Don’t Steal the Ladder

Even the ultimate Washington insider, former labor Czar Robert Reich, has admitted that — surprise– not every corner of the world can afford to pay the American minimum wage.

In yesterday’s Saipan Tribune (“Despite the U.S. Boom, Free Trade is Off Track”) Reich wrote “Should we demand that every nation’s workers be paid at the equivalent of American’s minimum wage…poorer nations couldn’t possible afford these things. Such requirements would effectively ban most imports and cost American consumers a fortune.”

Yes, such requirements would do just that.

If it was up to me, everyone in the world would make $100 per hour at least. That would be great. Let the good times roll, that’s what I say.

But even the dumbest trailer trash in the foulest bowels of red neck America can understand that a $100 hour minimum wage wouldn’t work. Why not? Because most labor isn’t that productive. Even folks not knowing the technical terminology have an intuitive feel for that fact.

And, guess what? Most labor in the world isn’t even productive enough to produce $5.15 an hour. Most labor in the United States is. But it wasn’t always that way. Economies, like species, have to evolve one step at a time and work their ways up the financial food chain. Some do it faster than others, and, true, some never really do it. But those that do manage to evolve have to climb the ladder one rung at a time. Ever try to climb a ladder with a missing step? Ouch.

I’ve climbed up this ladder for 20 years now. I remember earning two dollars an hour (baby sitting). I remember earning $2.65 an hour (dishwashing) . I remember earning $4.92 an hour (security guard). As I’ve gotten older I’ve “evolved” economically and now make more now than I did then. But if the minimum wage had been set at, say, $4.00 an hour when I was a dishwasher, I might have never been hired, since I was a young punk with no experience and was probably not productive enough to justify the pay. Then what? I’d be out of luck, buster.

As a kid, it was me — not the government — that determined my progress along the lowest rungs of the ladder. The CNMI, likewise, can remain free to climb its ladder, or, as Reich notes, wind up in a position in which its exports (which are U.S. imports) are effectively banned by the burden of the U.S. minimum wage.

What then? The CNMI has evolved as its exports have evolved, and if that economic ladder is taken away, it will be a long, long look up to the standards of living generally associated with the red, white and blue.

When even Reich — who is no friend to free labor markets –acknowledges that lightweight economies can’t survive the weight of American wage burdens…well, as they say, “that’s NEWS.” And Reich — who is no friend to American consumers, either — notes that an effective ban on imports would be a burden on America’s shoppers.
Indeed, he’s looked at both sides of the equation, those who supply goods (like us), and those who demand them (like the folks who buy garments in the U.S.). Both sides would be squished by an American minimum wage being imposed on small economies like the CNMI’s.