COMMENT: The Other View

The government agrees but seeing the inevitability of wage increases, as the third party, it reconciles workers and employers in the tripartite wage board negotiations – appealing to the workers to lower their demand and accept what the employers are willing to give. Employers come out the bigger gainers in the bargain.

Ibon Foundation, Inc., in an analysis posted by Bulatlat very recently, showed that according to statistics from the Department of Labor and Employment during the 1995-2006 period only 3,044 workers were affected by the nine minimum wage increases out of the 660,266 who had lost their jobs due to more than 16 causes of “permanent closure/retrenchmen t”.

This is a persuasive argument for a look at the other view.

Two States

Washington and Idaho are adjacent states in the US Northwest. Washington has the highest minimum wage ($7.93/hour) in the entire United States; Idaho, together with 20 other states, has not raised its minimum wage higher than the 10-year federal minimum ($5.15/hour) .

The experiences and testimonies of workers and employers in Liberty Lake (Washington) and Post Falls (Idaho), eight miles apart across their common border, and from others — as told by The New York Times, January 11, 2007 — are the interesting “other view”.

“Idaho teenagers cross the state line to work in fast-food restaurants in Washington…. That has forced businesses in Idaho to raise their wages to compete,” reports The Times.

Continues the report: “Business owners say they have had to increase prices somewhat to keep up. But both states are among the nation’s leaders in the growth of jobs and personal income, suggesting that an increase in the minimum wage has not hurt the overall economy.”

“We’re paying the highest wage we’ve ever had to pay, and our business is still up more than 11 percent over last year,” testified Tom Singleton. Papa Murphy’s takeout pizza store, which he manages, is small with only 13 employees.

His store, Singleton said, is flooded with job applicants from Idaho. Like other business managers in Washington, he had less turnover because the jobs paid more.

Rob Elder, owner of Hot Rod Café in Post Falls, told The Times he paid more than the Idaho minimum wage: “At $5.15 an hour, I get zero applicants – or maybe a guy with one leg who wouldn’t pass a drug test and wouldn’t show up on Saturday night because he wants to get drunk with his buddies.”

The Times said that “it is hard to find a teenager in Idaho who lives anywhere near Washington who is willing to work for $5.15 an hour”. Quoting 17-year old Jennifer Stadfelt of Coeur d’Alene, “Are you kidding? There are so many jobs nearby that pay way more than minimum wage.”

She said that in her town, Taco Bell, McDonald and other fast-food outlets were posting signs trying to entice entry-level workers with a starting pay of $7 an hour – hoping, perhaps, that for the difference of $0.93, Idaho workers won’t cross over to Washington.

On Increases

Nearly ten years ago, shortly after the passage of the $5.15-federal minimum law, voters in Washington approved, in a referendum or initiative, “a measure that would give the state’s lowest-paid workers a raise nearly every year.” Obviously, the present $7.93 an hour is the accumulation of increases through the years and will go higher.

Washington business leaders then predicted that small towns would suffer. But they did not! The Times reports that “instead of shriveling up, small-business owners in Washington say they have prospered far beyond their expectations.”

Last January 11, the US House of Representatives passed a bill increasing the federal minimum wage. On the 24th, the US Senate approved its wage bill raising the federal minimum to $7.75 an hour. If the reconciled measures become a law, 13 million workers will be benefited.

What businesses in Washington found – “that raising prices to compensate for higher wages does not necessarily lead to losses in jobs and profits” – significantly figured in the deliberations of the new federal minimum wage in both Houses of the US Congress.

No-brainer

According to Don Brunell, president of 6,300-member Association of Washington Business, that the federal minimum should go higher “is almost a no-brainer” – meaning, it doesn’t require much thinking to appreciate it. However, it should have “some flexibility for rural and small-town businesses”.

Brunell cited the 90,000 new jobs in 2006 as “proof that even with the country’s highest minimum wage” Washington “is a great place to do business”.

Washington is among the 29 states which have raised their wages above the federal minimum through initiatives – the last six doing so only during the last November election. Like in the other 23 states before, businesses warned of higher prices and loss of jobs but the voters passed the measures.

Five years ago, during a recession, it was feared that the high miminum wage would send businesses fleeing Washington to Idaho. That did not happen. One of those who raised the alarm, John Fazzari in Clarkston, now says, “To tell you the truth, my business is fantastic. I’ve never done as much business in my life.”

The Debate

Like in the Philippines, how raising the minimum wage would affect business is debated by economists. The Washington experience, as well as those in other states, has proven the positive effect on the workers, the employers and the economy.

David Holland, an economist of Washington State University, in his study of the experience in Clarkston and other border towns of Washington, found that “job loss is minimal when higher wages were forced on all businesses. About 97 percent of all minimum-wage workers were better off when wages went up.”

How do business owners cope with higher wages? Said The Times, they “have found small ways to raise their prices, and customers say they have barely noticed”.

Mr. Singleton said, “We used to have a coupon, $3 off on any family-size pizza, and we changed that to $2 off. I haven’t heard a single complaint.”

The above instances cite fast-food and restaurant businessmen. Will this hold true to other kinds of business? Why not?

Different

It will surely be argued that business climate and environment in the US are different from those in the Philippines. Socially, culturally and economically, the Americans and the Filipinos greatly differ. So, the “other view” is irrelevant to the Philippine wage problem.

Correct. However, the same universal principles apply. The people are the market of the nation’s business and industry. The more the people earn, the better market they become, the more prosperous will business and industry be, the more their workers should earn – the more the cycle goes upward.

High wages – higher than cost of living – will make workers contented, happy, and productive. The more just share employers give their workers, the more the latter will feel as business partners – having a stake in the business. They will not only be more productive but will turn out quality products.

The big differences must be: (1) Philippine business and industry do not highly value the Filipino people as their market – as highly as they do foreign people. Quality products are for export; Filipinos cannot afford their prices. Cheap rejects flood local markets.

(2) Employers consider their workers as mere tools of production, not their partners in business and industry. The lesser they are paid, the higher profits the employers get. In reality, however, keeping workers lowly paid, discontented, and unhappy is socially and economically counterproductive.

One more big difference: Once, back in the 1930s, the P0.30 to P0.60 daily wage was a living wage and, for the thrifty, with little to spare for savings. For some reasons, leaders in government, business and industry did not keep minimum wage abreast with inflation. Today minimum wage is less than half the cost of living.

In the US, the $5.15 an hour wage can keep up with cost of living. But raising the wages keeps the workers much better off and is found to be good for business and the economy. That is the other view.

(“Comment” is Mr. Patricio P. Diaz' column for MindaViews, the opinion section of MindaNews. Mr. Diaz is the recipient of a “Lifetime Achievement Award” from the Titus Brandsma for his "commitment to education and public information to Mindanawons as Journalist, Educator and Peace Advocate." You may e-mail your comments to [email protected] yahoo.com.)

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