There were two recent occasions when the cost of living, or rather the cost of maintaining a family, came to the fore. The first was when the Government set the National Minimum Wage at $202 per hour or $35,000 per month; the second the announcement by the Minister of an increase in the Old Age pension from $12,500 to $13,125 per month. Whenever the question comes up, the parties are speaking from different positions, or worlds.
Some years ago, we asked the Carnegie School of Home Economics to construct a basket of recommended goods for a family of two adults and two children. At December 2013, the basket would cost the family $59,972, exceeding the minimum wage by just under $25,000. If only one is earning at the minimum wage, that family will not be able to pay for the basic basket.
The challenge facing any society is how to minimise poverty which exists even in a relatively well-performing economy. Wintress White, a member of Red Thread, once responded to an assertion by a government Minister that the country’s macroeconomic fundamentals were strong by saying that her microeconomic fundamentals weren’t doing so well. She explained that she wasn’t just objecting to the government’s statement. Rather she was concerned at the failure of government, opposition and independent commentators to evaluate the economy’s success or failure in terms of the daily lives of poor families, the hidden costs of poverty and the invisible labour it imposes on the women who run poor households.
Red Thread showed the basket to a small group of women whose households range in size from one adult and one teenager to three adults and one teenager. It was clear that the spending pattern of the Ram & McRae’s family is vastly different from Red Thread’s group. There is no what we would call economies of scale, no money to buy in quantities or freezer to store them. The inevitable result is that their food costs more; ten tennis rolls bought one at a time cost more than a bag of ten tennis rolls.
But the issue is not whether a family of four can eat on the minimum wage, but whether it can live on the minimum wage. The basket of goods contains only food; it does not include soap, bleach, disinfectant, basic toiletries like tooth brushes, toothpaste, toilet paper, sanitary napkins, for example. And outside the items people buy in shops and markets there are the other big money items that have to be paid for: housing, transport, education, health care, water and light, to start with.
In every household surveyed the regular expenditure is way higher than the regular income and in each household both income and expenditure are much, much higher than the minimum wage. Red Thread argues that if the decision-makers and the rest of what is called society took the trouble to find out from the majority of families making up poor households, their real workdays (with their multiple jobs), their real incomes (including via barrels), and their real expenditures (including for education and health services), we might begin to understand many of the social problems we face.
When exposed to the real families who have to live on or below the minimum
wage the scale of the challenges facing the country assumes a stark complexion. Policy makers need to stop thinking only of macro-economic fundamentals and consider the plight of the poor in surviving on what they earn.
The fact that a cash grant of $10,000 per year is regarded as a budget measure of some note suggests the scale of the problem faced by those on the minimum wage and by our society. These across-the-board interventions may be easier to manage but like the Old Age pensions, they do not help those most in need. There needs to be a better way.
In the final analysis however, the poorer households need jobs paying wages that can buy not only the basket of goods of Carnegie but to live at a reasonable standard. They would not be helped by handouts or by accident but by pro-poor policies.
