Simmons: Living wage would not help jobless
Implementing a minimum wage in Bermuda could impact the people already struggling to make ends meet, according to Craig Simmons.
The economist and Bermuda College lecturer said minimum wages were “distortionist” and could lead to joblessness among those they were trying to help.
Mr Simmons was one of four panellists at the “what is a living wage?” symposium organised by the Bermuda Trade Union Congress to commemorate International Workers' Day, or May Day, yesterday.
“Economists aren't particularly fond of minimum wages,” Mr Simmons said. “The technical term is that they are distortionist — they create joblessness among the very people you are trying to help.”
According to Mr Simmons, the lowest-paid workers in Bermuda are those in hospitality, agriculture, fishing and mining, earning an average of $30,000 per year.
“Instituting a minimum wage would very likely directly impact those folks,” he said. “If you take the restaurant as a case in point, forced increases of wages of waiters is going to force the restaurant or the owner of the business to increase his prices and given that the restaurant business is rather competitive and is struggling to make ends meet now, it's inevitably going to lead to job loss.”
Mr Simmons suggested alternatives to the minimum wage model, such as a guaranteed income schemes, a wage subsidy or conditional and unconditional cash grants.
Nathan Kowalski from the Bermuda Chamber of Commerce also cautioned against any policies that would involve cost increases.
He said: “In economics 101, the more things cost, the less you use or the less you buy.
“If we increase the cost of doing business, we could end up at the very least not hiring an additional, marginal worker because it's getting too expensive.
“And also, it's not a clear 100 per cent that if you raise the wage that the cost of everything else doesn't go up.
“So maybe the person who is getting paid more, doesn't necessarily have more in their pocket.”
Mr Kowalski said he would rather see a focus on having a bigger economy, more opportunities and more competition, which would create “higher wages as people bid for workers”.
“If we look at policies and aspects that grow that pie, grow opportunities, everyone benefits along the way.”
Meanwhile, Jason Hayward argued that increasing the minimum wage or living wage of workers would not necessarily lead to job losses.
“When companies pay bonuses to the top performers, they don't lay off employees right after they pay those bonuses,” said the president of the Bermuda Public Services Union.
He pointed to the United States Department of Labour reporting that in recent years, academic research had shown that “increases in the minimum wage had little or no effect on the employment of minimum wage workers, even during times of weakness in the labour market”.
“Many of these companies are making large profits and could pay the minimum wage or the livable wage,” he added.
According to Mr Hayward, a minimum wage is a legislated minimum that an employer can pay to an employee, while a livable wage is a benchmark that is not legislated but takes the cost of living into consideration.
Mr Hayward also argued that the lack of a minimum wage had contributed to workforce displacement. “We are able to bring in persons who are able to live for a low wage that is not palatable for a Bermudian to work in,” he said. “If we increase that to a livable wage it reduces the dependency on foreign labour by the employer and gives more opportunities to our Bermudians.”
And he stressed that implementing a minimum wage could pay for itself.
“Maybe because workers get paid more, their output increases, their motivation increases, their productivity increases and as a result of those increases, they are paying themselves.”
Mr Hayward also noted Michael Dunkley, the Premier, stating in a letter during the Pathways to Status protests that there would be a conversation about a livable wage.
“The Government has recognised that there is increased social tension in the community because people are struggling and we need to alleviate some of the stress that people are experiencing by putting some things in place such as a livable wage,” he said.
“The time has come where the livable wage conversation comes to the forefront and the time is now to implement a livable wage.”
Erica Smith, of the Inter-Agency Committee for Children and Families, agreed with Mr Hayward that the issue was about “fundamental human rights”.
Appearing on behalf of Martha Dismont, the executive director of Family Centre, she noted various reports including the 1969 Wooding Report, the 1978 Pitt Report and the Mincy Report that highlighted income and wage disparities.
“I would like to move beyond discussion to action,” Ms Smith said. “At the very minimum, we need to do some research, we need to do some policy development and we need to determine whether or not it is actually feasible for Bermuda to implement a livable wage income.”
Ms Smith added the IAC had been tasked with researching and developing a livable wage for Bermuda.