Minimum Wage, Maximum Farce

By Raffique Shah
September 11, 2010

TrinidadiansLET us be realistic about this burning issue of the minimum wage: no employer who is worthy of being called an entrepreneur pays anyone in his establishment $9 an hour. Put another way, no worker worth his or her sweat, however desperate she may be, would work for eight hours to take home $72. He would be better off hustling on the sidewalk, picking pockets, or robbing others of their valuables.

I interact with many from the business sector on a regular basis, and when this question comes up, they would remark, “If we pay what is now the minimum wage, we’d get no one to work for us.” Contractors speak of being unable to retain unskilled labour at less than $150 a day—which is close to $20 an hour. Even in agriculture, farmers cannot get workers to tend to their fields for less than that. The latter may work for no more than five hours, given the nature of what they do. But sure as hell, they won’t work for less than $100.

So who are the poor sods who actually work for $9 an hour or less? Mainly, they are low-level employees at small groceries, mini-marts, auto-repair shops (where they can be considered apprentices), gas stations, roti and doubles establishments, and few small fast-food operations.

Most trade unions, and workers so affected, expected the new People’s Partnership Government to address this question in Finance Minister Winston Dookeran’s budget presentation. He didn’t. Prime Minister Kamla Persad-Bissessar said her Cabinet had the issue under “active consideration”. I found those responses strange. After all, the Partnership, during its elections campaign, promoted itself as being for the people, and most of all for the downtrodden in the society.

The previous Patrick Manning regime had before it a three-year-old recommendation from the Minimum Wages Board to raise the minimum wage to $13.50 an hour. Not surprisingly, Mr Manning ignored that. After all, he made no pretensions that his government had a bias towards the middle class and the wealthy. During the elections campaign he even held a “private” meeting at an upscale residence in Goodwood Park—which is why he lost the damn elections!

So we knew where the PNM stood on this minimum wage issue. It’s alarming, to say the least, that the Partnership Government would now raise the very issue of the ill-effects implementation of the $13.50 an hour would have on the economy. “Whaaaaaaat?” as my friend Anil Roberts would say (and I hope he echoed as much in the Cabinet chamber when the matter came up for discussion).

The new Government had no problem raising old age pension to $3,000 a month—very commendable: I expect to get mine when I register that number next year. It is spending $83 million on laptop computers for first-form students, with which I do have a problem (I proposed an alternative suggestion before the elections).

In its Budget, the Government gave generous concessions to local manufacturers. It adjusted the special petroleum tax to facilitate billion-dollar oil companies. It doled out a tax-free, $1,000 a month grant to police officers (including those who now collect more than that from “their” drug blocks or “gun rental services”!). And it granted a tax amnesty that will give a free ride to delinquent business operators who broke the law by not remitting VAT they collected, and avoided paying corporate tax.

I should add that I have no quarrel with some of these measures. For example, I understand that in order to attract oil and gas exploration in a globally competitive field, Trinidad and Tobago must make some concessions. I also do not have a problem with the “special duty allowance” for honest, hard working police officers. And if the Government can raise sufficient revenues without imposing the Property Tax the PNM had introduced, that, too, is appreciated.

But why must those poor roti and doubles makers, older women in the main, who leave their humble homes at ungodly hours, and labour in the heat of the kitchen, quite literally, be denied decent wages? Answer me, Madam Prime Minister. Why must the exploited security guard, subjected to working 24 hours at times (more the rule than the exception), to enduring woeful working conditions, be denied his or her just dues? Answer me. Why must gas station attendants and similar “low class” workers, take home $700 a week—if they are lucky?

I want this Cabinet to explain to me how and why raising the minimum wage to $13.50 an hour would send the country’s economy into a tailspin. I want Mr ECA, who was gloating over concessions to business, but stoutly resisting raising the minimum wage, to tell me if he would have his son or daughter to work for $700 a week, even if they are “duncy”?

Governments’ refusal to deal with “dog wages” in this era of opulence is partly responsible for the “crime factory” that has emerged in urban and rural Trinidad and Tobago. While I insist that poverty is not an excuse for crime, starvation wages sitting side by side with million-dollars-a-year “packages” provides ready avenues for young people who have the daring to narrow the rich-poor gap by any means necessary.

If this is really a people’s Government, it must be seen to act on behalf of the most vulnerable in society. It cannot continue with Calder Hart-style rip-offs and not expect a backlash. Be warned.

