Higher Wages, Great! But How to Afford?

Photo by Michael Sheridan

Jennifer Medina is a national correspondent for The New York Times based in Los Angeles. A little over a week ago, she published an analysis of recent minimum wage legislation in the United States titled “Higher Wages, Great! But How to Enforce?”

Today I take license with her title, take issue with her analysis, and take a shot at tying this article to the emerging conversation on farm labor in the coffee sector.

Wage Theft

Medina says “wage theft” — paying workers less than they are entitled to by law — is rampant, especially in labor markets where jobs are scarce and workers are plentiful. Laws raising the minimum wage in places like California and New York may be milestones, she says, but they aren’t the end of the struggle to secure higher incomes for the working poor. The challenge now, she suggests, is to make sure those laws are enforced.

Wages and Ethics

Why do employers pay less than they should? Medina believes that compliance is primarily a function of ethics and fear. “Employers tend to comply with ordinances either because they believe it is the right thing to do or because they fear getting caught doing wrong,” she writes. Based on my (limited) exposure to labor issues in the coffee sector, I am not sure I agree with Medina.  Or at the very least, I think she may be missing something.

Wages and Profitability

In the coffee sector, the motivations behind compliance with wage laws may have less to do with the ethics of employers than the economics of the supply chain. In the coffee marketplace, price discovery is disconnected from any consideration of production costs, and price volatility has never been higher. Prices can vary wildly from one harvest to the next and there is no guarantee they will exceed the cost of production. In that context, even a conscientious grower inclined to fairness may have trouble complying with the dictates of law and conscience when it comes to paying his or her workers.

Good Guys, Bad Guys and the Global (Coffee) Economy

In the coffee sector, we haven’t really had a broad conversation on labor issues in the way that the manufacturing sector or other agriculture supply chains have. If we take Medina’s cue in this endeavor and frame the coming discussion in terms of right and wrong, we will generate a compelling storyline — one that celebrates the good guys and shames the bad guys. But in the process we may miss the opportunity for deeper understanding of the underlying economics of global (coffee) economy.

I do not mean to suggest that there aren’t any “bad guys” in coffee or in the broader economy — unscrupulous firms and farms whose pursuit of higher profit margins lead them to cut corners on wages, or worse. I know they are out there. If we find employers in coffee trafficking or enslaving workers, by all means I think shaming and punishing them to the fullest extent of the law is an appropriate response to create disincentives for such behavior.

Nor do I want to apologize for employers who don’t pay workers what they are entitled to by law.

What I do want to suggest is that not all growers who are cutting corners with their workers are necessarily bad guys committing grievous abuses. I know that some of them are actively seeking opportunities for reinvestment in wages and worker empowerment but are constrained in their efforts by the economics of the coffee trade.

If we are honest with ourselves as we explore farmworker issues in coffee more deeply, we may have to face the fact that more often than we care to acknowledge, unpleasant things happening to workers are not aberrations, isolated occurrences or the actions of the occasional bad guy. They are all too often structural, rooted in part in the poor policies and lax enforcement that Medina writes about, but also in a global economic system wired to maximize profits and privilege short-term returns, even at the expense of people and the planet.

Improvements in labor conditions require more than just good policies that are well enforced; they require markets that incentivize higher wages and worker empowerment.