On Thursday, October 1st, five of Canada’s provinces raised minimum wage. Among them is Alberta, whose government has a plan in action to raise minimum wage to $15 by 2018. The purpose of this increase is to attempt to decrease the amount of poverty-stricken homes, improving the quality of life for many citizens. I think that this idea is not going to be as effective on Canadians as the government hopes.
When raising minimum wage, small businesses with a low profit margin will struggle to stay running, or be forced to raise prices. If the business doesn’t raise the price of its products or services, they may be forced to lay off workers, which would only make Canada’s poverty problem more prevalent. On a larger scale, multimillion dollar companies who have thousands of employees would lose a significant amount of profit. It would only make sense for these companies to raise sale price of their services or products in order to compensate for their profit loss. This would only further increase the cost of living, creating a viscous cycle of increase in living expenses and increase in minimum wage. In Canada’s current economy, Canadian companies cannot afford to be struggling to make a profit. If Canada is going to increase minimum wage, we need to make cuts in other places, and many companies can’t do that right now.