Wage economics

The 26 September edition of the Wall Street Journal reported that, while the average annual salary in the world’s 20 richest nations amounted to $25,480, the average annual salary in the world’s 20 poorest countries amounted to just $520. For the world’s poorest nations, that amounts to just under $44 a month. Most of the world’s nations, by the way, are quite poor by mainland US standards.

The CNMI probably ranks somewhere in the middle, between rich and poor extremes. It is certainly safe to say (trumped up OIA charges notwithstanding) that most of our workers–the overwhelming majority of them, in fact–make much more than $520 a year.

The question that US Democrats must ask themselves is: Can the CNMI, which ranks somewhere in the middle of world incomes, truly afford to be held to mainland economic standards in terms of the minimum wage?

Surely mainland American Democrats–in the US Congress, in particular–must understand that the CNMI minimum wage is not arbitrary. It is but a reflection of existing CNMI economic realities. At this stage in the CNMI’s relatively short economic development (about 20 years), the CNMI simply cannot afford to pay First World, Superpower wages.

The U.S. probably had a $3 minimum wage in the early 1980s–fully more than 200 years after the country was founded in 1776, when it had no such mandatory minimum wage. In fact, the United States did not even have a national minimum wage until the 1930s, during the Franklin Delano Roosevelt administration–150 years after the nation’s inauguration.

A look at the big picture should make the economic situation manifestly clear. The CNMI’s local population, with a severe local labor shortage, is only about 60,000. The US has more than 260 million people.

The CNMI’s Gross Domestic Product, if we are lucky, is not much more than a billion dollars. Bill Gates, Warren Buffet and many other rich Americans could buy us all out with ease and still have plenty of money–billions–left over. The United States, by sharp contrast, enjoys a multi-trillion dollar economy.

U.S. policy-makers should not need an economic formula to tell them that Bangladesh cannot afford to enact the CNMI minimum wage of $3.05 and hour, which would be a godsend to many millions of mainland Chinese and Filipino citizens, any more than the CNMI can be expected to hold up to mainland economic standards. The situations are not the same.

Should poor nations with an average income of $520 a year be barred from trading with the United States? Should they be prevented from gaining the opportunity to become rich through free trade? Should they be forced to comply with the US minimum wage before they can trade with the US? Many U.S. Democrats apparently think so, and that is a shame.

Strictly a personal view. Charles Reyes Jr. is a regular columnist of Saipan Tribune. Mr. Reyes may be reached at charlesraves@hotmail.com