THE OTHER SIDE OF GLOBALIZATION: A WORLD WIDE MINIMUM WAGE

by Herb Rubenstein
CEO, Herb Rubenstein Consulting

Introduction

The current discussion of globalization focuses on the negatives – the loss of local cultures, the pollution of emerging countries through the production of goods shipped to more developed countries and the maltreatment of workers in “sweatshops.” While the United States is considered the world’s economic villain by many, we can look to some of our domestic institutions and economic policies as a way to redirect the forces of globalization to create win-win scenarios for emerging countries as well as more developed countries.

As one of the first lawyers who worked on issues involving the Foreign Corrupt Practices Act (FCPA), I saw first hand the global reach of U.S. policy. FCPA made it illegal for any U.S. owned company to pay bribes or commit other corrupt business practices any where in the world, even if this activity was not considered illegal in the foreign country where it took place. FCPA made it illegal for a U.S. owned company to act in a manner oversees that would violate U.S. domestic anti-corruption laws.

Wages and Workers

The basic principle of this law is sound. We need to extend this principle to the most essential element of business - - the payment of a minimum level of wages to workers. In the U.S. we have a floor called the minimum wage and the law allows no employer to pay less than the minimum wage (and its related rates for “overtime”) to its non-exempt employee. I served as the lawyer for several Russians who came to the United States and were not paid the minimum wage for their work as a cook and dishwasher in a restaurant. Our case proved that failure to pay the minimum wage is not dischargeable in many bankruptcy proceedings. Recently, students at Harvard protested mightily that the University’s contractors were not paying a “living wage” to their workers. And the living wage, as defined in Cambridge, an expensive city is more than twice the national minimum wage. If it is right for workers in the U.S., Britain, France, Germany and many other countries to be protected by minimum wage laws and related overtime protections, it is right for workers in every country in the world to have these protections.

Creating the International Framework

How can the U.S. use the basic principle of the FCPA and apply it to the concept of creating and enforcing country specific minimum wages throughout the world. The steps along the path to global minimum wages may be the subject of some debate. Known processes and established procedures may not be fully developed to figure out exactly what should be the minimum wage for each country. But this could easily be accomplished. For example, a first step could be to create a “World wide minimum wage commission” under the auspices of the U.N. or World Bank. This institution would take into account the cost of living, prevailing wages, living standards and many other measurable factors including exchange rates to suggest a “minimum wage” for each country in the world that does not currently have an established minimum wage. Second, the country could then ratify the minimum suggested rate or wage and then it could become the law of the country. Even if the country did not make it a law, through treaties, countries could agree that their own businesses that hired workers in those countries would be required to pay the minimum wage. Monitoring organizations could easily document violations that could be prosecuted either in an international tribunal or in the country where the workers were not paid or in the country of origin of the company not paying the workers the minimum wage.

And if enforcement were not done by treaty, once a minimum wage is set for each country, the U.S. could then establish a domestic law that requires every U.S. owned company or subsidiary operating anywhere in the world to pay its workers no less than the ratified minimum wage in the country where these workers were actually employed. Second, as part of our trade and tariff legislation, the U.S. could extend the principle behind the “anti-dumping” provisions to require that every company exporting goods to the U.S. to pay the ratified minimum wage for that country, including standard overtime provisions.

Conclusion

While globalization may have created a defecto minimum standard for quality of products it has failed to set a needed minimum wage rate for the workers who produce these goods and services. The time has come for the 70 year old concept of a minimum wage to be “globalized.” This will be the first step toward promoting the concept of a global livable wage and get the world started on a path toward sharing the fruits of globalization. Then, and only then, will globalization be able to create a new face and a new reality that will go far to ushering in the new “win-win” era necessary to each country to benefit from the world’s economic development. In addition a global minimum wage would assist in reducing the immigration pressure currently affecting many developed nations.

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