Alberta now has the highest minimum wage in the country, however its impact on the service industry has some workers more worried about their pay and hours than they were before.
On Oct. 1, the province raised the minimum wage to $15 an hour in an effort to decrease inequality and reduce poverty.
Now that the wage has been in effect for more than a month, an easy industry to overlook is the service industry, which has work-related employment concerns with their hours and pay. Emma Yates, a server at the Shoe & Canoe in downtown Calgary, has worked in the service industry since she was 18.
“I’ve been able to live a very comfortable life,” says Yates. “I mean it’s hard work, busting my ass to make good money, but I live comfortably and it’s fun too because all my coworkers become like family.”
Yates explains budgeting is a big aspect of the industry because depending on the hours a server works, they may not be making enough to be well off in daily life.
“I mean there’s always this down season and there’s slower periods that you have to account for, make sure to like aggressively save just in case,” says Yates. “There are a couple months where it’s just really quiet, so that has to be accounted for because your income is so unsteady and you never know.”
Tips are a big part of the industry, but something that the average customer might not know is how tip-outs work. A tip-out is what happens to a certain per cent of a tip that subsequently gets distributed throughout the establishment.
Yates explains at her previous serving job at Bottlescrew Bills, the tip out was six per cent.
“Let’s say you get enough cash during your shift, your cash out is $1,000 , … all your tips however, from your gross of that $1,000 you have to tip out, is to the house and to the bartender, if you’re serving,” says Yates. In total, you’re tipping out six per cent of that $1,000, so I’m giving $60.”
With the minimum wage increase, some service industry workers, like Yates, are nervous that this might affect their hours and pay.
“I know that generally happens every time minimum wages increase,” says Yates. “So that would be a fear, it’s like ‘Oh yeah, I’m making $1.40 more an hour, but then I’m tipping out one and a half per cent more.’”
While the prospect of making more money sounds like a good thing, Yates says some working in the service industry seem to have a different perspective.
“Those people, I think still have a negative outlook on it because of thinking my tip out will go up, or they will lose hours at work, or could get laid off,” says Yates. “It’s like they could be making more money but they’re losing half their hours, at the end of the day it’s not benefiting them.”
The tradeoff of making more but working less is a common sentiment within the service industry. Courtney Crawford, who works at the Bank & Baron, also has similar concerns.
“It’s going to be a lot harder for us to get consistent hours and shifts,” says Crawford. “A lot of times now in the last week or so, people have been getting cut and told not even to come in before their shift starts because … if we’re not busy, they can’t afford all that labor.”
By having hours cut, some staff members are not going to work as much, making them rely on tips more for steady income, which is something the average customer might not know.
Crawford says generally the servers at the Bank & Baron can work an average of four to six hours a day, which doesn’t always coincide with consistent pay. Without that consistent pay, servers in the industry rely on tips to make up for those hours lost, possibly giving, at least from the customers perspective, reason not to leave as much of a tip because they know the staff is getting paid more.
The service industry has actually been one of the most affected by having the largest minimum wage increase, according to Joseph Marchand, an economics professor at the University of Alberta.
“They had a differential, so liquor service had a lower minimum wage if you go back to 2015,” says Marchand. “There was an offset there, that offset was because they get tips, but in the new minimum wage policy they actually got rid of that.”
Marchand explains the intention of the minimum wage increase was to reduce poverty and inequality in the province.
“I think theoretically and empirically inequality will go down,” says Marchand “I don’t know of what magnitude, but the literature does back that up, that a large minimum wage increase would reduce inequality.”
By having the possibility of being able to reduce inequality with the wage increase, the government of Alberta is showing an effort to make a difference with people who are struggling to make ends meet.
The minimum wage increase impacts have been studied before and have shown different results. In the U.S. for example, two recent studies came to opposing conclusions about the effect of an increase. Marchand says the picture is still murky on the minimum wage debate.
“It’s not even clear that this policy could help reduce poverty because a lot of literature, especially the really good papers for Canada say otherwise,” says Marchand. “They say that’s not a good means of reducing poverty, or they actually increase poverty if you have really big negative employment effects.”
With the increase affecting wage and employment, some in the service industry say that it is still hard to pinpoint the lasting impacts that this policy might have. Yates adds that this could result in higher prices for average bar goers, which will impact business and customers all across the province.
Crawford would rather have it go back to earning less than minimum wage for the service industry because it makes scheduling easier for businesses.
“When we were paid less than minimum wage, we were able to work a lot more, we were allowed to work six or seven days a week if we wanted to,” says Crawford. “I believe people got better service back then because more people were on.”
Editor: Colin Macgillivray | cmacgillivray@cjournal.ca
Editors note: In a previous version of this article, Joseph Marchand was quoted as saying “… a large minimum wage increase would reduce inequality and poverty.” The words “and poverty” have been cut, as Marchand was starting a new explanation rather than continuing his previous one. The Calgary Journal acknowledges and regrets the error. Further, this article originally stated “With the increase affecting wage rather than employment, it is hard to see what direction the lasting impacts of this policy can be have.” This line has been edited for clarity.