Have you ever noticed that every time the minimum wage increases, business owners seem to come out of the woodwork to complain about it? They claim it’ll force them to shut down, that it’ll eat into their margins, and that they’ll have no choice but to charge customers more?
Take Scott Crighton, for example.
Based out of Lethbridge, he’s the CEO of the 626 Restaurant Group, another name for his holding company, 626631 Alberta Limited. He is the CEO of several local restaurants: Kingsmen Ale House, The Duke Pub & Grill, Pop’s Taphouse, and Mojos Pub. He’s also the executive chair of ScoBob Investment Corp.
Anyhow, when the Alberta government, under Rachel Notley’s NDP, announced that they’d be increasing the minimum wage to $15 an hour by 2018, he came out swinging.
According to a Global Lethbridge article from 2016, he claimed that he would rather lay off half of his workers than increase the price of food and drinks slightly at his restaurants.
Kim Tams, the journalist who wrote the article, reported that Crighton “said his ultimate goal is to keep his businesses viable”.
And it’s that idea I wanted to discuss here.
Crighton was ultimately saying that his businesses are viable only if he pays his workers as little as possible. And I believe that if your business model centres around paying your workers as little as possible, you have a crappy business model.
Business owners who depend on minimum-wage labour to function often struggle with high turnover rates. Workers earning minimum wage frequently seek better-paying opportunities, leading to a revolving door of workers. This instability forces business owners to spend more on time and money for recruiting, training, and onboarding new workers, which ultimately reduces efficiency and increases costs.
Plus, when wages remain stagnant, workers struggle to afford basic necessities, such as housing, transportation, and healthcare. This can then lead to decreased productivity, absenteeism, and increased stress levels, all of which negatively impact business performance.
Not to mention that you might be forcing your workers to take on a second—or even third—job, which exacerbates those issues even more.
Low wages don’t hurt a company owner’s workers either.
A stagnant minimum wage directly affects the purchasing power of the broader consumer base, which is mostly other workers. Low-wage workers spend most of their income on essential goods and services. When wages fail to keep up with inflation, their ability to participate in the market weakens, leading to lower sales for the business owners that rely on consumer spending.
Raising the minimum wage, on the other hand, boosts disposable income overall, which increases demand for goods and services.
While it may cost a business owner more to give their workers raises, if other business owners are forced to do the same thing, it could actually increase the number or potential customers. People who couldn’t afford to shop at your business might now be able to.
Business owners who rely on keeping wages low often neglect investments in productivity and innovation. If your success depends solely on suppressing labour costs rather than improving efficiency, developing new products, or expanding into new markets, your business will unlikely sustain long-term growth.
Investing in workers through higher wages, training programs, and career advancement opportunities leads to a more skilled and motivated workforce. This, in turn, enhances business performance and competitiveness.
Minimum wage laws are subject to change, and business owners that don’t anticipate future increases may find themselves scrambling to adjust when wages are raised by legislation. When governments mandate sudden wage hikes, business owners who failed to plan for them may face financial strain, layoffs, or even closures.
By proactively raising wages ahead of government mandates, business owners can avoid abrupt disruptions and better manage payroll expenses. Business owners who continuously improve worker compensation also reduce the risk of facing labour strikes, lawsuits, and negative publicity related to unfair labour practices.
A business owner who pays the bare minimum often fosters a work environment where workers feel undervalued and disengaged. Low morale leads to poor customer service, higher error rates, and reduced overall productivity.
Conversely, business owners who pay fair wages and offer growth opportunities tend to have happier, more engaged workers. This translates to better customer experiences, increased loyalty, and a stronger company culture.
There is a common misconception that raising the minimum wage leads to job losses. However, research has shown that moderate increases in the minimum wage often has minimal impact on employment levels while also boosting economic activity. When workers earn more, they spend more, creating a cycle of increased demand that benefits businesses of all sizes.
Relying on a stagnant minimum wage as a core business strategy is shortsighted and unsustainable. Business owners who embrace fair wages benefit from lower turnover, increased productivity, stronger customer spending, and a positive brand reputation.
