http://www.saipantribune.com/newsstory. ... 4553&cat=3


"On this note, unlike the office-bound, tax-sucking toadies who offer economic commentary all over the world these days, I have roots in the real world, and close friends in the ranching, farming, and construction trades. The workforce in these realms, depending on where you go, is largely comprised of the black market in labor, and I know the gory details. These aren’t always low-paying jobs, either; a illegal alien carpenter can get $18 per hour, while also collecting food stamps, free medical care, and substantial rent subsidies."


Wage against the machine

Ed Stephens Jr.
By Ed Stephens Jr.
Special to the Saipan Tribune

It is likely that as this article goes to press, a bill to federalize the CNMI’s minimum wage will have hit the floor in Washing Tundy Sea. Extending federal wage laws to the CNMI gig will be a conceptual footnote to the overall bill, the main thrust of which is to hike the U.S. minimum wage.

But you already knew that.

What you might not have known is that the whole thing is, in the U.S. context, largely symbolic. While in the CNMI, it’s anything but symbolic.

Weird, eh? Well, when the going gets weird, the weird turn pro, so let’s get on the case, considering the U.S. context, and then ours.

In U.S. political circles, the minimum wage rhetoric will appease those who need appeasing, but the bottom line is that a sprawling black market in labor is supported by both political parties. Why would you hire a legal worker, and pay taxes and insurance on him, when you can hire an illegal worker for cheaper, skip the taxes, skip the insurance, skip the paperwork, and let him collect rent, medical, and food subsidies from the taxpayer?

On this note, unlike the office-bound, tax-sucking toadies who offer economic commentary all over the world these days, I have roots in the real world, and close friends in the ranching, farming, and construction trades. The workforce in these realms, depending on where you go, is largely comprised of the black market in labor, and I know the gory details. These aren’t always low-paying jobs, either; a illegal alien carpenter can get $18 per hour, while also collecting food stamps, free medical care, and substantial rent subsidies.

How can your average American guy compete with that?

Answer, in many cases: HE CAN’T.

Want some shocking news? Wage growth for American private sector workers in the "formal" market is essentially flat. In fact, for five months out of last year, wages actually shrank after adjusting for inflation. These debt-strapped workers have to keep working, mom and dad, while the kids vegetate in some grim day care center, even while wages are falling; they can’t afford not to work. That is not rare, that is very typical.

Indeed, increasingly, Homer Q. Public simply can’t compete with Asian workers on one hand, and the welfare-subsidized black-market on the other. A $7.25 minimum wage really won’t change any of that much. The lower-middle class is screwed from both directions, but they will only understand such things in extreme hindsight.

So, over there, the minimum wage isn’t really very meaningful. It just doesn’t matter all that much.

Ah, but it sure will matter for the Commonwealth, by contrast. The mandated wage increase will probably be 138 percent ($7.25 an hour vs. $3.05), and there is not a massive, tax-subsidized black market in labor to serve as a shadow source.

Here is something important, and why our Asian back yard is going to keep growing: Cheap labor, without money behind it, isn’t so hot, but cheap labor with money behind it is extremely hot. A fisherman without a net isn’t as productive as a fisherman with a net; here we see, then, that more capital (the net) increases the productivity of labor (the fisherman).

And Asia has lots of money. More every hour. Their workers, therefore, are more productive every hour. Same fishermen, bigger nets.

As the jobs leave the Commonwealth, the capital will follow. Where will people work (those who can’t get government jobs) when the money leaves? We’ll be all fishermen, no nets, eh?

Indeed. If you have any Chinese friends, start learning Mandarin. When the minimum wage gets federalized, hopefully you’ll have mastered the four tones and pinyin.

After all, in the Year of the Pig, much of the labor force on Saipan and in the U.S. is going to become economic bacon.

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"When the going gets weird, the weird turn pro."

-Hunter S. Thompson

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Ed Stephens Jr. is an economist and columnist for the Saipan Tribune. His column runs every Friday. Contact Ed via his website, TropicalEd.com.