Thursday, March 5, 2009

AB minimum wage increase

CTV link

To help in the economy, yet many places may increase their service/fee prices again so I'm not quite sure about the benefit...

Speaking of childcare alone, I learned today of a center in my city taking only ages 3 and up starting in September, leaving some families without care. My first thought was of the ratios... If you have children under two, the staff:child rations run from 1:3 to 1:6 but once you hit age 3, you can have 1:8 or even 1:12 (preschool/nursery school). It's becoming more cost-effective to increase the number of children per paid staff member because parent fees are the main (if not only) source of income for centers. Some businesses are talking of removing their baby centers as well, for the same reasons. As more policies are being put into place, businesses are losing money fast. Now with another wage hike in Alberta, you may see more of this.

Is it fair? No, it does not sound fair does it? If minimum wage goes up, it is usually because the cost of living is already higher and the wages need to be put up to match. But there are certain sectors where this does effect the consumer/customer directly. For example, more restaurants are offering cheaper menu items to draw in customers - but now having to pay their staff more yet again, are the items going to remain cheaper or are the prices going to creep up again?

It also causes problems further up the seniority chain, like where someone might have received a 50 cent raise after 6 months of employment, but would now be making only 10 cents more than someone who just started an hour ago. They want a raise as well - how far up the ladder does the increase go, and how much does the employer decide to raise the costs of the service they provide to citizens? It's a chain reaction that may or may not 'help' people during this time of economic uncertainty. At my small daycare center, it could mean transferring and extra $10 a month to each parent, which is about 13% of the raise they might have received at their own job (based on a .40 per hour increase). Or since the center already spends over 60% of it's income on wages alone, it means the owner losing another couple hundred bucks a month before paying the regular bills such as food and operating costs (utilities, etc). The owner has to choose between taking even more of a hit to a low profit, or passing the buck to parents. As this keeps happening, along with more policy changes that effect income, more and more centers are just going to close their doors. That already happened here less than 2 years ago with a center suddenly closing down along with some preschools - and it is likely to happen again.

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