Ever since the NDP gained power in Alberta, my Facebook newsfeed has been filled with strong opinions from my right-leaning friends about the provincial government’s “disastrous” decision to increase minimum wage to $15/hour. Now, with the federal election looming, raising the minimum wage has become part of the national conversation.

One post showed a picture of McDonald’s new touch screen cashier in St. Albert, saying this was the corporation’s direct response to rising labour costs. (In truth, this type of automation was coming, regardless of political interference).

The most popular argument is that raising minimum wage will put increased pressure on restaurant and bar owners, causing them to reduce operating hours or even close altogether. This New Brunswick restaurant owner called it financial suicide, saying there is no way he could raise prices by 40 percent to compensate for the increase in labour costs.

Here’s a crazy thought that could help business owners and customers alike manage a hefty increase to minimum wage – we should abolish tipping.

Think about it; restaurant owners who claim that passing along increased labour costs to their customers will cripple their business have had no problem presenting the same customers with suggested tipping options of 18-25 percent. The point being; customers are already used to subsidizing service industry wages through increasingly higher tipping “standards”.

Restaurant owners can pay the higher minimum wage, raise their prices accordingly, and then do away with tipping. This idea has already been successfully implemented in cities like Seattle and New York.

This week’s recap:

On Monday we had a guest post from John Ryan about how taking a break or sabbatical can rejuvenate your career.

On Tuesday we announced the winners of our HUGE five-year anniversary contest. Congrats to all the winners!

On Wednesday Marie wrote about how to budget like a small business CFO.

And on Friday we shared a post from Paul Marshman, author of The Travelling Boomer, as part of our retirement series.

Over on Rewards Cards Canada I explained why an annual fee credit card can make sense based on your spending habits.

Finally, on Rate Hub I looked at how technology companies like Apple, Google, and PayPal are changing the way Canadians pay for retail transactions.

Weekend Reading:

Bridget Casey dug up her ugly financial past when she decided to shred old documents from 2008. Like Bridget, I’ve also held onto my congratulatory letter from when I paid off my student loans in full.

Michael James answers the question: how much diversification do you need? I determined that holding just 24 Canadian stocks was quite risky and so now I happily own a small slice of over 3,000 companies from around the world with just two ETFs.

Dan Wesley explains how he handles stock market volatility – ignoring the noise and sticking to his long-term plan.

Justin Bender with some smart advice on whether now is the time to rebalance your portfolio.

Rob Carrick takes a light-hearted look at some financial terms that need policing. I’m guilty of using half of these phrases in my writing.

Jack Waymire explains how Wall Street’s biggest investment scam impacts you.

Financial Uproar says the biggest threat to our retirement isn’t running out of money – it’s the chance of developing dementia.

John Ryan explains how reverse mortgages work and whether they’re a good idea.

Big Cajun Man rants about his ongoing battle with TD bank – this time over the rate on his unsecured line of credit.

Frugal Trader shares the best and worst deals at Costco. As an Executive Member, and regular Costco shopper, I think his list is spot on.

Finally, this article in the Report on Business argues that although jerks can be unpleasant to be around, they get things done. One reason why I gave up trying to become top dog in the hotel industry was that I didn’t have the stomach (or maybe enough “jerk” qualities) to make tough decisions that impact the lives of my employees. Having to fire someone made me physically ill. Giving a negative performance review wasn’t any better. I’m much happier being a team player and manager of one (me).

Happy long weekend, everyone!

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14 Comments

  1. Tom on September 5, 2015 at 11:44 am

    Love your opinion on tipping! I have felt the same way for years! The friends I have that are servers call me a “jerk” and such for my view. Because while I do tip, I don’t do it based on service (are you even supposed to do that?), but rather to provide the server with a reasonable wage. Would have no problem if restruants were 30% or whatever more expensive on the menu, but I didn’t have to tip. The worst is NOT tipping (even if it’s terrible service), because at a lot of places, then the server pays out of their pocket for your meal (with tip-out to the kitchen/host).

