Being brief, and the minimum wage

Published: Sunday | December 22, 2013 Comments 0

Martin Henry

Let me be the first to be brief, and, as one of the longer ones, set a good example and get practice.

Driven by cost-containment pressures, our newspaper will be slimming down as of January 1, and columns here in In Focus will be shorter. The 17th-century French philosopher René Descartes once famously apologised to a friend to whom he had written a long letter. "Sorry to have written to you so long a letter. If I had had more time, I would have written a shorter one."

Philosophical rumination, which In Focus was designed to accommodate, will naturally have to be compressed and redesigned, but, hopefully, not eliminated. The American writer Mark Twain, a man of simple, pithy style, speaking on behalf of underpaid writers everywhere, once testily remarked, they pay me the same to write 'city' as to write 'metropolis'; so I will write 'city'."

I want today to tackle the minimum wage - its magic and impact. Starting January 6, the minimum wage, which Government has been magically setting for decades, is to inch up by $600 from $5,000 for the standard 40-hour workweek.

But first, a short philosophical digression, or diversion, expending a few of my few words on the matter of cost pressures on media, particularly print media, pressures of the sort which have led to a shortening of In Focus pieces.

I have just read the academic paper, 'Social Democracy or Corporate Libertariansim? Conflicting Media Policy Narratives in the Wake of Market Failure', by Prof Victor Pickard of the famous Annenberg School for Communication at the University of Pensylvania in the November 2013 issue of Communication Theory, a journal of the International Communication Association.

Despite the veneer of scholarly objectivity and balance, which a professor is obliged to display while professing, Packard, starting with a view of market failure in the US media system, supports a social democratic approach to media. He writes, "Postwar America saw the brief ascendance of a social democratic approach to media. In response to a journalism crisis with some similarities to the one the United States and many other countries are facing today, progressive policymakers sought to lessen profit pressures on key parts of the media. They argued that crucial public services should not be left entirely to market-driven forces and attempted to establish safeguards to protect and sustain news media," which Packard equates to public goods, economically and socially.

American media, much to Packard's distress, fought off the "progressive policymakers" and regulators, and won. Driven by ICT, contemporary media are dramatically transforming and diversifying with both opportunities and threats emerging for particular kinds of media. But journalism, as a whole, and the right of the public to know, don't seem to be facing any greater general crisis than in the past, as Prof Packard fears.

sense of obligation

Government here and widely around the world feels a pressing sense of obligation to protect the poor and the weakest workers with a social-democratic minimum wage, and often with other price controls. The problem with price-fixing is that 'fair price' can only be determined by real market forces, which allow a free buyer and a free seller in a free market to negotiate a mutually acceptable transaction of sale.

Despite modern faith in the omnicompetence of government, the plain truth is that no government knows what it is talking about when it sets about setting a minimum wage. Let me demonstrate, using a news report which I clipped from a real paper newspaper in September and kept for this column.

Appearing before the National Minimum Wage Advisory Commission, Government's own Planning Institute, armed with high science, recommended a nine per cent increase ($450), which we now know that Government has rejected in favour of a higher figure.

Members of the Jamaica Employers' Federation couldn't agree and ranged from zero to 15 per cent increase. The Sugar Producers Federation opposed any increase at all. The Confederation of Trade Unions, wanting more for members but fearing less from unemployment, played it safe and urged incremental increases to a "living wage" of $11,500 per week in the near future. By which time prices would have changed, anyway!

The Association of Household Workers wanted a $2,000 per week (a 40 per cent) increase! While the Bureau of Women's Affairs would be happy with only half of that! So where did the $600, 12 per cent, increase come from?

Besides sheer hocus-pocus ignorance, other challenges arise in setting a minimum wage. A government-determined minimum wage can kill marginal jobs, forcing workers with the lowest skills and weakest bargaining power out of work when employers cannot pay. On the other hand, the minimum wage can drag wage price down when employers who can pay better use it as an official reference point for setting wage price.

On purely rational economic terms, if Government sets the minimum price of labour, it is then obliged to also set the prices of the goods and services which the poor consume to protect them from having more expenses than income, thereby sinking further into poverty while hard at work.

So our Government tries that with bus fares and water, which it controls, setting the prices to suit the poor and not the economics of operation. And the services deteriorate. Our friend Venezuela has progressed further along the road of price-fixing, wrecking the economy in the process and jeopardising PetroCaribe, our petroleum lifeline.

And why not logically progress to set the price for all categories of work? At least with pay bands from minimum to maximum?

Martin Henry is a university administrator, communication specialist and public affairs commentator. Email feedback to columns@gleanerjm.com and medhen@gmail.com.




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