14 thoughts on “Minimum Wage, Maximum Farce”

  1. Perhaps now we can see the futility of attempting to put old wine into new – or is it chiefly -old bottles? Put differently, Uncle Shah , the lesson is to never destroy a bridge , before you have a blueprint , and or ,the ability to replace it with a better one. Make sense?
    Now to quote a military buddy you might like for his political astuteness ‘when not under fire,’in dependable ,green eye Colin Powell. It is ‘if you break it , you own it, you fix it.’ You remember the context, but same T&T monkey pants , yes?
    Let’s therefore give our still new ,’progressive government,’ ‘a lil bit o time/ breathing space ,’to see if Yankee Big Brother Barrack Obama ,and tag team Michelle’s job stimulus package would work.
    As a consequence , they the PP in turn , might wish to hire ‘one o dem’ old economic experts, that are scampering away from the Commander in Chief’s administration , and or dropping like flies,back into wealthy obscurity in private life ,yes?

  2. This is one of your best of all time. Quite often, the exploited ones you write on behalf of in this piece cannot share their misery by word or letter. You deserve an excellence in journalism award.

  3. In a capitalistic economy you cannot raise minimum wage whenever you want. The practice of most businesses in the develop world is to start an employee at base salary, then after three months they are given an increase and each year depending on the rate of inflation they are given an increase. However, that changes when the employee have education, experience and is willing to work stipulated hours. Those things are taken into consideration and the starting salary goes up depending on these factors.

    Minimum wage is necessary as a standard for the new employee to ensure that they are able to survive on the pay they are recieving. The government must consult with businesses, trade unions, and constituents before setting a minimum wage standard. If it is too high then new business would not be able to afford it.
    Here is my take on it.
    (1) Minimum wage should be determine by industries. For instance the construction industry will have higher minimum wage because of the nature of the work.
    (2) Blue collar jobs will have a different wage standard base of some of the factors previously mentioned.

    The truth is industry determines wages. Whatever the field you are in there are already certain established industry practices.

  4. Its all well and good to say minumum wage is $20. But which small employer can sustain that wage? the energy and construction sector can afford to pay such wages but there will be many lay offs from smaller businesses. The main problem i have with wages in this country is how much money u get for your qualifications. There are people with university degrees who work for only a couple of thousand dollars more than an unskilled person with not a single CXC subject. So what an increase in the minimum wage will do is further encourage young people to drop out of school and get a job and make the overall population even more ignorant than it currently is.

  5. “Quite often, the exploited ones you write on behalf of in this piece cannot share their misery by word or letter.” Very astute observation GruGru, and the reason for that in Sweet, Sweet T&T aka Rainbow Country, is easy to figure out.
    It’s primarily due to the fact that Uncle Shah’s old time newspapers Bomb, Blast, and T&T Mirror, cost more than a box of tasteless Trini KFC , which is what,$40 a pop?
    In addition, most folks in that category you listed , cannot afford to pay the astronomical cost for internet service as provided by the two monopolistic bastards, TSTT , and Flow, yes?
    Hopefully all, dem grateful parents of desperate, Secondary School kids that were promised free laptop , aren’t conscious that they too are getting a 6 for a 9 , as this ruse for enriching local business crooks takes shape,for else they too would be outraged ,and speak forcefully come 2014 or less- preferably, ent mi amigo?
    Let’s wish our citizens well ,shall we?

  6. While Mr. Shah makes a compelling argument for an increase in the minimum wage, and takes a gratituous dig at the former government in the process, I sincerely wish that he undertakes an analysis of the PP’s discontuance of the Alutrint Aluminium smelter, a true poverty reduction initiative.

  7. Whether the minimum wage should be this figure or that figure (everyone knows that it would always be a figure acceptable to big business) should not be the thrust of a government’s poverty reduction initiative. Job creation, skill training, education, income supplementation, social supplementation and a host of other strategies: the much maligned CEPEP, URP, etc. (most undertaken by the former government, if I am correct) should be undertaken. I will judge the PP by how they accomplish poverty reduction and, if I am not mistaken, did they not provide a schedule of reductions, by year, in their manifesto? And I return again to the smelter issue and the hyper-populism that caused its demise. Change indeed.

  8. Uncle Shah touch that hot button PNM issue ,with a 10 ft pole? Heavens forbid Danny! Remember the orchestrator of the ill-fated Caroni distraction,’Houses before Horses,’ and what it cost the taxpayers by Opposition experts ,that merely opposed affairs of state, for Opposition sake?
    Don’t worry, we’ll hear something about wonderful initiatives, by either Uncle Shah ,or his altered ego ,and our lifetime T&T Foreign Affairs expert/Mercantile legal luminary, of COP fame, Uncle Kendal, when the PP revamp it, and reintroduce same in another form, with more neo tribal beneficiaries.
    It’s the way of dem modern forms of patriots, dat our country can do well without , if the end game is full sustainable development, hmmmm?
    I stand corrected.
    Can I sell my citizenship?

  9. If a business cannot afford to pay it’s workers a liveable wage, then perhaps they sould not be in Business or have employees. The pofit margin for business owners should’t make ther employees suffer.

