WHY THE MINIMUM IS NEVER ENOUGH




Hubert Edwards


Published in The Tribune - http://www.tribune242.com/news/2021/apr/15/why-minimum-never-enough/


THE MINIMUM WAGE DEBATE


According to a 2020 survey report, The Bahamas is the fourth most expensive country in the world to live, with a cost of living index of 100.68 and purchasing power of 71.40. The three countries ranking ahead of The Bahamas are Iceland (123.96: 87.85); Switzerland (131.39: 126.15) and Norway (113.70: 107.95). Luxembourg follows The Bahamas as one of the top five (96.56:116.73). The country is in fact more expensive to live than the city of New York, with two important differences, rents are cheaper and taxes are much more favourable.


Iceland has no official minimum wage, however, there is a benchmarked salary of 351,000 ISK per month, which translates to approximately $2,720 USD per month or approximately $540 per week. I suspect that this is highly influenced by professional salaries. In Switzerland, the minimum wage recently determined in November 2020 is 19 pounds or $25 per hour, giving a minimum wage of approximately $3,800 per month or $760 per week. Norway has no official minimum wage either but as an example, a hospitality worker makes $19.50 per hour while cleaning staff makes $22 per hour. Comparatively the rates are significantly higher than The Bahamas and for important economic reasons that is expected to change. In many ways other than being in the same category as a high cost country, the fundamentals are significantly different. This is information though, and provides context as in absolute terms the gap between the cost of living and earning potential at the lowest levels instinctively tells a story of what realities are likely to be for many. It is the issue of how we can reduce the impact of this gap, knowing that wages will never approach the level of those cited above, with which this piece is most concerned.


In conversation with a leading public figure recently the question was raised, how do we facilitate positive changes in the personal economy of citizens such that the individual becomes more capable of being self-sufficient and be able to create wealth thereby collectively helping to drive the economy. I believe that this is such a powerful thesis on which to think about economic growth and development, the advancement of citizens and national building. It provides broad, rich and personal context for discussing matters which when placed on the table quickly narrows to harden positions destroying the potential for fundamental assessment and analysis and radically diminishing the serious strategic incursions into the root drivers of the surface issue, which usually triggers the discussion, low minimum wage. A rethink through this kind of lens forces the players to see not just the thing but to accept and appreciate the opportunities for humanizing the issue and its attendant problems and challenges. How do we think and engage beyond the usual chatter with the view of getting to that place of understanding that the ability to become better is what is most important in changing lives and shifting generational trends.


It is often sage advice that effectively admonishes that if you are to achieve anything of significance you have to do more than the minimum. Those who go the extra mile realize the massive successes. These are both true and while the logic will certainly not hold here there is some level of coercive influence that as a country we must move beyond the minimum wage debate, make the necessary corrections and look at the other important fundamentals which will improve the lives of those meandering at or below the poverty line. It requires no analysis to conclude that any reasonable increase, one that on balance takes into account the interest in employers and employees, will never change the fortunes of any significant number of persons. In a country listed as having the sixth most expensive city (for our purposes the entire country), $210 or any new number, after a nominal increase, is simply not sufficient to facilitate the standard of living typically assumed, on average, across the nation. With a stated per capita income of approximately $32,000, the minimum wage produces $11,000 in annual income, a third of the average. The comparison provides a compelling tug toward an increase; unfortunately, the idea of an increase is not the totality of a seemingly simple but complex imperative. Let me disabuse the reader of any inference that I may be proposing increases that would make the above statistics look more reasonable but I support an increase in the current level of minimum wage, for reasons beyond persons just having more money to spend and as part of a broader national approach, which ultimately benefits all, benefits the country.



THE NEW NORMAL IS ALREADY HERE


I believe that the remainder of 2021 and into 2022 will be characterized by unprecedented levels of volatility and uncertainty. Securing agreement on this position should certainly not be very difficult. Additionally I am convinced that the said period, and beyond, will also be characterized by a significant level of economic scarring where individuals will suffer the lingering effects of global financial downturn. The Bahamian economy continues to show small signs of coming back to life. A large part of this is psychological given where the world is with vaccines and the possibilities that it presents for significantly changing the trajectory of the pandemic.


However, there is no doubt that over the last year many individuals and businesses have taken a significant economic hit. Unemployment is at an all-time high, many employees have been furloughed for long periods, government social support has been historical, parliament has suspended the automatic trigger for redundancy payments and there are many companies hemorrhaging for liquidity. The truth is that despite the positive outlook the true extent of the hurt is not yet truly evident. This certainly provides an interesting backdrop for discussing a myriad of social issues including, poverty, economic inequality and creating wealth.


The extent of the hurting is expected to emerge in the now fabled “new normal”. The “new normal”, a period of sustained high uncertainty and volatility characterized by leapfrogging adaption and adoption of technology and innovation, an ever shrinking global community and radically new opportunities, many of which will lead to creative disruption and in some cases destruction of employment. That new normal is here and the table has been perfectly set for a potentially challenging period. With significantly weakened fiscal fundamentals, driven largely by a bulging national debt stock there are some structural headwinds to grapple with. In an environment where for the first time the historical composition of foreign and domestic debt could flip with reduced national income, (though expected to increase) the possibility of seeing significant adverse pressure on low income earners is significantly high. It is in this environment that we now have a raging debate about the pros and cons of increasing the minimum wage. At a time when the country is at one of its lowest economic states, the spotlight has been turned to the question of whether low-income earners are earning enough, should it be raised and to what extent. Should there be an even broader consideration of a “living wage” and not just a minimum wage? Issues and questions such as these always arise during times of significant economic upheaval. From a pure humanistic point of view, I am and will always remain a staunch proponent for the need to pay special attention to the advancement of low-income earners. There are, however, very important wider national economic implications as to why one would wish to align self with the idea of any form of progression in the personal economic wellbeing of individuals.


On the other hand, there are people who strongly hold that any increase in minimum wages will be detrimental to the country. One would have to be very naïve to think that there would be no negative effect of such a change. Proponents point to the impact