In 1997, Paul Krugman, Nobel Prize-winning economist, wrote ‘In Praise of Cheap Labor’. The core premise of the article was that bad jobs at bad wages were better than no job at all.
Krugman started his argument with the example of Smokey Mountain, an enormous landfill in Manila, Philippines. For context, Jamaica’s Riverton waste disposal site would be our Smokey Mountain. At this dump, several thousand men, women and children made a living collecting scrap metal. A family living and working at the dump could earn more collecting scrap than they could through many alternatives. And, on this, Krugman made the argument that people always choose the best option for them, even if it seems repulsive to the observer and that this principle is also applicable to sweatshops, and low-paying industries.
In a bid to attract foreign direct investments, many developing countries opened their markets to multinational corporations. Jamaica had its fair share of factories. In the ‘90s, there were more applicants than jobs available. Globalisation promotes long-term economic growth in developing countries despite providing jobs far less attractive than those available in developed countries.
Though many developing countries opened their markets, in a bid to attract investments, nationals are often underpaid. The supply of labour is greater than demand, thus, the market will determine wages. There have been reports of locals training foreigners, who are in turn paid significantly higher.
Today, for many underpaid individuals in the job market, similar to those Krugman presented on, the bad jobs at bad wages are seemingly better than no job at all. Many individuals do not have the luxury of simply not working, whether it is student-loan repayment, bills to pay, or to be engaged with the ‘hope’ of finding better.
But, what are the alternatives?
For many individuals, notably young professionals without family support, it is a struggle to make ends meet. Peruse the classified ads on a Sunday and reviewing the qualification, skill set, and experience required in comparison to salary. Those rates will not attract the best and brightest.
The living wage is the amount of income needed to provide a decent standard of living. It should pay the cost of living. It should also be adjusted to compensate for inflation. The living wage is often confused with minimum wage, which, though used interchangeably, are not the same.
Recently, Bank of Jamaica Governor Richard Byles, was quoted in The Gleaner (October 11, 2019) as saying, “Thank goodness for them [low value-added jobs], because they are jobs, and the people getting them didn’t have any before.” However, he added: “But they are the same jobs that we produced 20 years ago, whether it is in the hotel sector (or) the BPO business. It is the same kind of low value-added.”
This is a stark reminder of Krugman’s seminal article, ‘In Praise of Cheap Labor’. Byles’ pressing of the need to create high-value jobs and better-quality workers was also pointed. However, some will argue that today, especially, better-quality workers exist, but the remuneration is not commensurate with the responsibility.
Furthermore, the conversation around adding high-skilled jobs should also include proper compensation, as there will be little incentive for Jamaicans to work in a sector where foreigners are sourced and paid significantly better.
The argument that workers benefit more from having low-paying jobs than from unemployment, with the view that making more jobs available will force companies to compete for workers, resulting in higher wages over time, does not necessarily hold for every society. In a country where the demand for jobs is greater than the supply, the market will determine the wages. And, for now, the wages are still low, even for better-quality workers.
The spate of social uprisings in many countries around the world, over the rising cost of living, increased taxation, low wages, and government corruption, will reach a tipping point.
Omar E. Hawthorne, PhD, is a senior lecturer of international relations at the University of the West Indies, Mona. Her most recent publication is ‘Corruption Scandals and their Global Impacts’.
