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Economics of Doing Business and the New Minimum Wage

Posted on January 12, 2018
By Michael Adamcryck

The January 1, 2019 looming deadline of a minimum wage increase to $15 / hour has people on both sides of the pay cheque debating the merits of this increase and the potential unintended consequences of moving so much so fast.  We have the employer discussing the impact to their bottom line as any increase in expenses directly impacting profit.  On the other side of the paycheque we have social leaders advocating the positive economic impact that this wage increase will have on both the individual employee and the greater economy.

As with many public debates we have individuals and organizations debating the symptoms of the problem rather than defining what the problem is and creating solutions that will get to the root issues in society. At the surface we appear to have a widening gap in our society between those that have sufficient funds to live and those that struggle every day making financial choices that both impact their short-term health along with financial choices that impact their families future through education and opportunity.    

While there has been and will remain debate on the cause, there is little doubt that we have a component of our society who are currently not generating a living wage.   There are many ways to calculate this, however the basic fact remains that one cannot find a part-time hydro bill, no landlord will accept part-time rent, however we seem satisfied with providing people with part-time jobs.   This leads to what is now being termed as precarious employment.

This part-time employment should not be confused with those who actively participate in the growing ‘gig’ economy. Many individuals with portable talents and a desire for personal freedom, choose to move from gig to gig, knowing their personal value and creating a living that services their personal goals.

We are talking about those individuals and families who cannot generate sufficient income to satisfy their basic monthly needs while also saving for the future and those emergencies that will definitely happen.   This is where we as employers need to start playing an active role in the solution and January 1st should act as a demarcation point in the way we evaluate roles, hire people and help individuals thrive in an environment of continuous learning.

As employers we need to reevaluate every role where we are prepared to pay the minimum that the government regulations will allow, ostensibly telling our staff that we would pay you less if the government allowed us.   We need to equate the value of the amount we pay for the role to the product and/or service we expect the employee to deliver.   We are talking about understanding the economics of each and every role within our companies.   For example in a small format retail store where the sales professional would typically be in a client facing role for 50% of the day, what is the gross profit directly attributable to that role.  Once that calculation is understood, one then knows what the value deficit is for the role and can then understand what other duties and responsibilities can be added to reflect, at a minimum, $14 per hour of value.   As an employer we then have a responsibility to provide training to the employee so they can fulfil the economics of the role.

As employers we have a fiduciary responsibility to run a profitable business as there would not be employment without profit.   However this does not always mean running a business at the lowest possible labour cost.  A better understanding of role economics will provide greater meaning to work, allow an employer to increase wages and go a long way to reducing the number of working poor we have in our community.

Topics:
Vibrant Communities, Income Security


Michael Adamcryck

By Michael Adamcryck

Michael Adamcryck is an innovative leader with extensive executive experience in the banking industry along with a focus on small-to-large corporations as well retail and manufacturing start-up/expansion. Demonstrated record of achievement through developing people and leading organizations from a deficit position to a balanced position while adding new revenue streams. Change management executive with the ability to lead organizations through collaboration, implementing new programs and technologies. Visionary leadership with an ability to develop strategy and partnerships ensuring success at operations, sales and marketing levels of business. A proven leader with a demonstrated ability to lead teams as a high energy and personable team player with an entrepreneurial mindset. In Michael’s past role he was Regional Vice President at Royal Bank of Canada, leading a team of 250 people across the retail branch network in Eastern Ontario. Prior to banking Michael had ownership interests in light manufacturing, Home Hardware Building Centre and retail operations focused on the outdoor industry. Currently Michael through his company, Adamcryck & Associates Inc., is focused on investing, financing and providing advice regarding, growth, expansion, acquisitions and succession planning to small and medium sized enterprises within Leeds & Grenville, primarily in the role as an active private investor. While Adamcryck & Associates Inc. focuses on the retail and service industry, they actively pursue all industries and stage of development. Michael is currently sits as the Chair of St. Lawrence College, Chair College Employer Council of Ontario, Vice-Chair Brockville General Hospital, Chair City of Brockville Economic Development Advisory Committee, Board Member 1000 Islands Masters Swim Club and Advisory Board Member Homeward Bound. Michael has a Bachelor of Commerce degree from Laurentian University along with a Graduate Degree in Management and a Masters of Business Administration from Athabasca University. Michael lives in Brockville with his wife Amanda and son Burke.

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