and equipment costs/purchases were always trimmed as low as possible. But even in that, Barry and I were not making minimum wage as the owners. And to pay out more to employees than we were bringing in as revenue did not make good economical sense. The alternative was to raise rates to our clients. This was not an option either, as our clients, many on small pensions or government pensions, did not have the funds either.
But they still required the work to be done. As Barry and I have hearts of servants, the choice, though difficult, was to continue to service our clients without the assistance of added employees. In this way we were able to keep many of our clients in their own homes for longer periods of time before they either passed away or moved to nursing homes.
This was very challenging and heart breaking as we realized that it did not help the young people of our community who needed to also earn an income. But we had none to give them, because, as I mentioned earlier, after paying business related expenses, there wasn’t even a minimum wage income left for Barry and I.
We, as the business owners, could choose to live on less than minimum wage, however, when you have people employed, you cannot legally have them do the same. It is the law to pay them minimum wage. But what happens if you don’t have minimum wage money to pay them?
Employees Replaced By Machines
More and more businesses are looking at how to replace people employees with machines. In Alberta, Dollarama is going to be testing self serve checkouts in an effort to reduce operating costs.
Even now in Walmart when pressured to use the self serve checkouts, Barry and I refuse. We will stand in line in order to have a real life person employee ring through our order of purchases. In this way, we show our support for human employees not machines.
If all of the employees get replaced by machines, what jobs will be left for these people now unemployed?
And this, all in an effort to reduce costs. Wages being a huge cost.
Other ways that businesses are looking at cutting costs include:
- creative scheduling—having extra employees present only during the typical rush periods, and for the shortest period of time as possible
- more on line shopping instead of in store
- perhaps in store pick up of on line shopping items, moving from being an actual store to being a pick up location
- adding in store mobile apps
- cutting utility costs such as electricity by using energy efficient lighting
- trying to find better ways to prevent shoplifting
- reducing waste
- and of course, raising the prices!
Job Losses Most Likely To Occur In These Sectors
With the discussion of how to make our lives more automated and handled by machines and not humans, I found some research that was interesting. It shared what jobs were most likely to be replaced by machines.
The least likely to be replaced completely by machines are Physicians and Surgeons. However, even there, Skype appointments and computerized surgical assistance is becoming more prominent. Another group that looks to have secure jobs appear to be elementary school teachers. However, with the increased computer tablet games and teaching programs, this might change in the future too.
This next grouping of jobs at a lower risk of being replaced fully by machines are:
- and of course the computer programmers who are helping to automate everything
Those whose jobs run the greatest risk of being completely replaced by machines are:
- pay day loan officers
- financial advisers, bank tellers (look at all the ATM and online services now!)
- secretaries/receptionists (those annoying automated incoming call directory systems)
- legal assistants
- retail salespersons as the switch moves to warehouse packing for on line orders
- taxi drivers/chauffeurs as the technology for self driving vehicles improves
- security guards
- and cooks, especially in the fast food industry
When Does The Madness Stop?
When will government realize that raising the minimum wage does not increase a person’s spendable cash amount. Because as wages increase, so does the cost of everything we purchase whether it is a pair of socks or a bag of apples.
In fact, the gap keeps widening between the rich and the poor everytime wages increase. All raising minimum wage does is throw more people under the LIM-AT (Low Income Measure After Taxes) or the poverty line.
The poor actually end up with LESS disposable cash. So when economists report the justification for raising wages is that it will actually boost the economy is a falsehood.
With fixed incomes such as Barry and I, we end up with less disposable cash for spending every time the minimum wages increase. Our annual money doesn’t increase, but our expenses keep increasing. You and I can only trim our expenses so much before quality of life is drastically compromised. Which only leads to addictions, depression, and more as solutions to escape the madness drive us to this.
When will the madness stop?
Prices need to come down, not keep going up. We need to find alternative ways to become self sufficient and self reliant. There is no such thing as job security any more. So, once your job is gone, how will you feed your family?
Minimum wage increases job losses. When will the politicians learn this?