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Zero in on Problem with Economy – Overweight Government

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By Lowell L. Kalapa

Despite all the attention that economic revitalization has attracted over the past two years, recent “clarifications” of what economic revitalization means to some is disturbing.

Basically, the point made by some of these pronouncements is that economic revitalization is not acceptable if it only creates low-paying jobs. While that is not exactly the verbiage used, the implication is the same when the point is made that nine out of ten new jobs in Hawaii pays less than a living wage.

However, if one were to think carefully about what the characterization infers, one would realize how very misleading the statement is. First, what is a living wage? Does that mean that one should be able to earn enough to buy everything his or her family wants? Or is it relative to what the environment in which we live costs? High housing costs, high food costs, high transportation costs are all relative. If the cost of providing housing or growing or delivering food products is high, then that cost must be passed on to the consumer. Surprise, surprise, what about the cost of the labor that builds the housing or the cost of the fuel that powers the trucks or barges that bring those food products to our grocery stores.

Do critics bemoan the fact that food prices are too high because check-out clerks are getting paid too much. No, instead, they turn to the owner of the grocery store and talk about how much the store owner is “ripping” off the worker by paying that worker less than a “living wage” while charging higher prices and making bigger profits.

The problem with that analysis is that in this economy, competition exists as the check and balance. Consumers practice this check and balance system every day when they shop. They check the advertisements in the newspapers, clip coupons, and purchase only those items which they are willing to pay the asking price. As a result, the business can’t just charge any old price it wants because its customers will find another place to purchase the same product or service at a more reasonable cost.

So what makes living in Hawaii so expensive? As detailed in the past few columns, government regulation as well as the heavy burden of taxes are key contributors to the higher cost of living in Hawaii. While site or land costs are a factor, as is transportation, one can also make the same argument about certain communities on the mainland. Some critics have argued that local businesses have ripped off consumers for years and the recent wave of big-box retailers has shown that prices can be lowered.

But stop and think about what big-box retailers have over local businesses. They can bring their goods right up to their loading dock and sell the goods out the front door. Thus, they don’t have the expensive warehousing costs because their customers assume that cost by buying in bulk and then have to find a place in their homes to store a year’s worth of ketchup.

They also don’t have to deal with a multiple layered distribution system, from jobber to wholesaler to retailer to customer where each level of business activity is subject to the general excise tax, a tax that is added to each subsequent selling price and ultimately finds its way to the consumer’s pocketbook. Add to that, government rules and regulations with which a business must comply and it is no wonder the cost of doing business and the products and services those businesses sell are so expensive.

If costs were not so high as a result of government then the wages Hawaii’s workers earn would provide a “living wage.” To say that economic revitalization that does not pay a “living wage” is unacceptable is somewhat of an oxymoron. Hey, if you are a worker with a job that pays a wage, that is better than no job and no wages at all.

Sure it would be great if all workers could earn six-figure salaries, but guess what, no business that can afford to pay that kind of wage would be able to do so in the business climate that exists in Hawaii. If Hawaii wants to attract businesses which can pay better wages and salaries – then something must be done about controlling the cost of doing business and it must begin with costs imposed by government.

Public policy makers can no longer stick their heads in the sand and say that there are no services the government can cut, that everything government does is essential. If that attitude is maintained then Hawaii is doomed for economic mediocrity and workers who will never earn a “living wage.”

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