January 30, 2013 at 5:54 p.m.
Salaries are determined by supply and demand, not race
Most comments indicated that such disparities arose from institutional racism or simply malignant employers who took great delight at paying salaries to the black population significantly below those paid to whites. Put bluntly, that is garbage.
Coming from a white man who believes that such comments are way off mark will automatically lead to me being classified as suffering from "cognitive dissonance".
However, salaries and wages, are like any other commodity their price being determined by supply and demand. Let me explain further.
In the free market economy it is the customer, or the consumer, that ultimately pays salaries. If there are no customers, or not enough of them, the operation goes out of business and employees lose their jobs. Just ask those involved with Trimingham's who closed their doors a few years ago. Employers who fail to satisfy consumers in the best possible way forfeit their right to operate. They go bankrupt and employees lose their jobs.
In every business I have come across, employers will pay more to employees who contribute significantly to the efficiency of their business. Other employers will be prepared to offer higher wages to good employees to leave their current employer and move over the street. The opposite rule also applies. Employees who fail to make a contribution are let go. The essential point to grasp is that it is not employers who pay salaries and benefits - it is the customer. When there are many customers, wages go up, when there not too many wages, go down. Think the tourist business.
Individual choices
The other important point to grasp is that customers are invariably employees. There is a dual role. The owner of the business is simply an agent of both.
In a feudal society, employment was determined not by the individual but by the feudal lord. In our society the individual determines where he will work and what he will do. Some decide to be teachers - and get paid accordingly. Others decide to be accountants and get paid more. If teachers are dissatisfied with their salary they can train to be accountants. If accountants are dissatisfied with their hours of work, they can train to be teachers.
Three hundred years ago that was impossible because society was feudal; 50 years ago that was difficult in Bermuda because of Jim Crow practices and laws. We do not have feudalism or Jim Crow in 2009.
It is simply incorrect to state that employers are somehow a ruling class intent upon exploiting employees and discriminating between black and white workers. Employers are simply carrying out the instructions of consumers. The realities of business means that the boss has to deal with every employee exclusively from the point of view of the services he renders to consumers. To do otherwise would be financial suicide. It is therefore important for employees to work for companies that are profitable - meaning they satisfy their customers - than it is to be employed by some deadbeat organisation.
With regard to inequality of incomes, there is no such thing as an apportionment of shares out of some accumulated wages fund. There is no secret money chest which is then doled out to employees by anonymous malignant employers. The lower wage of someone is not the cause of the higher wage of someone else.
The key to high wages is high productivity. The more efficient is the employee the more he will make. Tiger Woods makes millions at golf, whilst I am lucky to win $5 every other month.
Oprah Winfrey rakes in a fortune by appearing on TV. I get nothing. The late Michael Jackson was a great performer. I am a klutz. The reason they are paid more than me is simple; their productivity far exceeds mine and customers are prepared to pay them big bucks.
As a general rule, the most productive employees are those with the best education. Those who attend government schools are penalised and hence earn lower wages. Until the fiasco called the Department of Education is sorted out there will be a persistent shortfall in the earnings of those who are badly educated. Craig Simmons is spot on when he says "better education is the key to closing the wage gap between blacks and whites."
Negligence, ill will, institutional racism, and history may have a subsidiary or minor role but that is diminishing each and every year. Dr. Brimmer is correct - improved education and high productivity are what gives rise to good salaries. Being black or white is irrelevant.
To several of your columnists who made comments on the Employment Survey I would just like to add that it is no crime to be ignorant of basic economics which is known as the dismal science, but is somewhat irresponsible to hold oneself out as an expert whilst in a state of ignorance of economic subjects.
To CURE, and Cordell Riley I would just quote the late Professor F.A. Hayek who said: "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design".
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