    In regards to your Ratehub article – we’ve been paying our “contractors” (read: handymen found online) with PayPal probably 90% of the time since buying our home. It’s great for me, because PayPal covers the transactions (in case the work is extreamly poor) and I can then pay with my credit card. The “contractors” are usually convinced into it by reminding them it’s in their bank in only a few days, and eliminates the risk of a bounced cheque. (Although, most of them are fine with it after I simply say I want the credit card rewards).

  2. Big Cajun Man (AW) on September 5, 2015 at 1:59 pm

    Thanks for the, inclusion this week, guess I am going to have to change banks?

  3. Cool Koshur on September 5, 2015 at 5:19 pm

    With barely any disposable income left after taxman takes a big bite along with mortgage, that leaves with little to nothing in average Canadian’s pocket. Average middle class wont eat outside with rising cost of foods at fast food chains. It is anyways unhealthy. I personally brown bag my lunch. We go out for a weekend lunch once or may be twice a month.

  4. John Ryan on September 5, 2015 at 8:29 pm

    Thanks so much for the mention (both for my post this week and my guest post)!

  5. Michael James on September 5, 2015 at 8:57 pm

    I suspect that many restaurants may choose to continue to encourage tipping and keep a bigger percentage of tips (leaving a smaller percentage for the staff). Thanks for the mention.

  6. Robert on September 6, 2015 at 5:57 am

    Tipping is an insane practice. To me it is right of the Dickens era mentality. I do not think it exists in many developed countries. A bit shocking that it exists here.

    • gcai on September 6, 2015 at 7:31 am

      Actually tipping thoroughly entrenched in most ‘developed’ countries to the point that it is a line item on the bill (i.e. most of Europe). Only exception I can recall is Australia and New Zealand but tipping is creeping in there.

      It’s the undeveloped countries where tipping is not the norm.

      The only problem I can see with a no tipping + increased wage scenario is that the already dreadful service we experience in Canada will get even worse in that the staff has no incentive.

      • Robert on September 6, 2015 at 2:14 pm

        I spend a lot of time in Europe. Not only is tipping not expected, it tends to be considered a bit insulting.
        However, you really only ask yourself if you would like to be paid in your job based on alms from customers, or if you work so much more poorly because you are not tipped.

  7. Brian on September 6, 2015 at 8:54 am

    There is much more to this issue than restaurant servers. I have a small professional office where I employee 3 other people. The first one performs front desk and junior professional duties. This person has a high school diploma and a good amount of experience. Pay rate is $16.00/hour. Minimum wage takes a big jump and therefore I need to bump the pay up a bit.
    The next person is a full junior professional staff person and I pay them $19.00 / hour. The last person got a big increase and to keep the scale I need to bump this one up as well.
    And on it goes…..
    The bottom line is, if you don’t want a minimum wage job, then improve your skills and get out of that job. Nobody owes you anything, get out and earn it.

    • Echo on September 6, 2015 at 9:07 am

      Hi Brian, thanks for your comment. I worked in the hospitality industry when Alberta moved minimum wage from $5.90 to $8.00. It was a lot of work, not only moving up the base rate of pay but also creating an entire matrix grid for the rest of the hourly employees who would be affected by the increase (moving up the scale, as you say).

      It was messy but we got through it. The problem with your last statement is that if it were left up to corporations we might still be paying $5.90/hour at the entry level. In my experience, we always made annual merit and cost of living adjustments for our existing employees, but never adjusted the starting point or minimum wage for new entry level employees (unless mandated by gov’t).

  8. Ginette on September 6, 2015 at 10:34 am

    As always, a nice round up of interesting personal finance reading. Thanks!

  9. kcowan on September 6, 2015 at 11:04 am

    Maybe I am alone but I never tip in a fast food restaurant! How many people tip in McDs?

  10. DN on September 6, 2015 at 11:50 am

    I agree with Robert , Brian, KCowen

  11. Sean Cooper, Financial Journalist on September 6, 2015 at 8:12 pm

    I don’t think it’s right to tip some people and not others. For example, why should a server get tipped, but no the cashier at the supermarket? I’m all for abolishing tipping.

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