  10. Mr Shah,
    Let’s pretend that one actually cared about the “poor roti and doubles and makers”. Why would you think that increasing the minimum wage would actually help them? I am surprised that your thought process could be so devoid of analysis.

    Let me pose to you some very simple questions to get you thinking:
    (1) Can the minimum wage differential between the US and Trinidad explain why Americans are richer than Trinidadians?
    (2) Do Germany and Sweden have legislated minimum wages?
    (3) Should roti sellers earn more money no matter how much roti they sell?
    (4) If I possess the skills (cognitive and non-cognitive) that earn me $6TT, I can choose to either use those skills or starve. Is that choice called exploitation?

  11. Just a short note to address Sheree’s queries:
    1. Are Americans, on a pro-rated basis, richer than nationals of this country? I advise Sheree to examine the latest stats that show some 23 million Americans living below the poverty line. Also, the USA is one of the most indebted countries in the world.
    2. Understand the difference between “rotior doubles makers” (mostly single women, many widows) and “roti and doubles dealers” (the latter employ people to make and sell, and they are usually millionaires. Yet, much like the banks (and other big businesses) that make almost obscene profits, they keep their employees in virtual bondage.
    3. I do not know, nor do I care, whether or not Germany and Sweden have minimum wages. Have you ever looked at their tax structures? Their property taxes? They extract more from working people (through a range of taxes and un-subsidised prices) in order to cater for better retirement benefits. I should add that because of aging populations, most European welfare states are running into trouble with their generous pension schemes.
    4. If you, Sheree, think you are worth $6 an hour, who am I to argue with you? I don’t know roti makers or shop attendants think they are worth that! But you go work for $48 a day…I am sure you will live a fulfilling life.

  12. So let me see if I can decipher the logic here. Taxation as played out in Germany and most of old Europe is bad, so Trinidad is bad not to adopt any form including the much maligned Land Tax that ensured fat cat, local land holders can live the good life without any cost.The Yankees are indebted, and many are living under thew poverty line, so oil rich Trinis , with it’s paltry 1.3 million population , should not feel to bad about their plight? Can anyone explain how these folks intend to pay for all the lofty plans on the table , if nothing is done to help create employment , and self sufficiency, by a vast under employed , or non employed population.
    Can a debate begin soon about entrepreneurial initiatives by the privileged elites talking heads? Since land ownership is one of the few ways in which a family can develop some sense of independence and dignity,can we hear a bit about long overdue , land redistribution?
    Is that small loans operative that worked so well for others in certain sectors across the nation in the past, still available today Mrs Provider, or are we going look over our shoulders in similar fashion to Lot’s Wife , at dem useless PNMites ,for the next 4 years? Speaking of good old America, such foolhardiness won’t work for their first Black /White / Muslim/ Christian, and certainly won’t work either, for our own ‘First amongst Equal,’ PM, yes?

  13. Mr. Shah:
    First let me I saw I am over the moon and delighted that you would take the time out to respond to little old me. I am being sincere when I say I feel pretty honoured.

    Now back to the issues. Unfortunately, you have missed every point I tried to make in asking you those four questions. Now, that could be my fault – maybe I posed the questions badly. Or it could be your fault…let’s see.

    (1) On the first point, the average American IS richer than the average Trinidadian. That is not up for any kind of debate. That is a factual statement. I am surprised that you would question that. The average American earns more AND can buy more with her money than the average Trinidadian. The difference is absolute and relative.

    The American poverty threshold is higher than the Trinidadian poverty line. To be poor in the developing world is NOT the same thing as being poor in the developed world! If you offer a person the legitimate opportunity to be poor in America or poor in Trinidad, they are likely to choose being poor in America. Trinidadians make this choice ALL THE TIME. (Do the American poor migrate? Nope!) This is also the choice that millions of Latin Americans make. They would rather scrub toilets in the US than continue to live in the abject poverty of their homeland. Yes, they are going to be living under the poverty line in the US. But it does not matter to them, because the type of poverty they endure in their homeland is DEMONSTRATED to be much worse. The fact that they pack their bags, and cross dangerous terrain and shark-infested waters (this is NO exaggeration, they truly risk death) to get to the US is evidence enough of the point.

    Opportunities to improve one’s standard of living exist abundantly in the US, whereas in Trinidad, such opportunities are lacking. That is why the US attracts more immigrants than ANY other country (you can look up this fact if you don’t believe me).

    I do not understand the relevance of your point about America’s indebtedness, because debt or no debt, what I have just described is true.

