Wednesday, January 24, 2007

A BLESSING IN DISGUISE?

Faleomavaega, Togiola and the Fono can't make a good case to the US Congress, or more importantly to our people, against the minimum wage law by arguing the technicalities and the politics of this issue instead of its principles. Is the minimum wage of $7/hr too high or our wages of $3/hr too low? If 3 cents for a raise is an insult then apparently a $4 hike will correct this social injustice.

Our politicians are saying that the minimum wage should reflect our economic conditions, that it should only rise with what our economy can handle. Theorists say that a minimum wage law has no impact on employment as long as it is set at or below the market price for labor. The "market price for labor" or the "average wage" measures what most people make in a particular industry free of any government mandates. So what our politicians and theorists are saying is that the minimum wage should be set at a level most people are getting anyways.

The only effect of a price floor set at market levels is making it illegal for some laborers to undercut the market price, and this harms mostly immigrants and minorities. A carpenter from Upolu or Asia, for example, may possess superior skills, but bigotry, bias and favoritism are unfortunate hurdles easier to overcome by being able to offer a lower price for his services. As we see in Western Europe, where there are high minimum wage laws, a higher level of unemployment exists among Muslim immigrants than the native populations, and these people are less assimilated into the societies of their host countries. According to a study published by the European Monitoring Centre on Racism and Xenophobia (EUMC), "in 2004 Muslims had the highest male unemployment rate at 13 percent and the highest female unemployment rate at 18 percent, with the UK average jobless rate at 5.5 percent." A higher minimum wage just makes discrimination easier to do.

It's convenient to ignore that the employee has a part in the wage-setting process and that being able to work at low wages is to some people's advantage, mainly the poor, teenagers, immigrants and retirees. It's convenient to paint Starkist as a take-it-or-leave-it company who took advantage of us and will move to a poorer country to take advantage of other people. But convenience doesn't cover up the fact that these poor countries and their "slave" laborers are begging our tuna industry to come. Who's taking advantage of whom?

The only way to raise wages is to affect supply and demand especially since we're pegging the minimum wage to the market price anyway. The more enterprises that open up shop in our territory, the more bidders we'll have to bid up prices for our labor. On the supply side, knowledge, skills and experience are naturally in limited supply and thus, people who obtain these things will be paid more. As our workforce and our economy develops and diversifies, then we'll be in a better position for the tuna industry's inevitable departure.

Unfortunately, the ASG and our local politicians have instead focused their efforts on attacking HAL for their airfares, banning smoking on our private buses, continuing their nickel-and-dime taxation on imported bottled water and perpetuating their irresponsible and un-prioritized government spending by supplementing it with $20 million in bond debt.

Maybe the federal minimum wage will be a blessing in disguise, because after it's implemented, there will be no HAL to attack, no commercial buses to ban smoking on, no imported bottled water to tax and $20 million in junk bonds. In one fell swoop, and the ASG didn't have to break a sweat to complete its agenda this year. How typical.

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