Opinion: Can You Live on the Minimum Wage?

Opinion, by Michael Royster

RIO DE JANEIRO, BRAZIL – On February 12th, former President Lula told the New York Times that Brazil was doing fine, and that it would not encourage growth by using the example of China. “We don’t want to be competitive like China is, where there’s no welfare program, where you have no obligation to the workers, pension funds, trade unions, and people earn very low wages,” he said.

Four days earlier, the New York Times had asked its readers to answer the title question. The minimum wage in New York City is US$8 per hour, so with fifty weeks worked on forty hour per week (two weeks vacation) that’s US$16,000 per year. At an exchange rate of R$2,40 per dollar, the minimum wage in Brazil is now US$300 per month, whereas in NYC it’s US$1,333, more than four times greater.

Are prices in New York City four times more expensive than they are in Rio? Not by a long shot. In fact, it’s arguable that even housing in Rio is now more expensive than in NYC. So, who does Lula think he’s kidding? Does he really expect people to believe Brazil wages aren’t low?

There are isolated areas where Brazilian wages are high, much higher than the minimum here or in the United States. A petroleum engineer or geologist in Rio de Janeiro will earn more here than almost anywhere in the world. Automobile workers earn extremely good salaries in Brazil, thanks to the efforts of the Metalworkers Union, which Lula successfully headed for years before entering electoral politics.

But schoolteachers, firemen, police, and most people are paid pitifully little. In the case of the police, this is often cited as a justification for the corruption said to be rampant among them. It’s also cited as a reason why the fire department reports up to a military figure — allegedly, firefighters wouldn’t go out and do their dangerous job unless they were ordered to do so, because of their low pay.

In the case of schoolteachers, the problem is equally serious. With some worthy exceptions, public school systems in Rio and other metropolitan areas are dreadful — which is why those who arrive in the middle class immediately seek out a private school for their children. Dilma’s affirmative action system seeks to ensure public school children have increased access to university, precisely because of this problem.

President Dilma has determined that most of the “pre-salt” bonanza should go to finance education, but education is not federal, it’s state and municipal, which means she’ll have no control over the spending at all. And, in far too many places, there are far more bureaucrats than teachers, there is no teacher training, and most teachers earn less than two “minimum salaries” per month.

The Curmudgeon grants some credit where it is due, namely to the Lula administration who raised the minimum salary from its traditional equivalent of US$100 to its current US$300. That, coupled with the killing of hyper-inflation by the Real Plan twenty years ago, is one of the principal reasons millions more people are now in the middle class rather than the underclass. But with inflation rising rapidly in 2013, that US$300 just doesn’t cut it any more. No one can live decently on the minimum wage, here or in New York City.

–
Michael Royster, aka THE CURMUDGEON first saw Rio forty-plus years ago, fetched up on these shores exactly 36 years ago, still loves it, notwithstanding being a charter member of the most persecuted minority in (North) America today, the WASPs (google it!)(get over it!)