    In my first question, I wasn’t trying to “big up” America. I am aware of the problems in the US, and can speak on those issues too. I was trying to get you to see that the US performs better than Trinidad, and Americans earn much, much more than Trinidadians, NOT BECAUSE OF ANY SILLY MINIMUM WAGE LAWS. Raise the minimum wage and neither the poverty level nor our level of development changes. This is an EMPIRICAL fact of history in Trinidad. The level of the minimum wage in Trinidad never affected the level of poverty there. So, prioritizing the minimum wage as a serious development strategy, as you have suggested we do, is ABSURD.

    (2) What I said above is related to my second point about Germany and Sweden. Now, I know you are trying to launch an attack against me but you do not have to say that you “do not care” whether or not Germany and Sweden have minimum wages. It makes you look bad, not me. Once you start writing articles about a NATIONAL minimum wage policy, it helps to know how the minimum wage works, don’t you agree? And in order to really know how it works, you should know how and where it is used. And the fact that it is NOT used in Germany and Sweden should tell you something (unfortunately it didn’t). Germans and Swedes are highly productive people. One should be asking, how did they get there and how do they perform as they do? And if, as you see, minimum wages have NOTHING to do with their performance, then you have to ask yourself what is the purpose of a minimum wage at all. (Note that industries in those two countries sometimes decide on wage levels, but there is no national minimum wage enforced by the state).

    I know very much about German and Swedish tax structures, and the rest of their economic problems, and I fundamentally disagree with the idea of a welfare state. But all of that, and all you have said about it, is irrelevant to the point I’m making about the minimum wage, which you brought up. Germany, Sweden and the US all perform on a different level than Trinidad. All of the countries have economic problems, but the fact is, people in Germany, Sweden and the US are more productive, and are many, many times less likely to be poor. Germany, Sweden and the US are advanced economies where people have a much better chance of earning enough money to live well, and those opportunities have NOTHING to do with how high the minimum wage is. So the focus cannot be on the minimum wage, as you are suggesting.

    (3) I understand the difference between roti makers and dealers, thanks. You didn’t answer my question though. But I will. No, roti makers should NOT earn more money irrespective of how much they sell, just as you and I can never expect to earn more money if we do not produce more than we currently do.

    Furthermore, ‘bondage’ is the wrong word to describe the state of roti makers (unless you know something I don’t and they are actually being kept in captivity??). And the bondage is neither real nor virtual. Roti makers always have the CHOICE to leave their job, but they will either have to take a job that pays the same wage, or they will have to starve. Why? Because pay matches skill, and valuation of skill is determined by what society desires. Government cannot tell us what to value and how much to value it for. The only way that roti makers or gas station attendants can ever hope to earn more money right now is if they acquire additional skills and start doing some other job. And even then, the economy has to be thriving enough to make room for their added skill.

    If society wants roti, remember that somebody has to make and sell the roti. In developed countries, people selling these ‘necessary’ services earn a lot more money than people in developing countries. Why? Because: in order for, let’s say, a hairdresser in America to provide a service, he has to earn a salary that would not make him want to do something else, like become an accountant. America needs hairdressers, and Americans pay a lot for their hairdressers so that these hairdressers don’t become accountants, etc. In places like Trinidad, the opportunities for what an individual can achieve are limited (for several reasons I will not get into here). When you are young, you look around and do not see much more possibility than roti making (or law or medicine or accountancy etc), and so that is what you become. You start making roti (or practicing law, etc), and chances are you will stay making roti for the rest of your life. So you see, it is not a matter of what the minimum wage is. Raising it will not solve the deeper problem of lack of opportunity. Raising the minimum wage will not even solve the superficial problems. Poverty cannot addressed by forcing certain employers to pay their workers more money. In fact, if you researched the debate about the minimum wage, you will find many professionals saying that minimum wage policy actually increases poverty and stunts economic development, and this has the opposite effect to what it was intended to do.

    (4) My fourth question relates to the previous point. And let me restate the point in a way that that does not give you the opportunity to show your meanness. If I have the skills than earn me “x” dollars, then I will have to earn “x” dollars. Only three things should change that: either I improve my skills, I move to a society where my skills are valued more and people are willing to pay more for my skills, or the economy where I currently live changes such that people come to value my skills more. I used $6 as an example to show you that that principle is true no matter how much money you earn. I could easily have said, if I have the skills that earn me $200… But again, in your quest to make your argument forceful, you figured you would try to embarrass me. And to me, you embarrassed yourself.

    All I have tried to show you here, is that the existence of and level of a minimum wage CANNOT explain why some countries are rich and some are poor. The minimum wage cannot turn around the lives of poor people, not even marginally. There are bigger questions and bigger battles to fight in the quest to reduce poverty. This is the subject matter of economics.

    Thank you for the conversation Mr. Shah, and if at any point you would like to continue the conversation, or you would like me clarify or further defend anything I just said, please email at the address I provided to the website.

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