Are Minimum Wages Moral or Immoral?

Two situations have raised the profile of the issue of minimum wages into the spotlight once again. First it was the government tabling a proposal at Nedlac regarding minimum wages and much more recently, the Social Development Minister, Bathabile Dlamini claiming that a grant of R753 per month is sufficient for social grant beneficiaries to buy food as well as additional non-food items. Incredulity is the more polite response that Bathabile has received.

Disregarding the emotional issues, the quasi Orwellian agenda of denialism and the dismissive tone, what is the social effect of minimum wages on a country?

Main picture: The Shark Rock Pier in Port Elizabeth. All of the photographs in this blog are that of this pier

Much of the discourse regarding this issue can be categorised as either self-serving or flagrant hypocrisy. These arguments are also often conflated with a contemptuous attitude towards the poor by casting aspersions upon their eating habits and contraception skills. The more psychologically inclined who are more supportive of the poor will raise issues regarding the poor’s dysfunctional upbringing.

Aerial view of Hobie Beach Port Elizabeth with the Shark River Pier

Aerial view of Hobie Beach in Port Elizabeth with the Shark Rock Pier taking centre stage

Rather than engaging in such puerile arguments, let us examine the issues dispassionately. For my sins, I have always been responsible for performing the shopping chore in the McCleland household. Rest assured that after purchasing a few groceries on the way home from work, I will be continually shocked at the cost of a couple of packets of groceries. Normally it will range from R 300 to R 500. In addition, on many occasions, a trip to the Chemist or Dis-Chem would be part of my duties. Again this will amount to at least R 300.

Compare this with the R 180 per day that I pay my maid and a substantial shortfall arises.  Yesterday on the way home from the Num-Num hike I purchased McDonalds take-aways for supper. It cost R 152.

Shark Rock Pier

Shark Rock Pier

Without overstating the case, I fail to understand how a person let alone a family is able to survive foodwise on R 180 per day. Then there are the other incidentals such as taxi fare, the schooling, the rent amongst the other living expenses.

From a purely arithmetic calculation perspective, I cannot comprehend how the other half can survive on R 180 per day let alone the R 753 per MONTH that the Minister of Social Development Minister is alleging.

It is a risible suggestion.

Shark-Rock-Pier-Port-Elizab

Before the converse is considered, let us reflect on why Donald Trump on the right and Bernie Sanders on the left have dominated the American Presidential nominations. Both are ironically supporting policies that are the antithesis of Free Enterprise. In Trump’s case it is his moronic idea to ban the importation of cheap Chinese products and restrict the flow of immigrants from Mexico.

On the other hand, Bernie Sanders solution to America’s woes is the classic failed Socialistic solution.

But why have both candidates gained so much traction during the election?

It is simple.

It is the economy.

Waves smashing on the rocks next to Shark Rock Pier at Hobie Beach

Waves smashing on the rocks next to Shark Rock Pier at Hobie Beach

An appalling statistic that I read the other day was the growth in wages in the USA since 2008. For the richest it was 31% and for the average salary worker it was 0.4%.

For the average citizen in America this is equivalent to swimming against a fast flowing current and not making any progress. Hence their dissatisfaction with the status quo.

When was the American populace at their most contented? It was during the boom years of the 1950s and 1960’s when growth in incomes surged ahead and the aspirations of all segments of American society were being satisfied.

The Pier

This dissatisfaction with one’s personal circumstances is an international phenomenon and is not only prevalent in South Africa. Whether it was France in 1789 or Russia in 1917, the same feelings of hopelessly were prevalent resulting in the same confrontation.

I have pondered this issue at great length. The arguments above seem to conclusively prove that the enacting of minimum wages is the morally correct solution.

But is it?

It goes without saying that legislating for minimum wages has unintended consequences. A pure mathematical calculation of the minimum income to support a four member family is say R 10 000 to R 12 000 per month.

The Shark Rock Pier#03

What would be the consequence of legislating a figure of R 12 000 per month? For one, the McCleland household would retrench their maid and at the very least more than 50% of all maids will also face a bleak future without a job.

Of far greatest consequence will be the decisions of commerce and industry. Over a fairly short time horizon, many entry level jobs will either be discontinued, automated or combined. With the world on the cusp of the Fourth Industrial Revolution with the advent of the workerless factory, it will become a reality with greater rapidity given the imperative of unaffordable wage levels.

As any psychologist operating in the slums of Mannenberg in Cape Town will concur, that the effect of unemployment is one of the greatest drivers of social ills such as drug addictions, crime and much more.

Hobie Beach Port Elizabeth#2

Just as crucially in this debate is a question that the ANC government has failed to acknowledge: the surfeit of unskilled workers is being exacerbated by the millions of refugees from north of South Africa, mainly from Zimbabwe. As any competent economist will attest, additional supply of workers will depress their wages, yet South Africa must be one of the few countries making immigration of skilled workers difficult whilst simultaneously not discouraging the immigration of unskilled workers!

The only plausible case for minimum wages would be as a form of safety net to ensure that the most vulnerable workers are not exploited.

Anything else but a minimum wage set at a low safety net level would be immoral as the net effect would be a reduction of employment & the creation of a permanent underclass of unemployed citizens.

A nocturnal view

A nocturnal view

The social consequences of such a situation would result in the further erosion of social and family values which cannot be condoned.

Comment #1 copied off email:

First comment relates to your article that is not relevant to the content but rather the picture of Shark rock pier.  Who in their right mind specified steel balustrades.  No matter how much you galvanise, it’s going to rust and fast with the amount of spray it gets.  Stainless steel and Aluminium will work but will get stolen.  As unsexy as it is, it has to be concrete.

Second comment.  There have been a lot of people shouting their mouths off about R12,000 min per month.  All those individuals and organisations who shout their mouths off should ensure that they pay their servants, secretaries etc R12,000pm.  Otherwise, you’re a hypocrite.  Reality will soon bite.  (Remember the newly appointed minister of agriculture who was found to be paying his herder R800 instead of the sectorally determined wage of about R2400pm!  What about the hypocrite Lumka Yengeni, Chair of the Labour Portfolio Committee, who routinely castigates rich people and companies for not paying UIF and was found to be guilty of the selfsame offence amongst other illegal labour practices.)

The other day I saw an advert for the manager of a bottle store.  It probably wasn’t a big one, nevertheless the salary offered was R8000pm!

END

Leave a Comment.

*