'I think we're in trouble': Business community concerned about B.C. minimum wage hike

B.C. is set to increase its minimum wage on June 1 to $16.75, making it the second highest in Canada. Some say the near seven per cent increase could be devastating for businesses already struggling with high costs.

"It's another cost that's been added," said Jairo Yunis, an economist with the Canadian Federation of Independent Business.

"It's going to strain their budgets even further, and further increase the cost of doing business in this province which really has increased significantly in recent years with inflation creeping up, labour shortages, high interest rates and rising property taxes."

One Metro Vancouver cafe owner, who didn't want to be named due to fear of public backlash, told CTV News he'll have no choice but to once again raise prices by five to seven percent to offset the cost of the change.

Another restaurant owner told CTV News the increase will cost his business approximately $20,000 per year, the equivalent of 15 to 20 per cent of his annual profit. He says he's also adjusting the menu to raise prices and is experimenting with how he can cut labour costs through creative scheduling. He also did not want to be named.

"These types of laws increase the cost of labour which means that fewer people will be hired, or that people that are working will be working fewer hours," said Alex Whalen, a senior economist with the Fraser Institute. "So it actually has the opposite effect as was intended."

The provincial government has argued the increase will help low-income earners deal with rising costs and help address labour shortages.

Ian Tostenson, president of the BC Restaurant and Food Services Association, says he urged the government to cap the increase at three per cent.

"I think we're in trouble," said Tostenson. "I think we're going to start to see some closures. In fact, I just had a text message about an hour ago from someone that said two well established restaurants are at the end of the ropes financially."

Tostenson also pushed for an exemption that would allow restaurants to not pay servers the increased wage because the majority of their earnings come from tips.

"Average server, on a survey we did in Victoria about a month ago, is making about $80 to $85 thousand dollars a year," he said.

The CFIB is urging the government to consider several options to provide immediate relief to business owners including adjusting the employers' health tax exemption threshold, and shifting the cost burden of paid sick days.