#BTColumn – The minimum wage issue

Disclaimer: The views and opinions expressed by this author are their own and do not represent the official position of the Barbados TODAY Inc.

by Ralph Jemmott

Questions concerning the raising of the minimum wage involves both moral and economic issues. Arguably the concerns are primarily economic and financial. Workers, many of whom sell their labour at very marginal rates, seek what they see as fair or just return for that labour. They want a decent living salary on which in Barbadian parlance they can see what they are ‘wukking’ for. The need is most acute where inflation is rising and cost of living is high and ostensibly getting higher.

Capital also has its legitimate concerns. Investors expect a fair return on their investments, recognising that wages often constitute a preponderant element of costs and the overall cost of doing business is also increasing.

It’s called Capitalism.

Both the BLP administration in Barbados and the Democratic Joseph Biden-led government in the United States are seeking to raise the minimum wage.

Both represent genuinely progressive efforts to stem the growing inequalities in society always recognising that no attempt to raise the minimum wage will ever negate the
socio-economic inequality that is inherent in the capitalist mode of production.

The Mia Mottley-led regime is seeking to increase the minimum wage by some 36 per cent, an upward adjustment from $6.25 to $8.50, the first increase since March 1, 2012.

The Biden administration wants to raise the US Federal minimum wage from the existing $US. 7.25 an hour, where it has stood since 2009 to the proposed $15. It would constitute part of President Biden’s COVID-19 stimulus package.

Debates on minimum wage increases are invariably acrimonious and sanctimonious since there are legitimate arguments on both sides. Few would deny that low-income earners need a pay–raise, the cost of living being what it is. No one questions the desire to reduce poverty and raising the standard of living for that category of workers.

The private sector through its spokespersons Trisha Tannis, President of the Chamber of Commerce and Edward Clarke, contend that particularly at this time when businesses are under stress, the result of a substantive rise in labour costs is likely to result in a rise in the cost of living.

The assumption being that business cannot and will not absorb the additional wage rise without seeking to pass it on to the consumer.

The other alternative would be to lay of some workers forcing retained labour to work harder. The government could and does contend that an increase in the minimum wage, increases consumer spending putting more money in circulation which could expand an economy highly dependent on consumer spend. The working class, by and large tend to spend its increased purchasing power on the necessities required to sustain living.

Interestingly, Carlton and A1’s Managing Director Andrew Bynoe supports an increase to $10. One is not sure how he arrived at that particular figure. This had led some to question whether Bynoe’s business in particular was prepared to absorb the increased cost or might be inclined to raise prices.

What happens if this is the case in the whole supermarket sector?  A substantive increase in the cost of foodstuffs could erode any benefits accruing from the minimum wage increase.

As a Labour Party and given its recent political embrace of BWU General Secretary and now BLP backbencher Toni Moore, the government cannot afford to appear to be anti- worker.

However, it has to be careful of scoring political points if the effect of any initiative is to damage the economy and aggravate the condition of the people it is claiming to want to assist. These issues are complicated and should not lend themselves to political gymnastics.

There is a perceived tendency on the part of the current administration to want to rush things, to be seen as getting things done and quickly.

Perhaps this is not the time for precipitate haste and maybe it would be better if the date for the start of the minimum wage was put back a few months until after things have settled.

To appear to be against an increase in the minimum wage runs the risk of being accused of being anti-black working class, pro-corporate, conservative and even reactionary.

In a capitalist economy, profits and profitability need not be dirty words. We can assume that Barbados will continue to be a capitalist, liberal-democratic state. I see and have never seen any evidence to the contrary.  However profiteering, exploitative super-normal profiteering must always be watched anywhere capitalism is practised, be it in the United States or Barbados.   

The difficulty with instituting an across the board increase in the minimum wage is that it affects firms differently. A prospering enterprise may well afford to absorb the increased payroll cost, while small businesses making marginal profit or barely breaking even, could go under, an eventuality that would hurt many workers as well as employers.

One wonders how much thought has gone into the policy prior to its initiation. For example one might ask: What percentage of entrepreneurships in Barbados are currently operating on the margins?

The literature on minimum wage legislation and its effects is as confusing as it is inconclusive even among a cadre of writers now known as ‘institutional economists.’

Too often it reflects the ideological leanings of the author to the Right or the Left. Kelly Ann Smith writing in the Forbes Advisor has stated: “There are few political arguments more polarising than raising the Federal Minimum Wage. For every argument in favour of raising the wage, there seems to be equally appealing argument against it.”

There are some key issues on which the Mottºley administration may well be advised to resist all urges to be impetuous. One is the minimum wage legislation. Two is the abolition of the Eleven Plus and the third is open migration into Barbados to take in an estimated 87,000 new citizens.

Ralph Jemmott is a respected retired educator.