The Minimum Wage and the Coup in Honduras

Posted: August 7, 2009 01:09 PM BI
The Minimum Wage and the Coup in Honduras

The coup in Honduras - and the at best grudging and vacillating support in Washington for the restoration of President Zelaya - has thrown into stark relief a fundamental fault line in Latin America and a moral black hole in U.S. policy toward the region.

What is the minimum wage which a worker shall be paid for a day's labor?

Supporters of the coup have tried to trick Americans into believing that President Zelaya was ousted by the Honduran military because he broke the law. But this is nonsense. A Honduran bishop told Catholic News Service,

"Some say Manuel Zelaya threatened democracy by proposing a constitutional assembly. But the poor of Honduras know that Zelaya raised the minimum salary. That's what they understand. They know he defended the poor by sharing money with mayors and small towns. That's why they are out in the streets closing highways and protesting (to demand Zelaya's return)"

This is why the greedy, self-absorbed Honduran elite turned against President Zelaya: because he was pursuing policies in the interests of the majority. The Washington Post noted in mid-July,

To many poor Hondurans, deposed president Manuel "Mel" Zelaya was a trailblazing ally who scrapped school tuitions, raised the minimum wage and took on big business.

In a statement condemning support for the coup by U.S. business groups, the International Textile, Garment and Leather Workers' Federation expressed its concern that under the coup regime, there are

worsening working conditions, and in particular at efforts to claw back a wage increase ordered by President Zelaya six months ago in order to reflect the increased cost of food and other essentials. In reality the increased wage barely covered 90% of basic food needs and less than a third of a living wage covering basic needs such as food, rent, transport, education, and medical care.

It's not just in Honduras that raising the minimum wage provoked a coup. In reporting about efforts by Haitian lawmakers this week to raise the minimum wage in Haiti, AP noted:

Former President Jean-Bertrand Aristide was overthrown in 2004, in part after business owners angered by his approval of an increased minimum wage organized opposition against him.

This May, the Haitian Parliament approved a proposal to triple the minimum wage to about $5 a day. But President Preval rejected this, saying

the increase should omit workers at factories producing garments for export. Preval said those workers should receive an increase to about $3.

What's the argument in Haiti against raising the minimum wage?
The debate has fueled unrest across the impoverished Caribbean nation, with some critics arguing that an increase would hurt plans to fight widespread unemployment by creating jobs in factories that produce clothing for export to the United States.
There are the magic words I search for in these articles, often buried at the bottom: "United States."

So, the argument is being made that Haiti can't afford to raise the minimum wage for workers in the export sector to $5 a day, because if they did Americans would buy clothes and shoes produced in some other countries.

Let me underline this, dear reader. You, as an American consumer, you are being invoked in Haiti as the reason that the minimum wage cannot be raised to $5 a day.

Of course this is nonsense. The overwhelming majority of Americans, along with the overwhelming majority of Haitians and Hondurans, would be absolutely delighted if Haitian and Honduran workers producing clothes for the U.S. market would be paid more. Labor costs are a small fraction of the prices that consumers face. Wages are so low because that yields even more profits for those who already have more money than they can ever spend; the low wage floor is being determined by government policy in Washington, Haiti, Honduras, and elsewhere, not by the desires of consumers. No magic formula of economics determines the minimum wage that can be sustained in Haiti and Honduras. At the margin - whether the minimum wage shall be $3 a day or $5 a day in the export sector in Haiti - it is determined politically.

If you say that the leverage of the U.S. consumer market should be used to support higher wages for poor workers in poor countries, rather than the opposite, you're likely to be told that this is not allowed. This leverage has been allocated to something else. The power of the U.S. market can only be used for things like forcing developing countries to enforce the patents, trademarks, and copyrights of U.S. pharmaceutical companies, software companies, and Hollywood.

More:
http://www.huffingtonpost.com/robert-naiman/the-minimum-wage-and-the_b_254023.html