USAID and wages

By Tom Driver (contribution to a dialog on Bob Corbett's Haiti list), 7 November 1996

Many thanks to Alex Dupuy for his cogent sketch of the big picture concerning the objectives of USAID (along with the International Financial Institutions, and Haiti's foreign and domestic business sector) with regard to Haitian workers' wages. I trust that many will agree with him that the evidence for the class objectives of the big players is not questionable. From this point of view, then, Greg Chamberlain had involved me in a quibble over a mere detail, nothing more than the expenditure of $26 million of US taxpayers' money in 1991 (more on that below).

Thanks also to Bob Corbett for relaying text from the National Labor Committee (NLC) report, HAITI AFTER THE COUP (1993), which was unavailable to me at the time that I cited it. And thanks to all who have shown an interest in this thread.

Thanks even to Greg, if not for his tone and attitude, at least for his prompting me to retrieve my source. Since my copy of the NLC report had vanished, I went yesterday to NLC's office to get another. After re-reading, I think that my statements here might have been nuanced a little differently but that on the whole they were correct. I'll cite them now, putting in backets <> the words I'd change if doing them over.

My original sentence, in a letter responding to some commentary Bob Corbett made on Oct. 21, was this: In 1991, Aristide and his then Prime Minister proposed raising the minimum wage. The US spent $26 million to defeat that move <in the legislature>. Today the US and the various agencies it controls still oppose any rise in wages.

When Greg challenged the accuracy of what he called this huge charge, I replied as follows: ... my specific source is HAITI AFTER THE COUP: SWEATSHOP OR REAL DEVELOPMENT, a report published by the National Labor Committee (NLC) in April, 1993. <On page 26> the reader is informed that in 1991 USAID <allocated> $26 million to Haitian business organizations with the aim of opposing Aritisde's minimum-wage proposal.

Let me annotate:

<in the legislature> -- While it's true that USAID hoped to forestall enactment of Aristide's proposed minimum wage raise, its efforts were not directed, as far as the NLC report says, toward the legislature itself but toward the business community.

<On page 26> -- On this page and following, the report identifies the components of the $26.7 million that USAID spent in the first part of 1991 to help organize and support the Haitian business sector. The aims motivating this expenditure (and the lack of any outlays to help organize and support, or even research, the labor sector) are discussed throughout pages 1-26, which I encourage anyone interested in this question to read.

<allocated> -- Although this is the word used by the NLC report, it could be misleading if taken in the technical sense. There were several allocatiions by the agency, and none had the stated purpose of opposing wage raises. But apparently the expenditures were made, and the underlying reason for them is one of the things that the NLC report attempts to disclose, especially in light of the ever-worsening wage situation.

The Executive Summary of the NLC report (p. 6) contains this paragraph:

USAID used U.S. tax dollars to actively oopose a minimum wage increase from 33 to 50 an hour proposed by the Aristide government.

Phil Knowles, writing here on Nov. 3, expresses a common puzzlement: Wages, it seems to me, are low in 3rd world countries. I've never understood why a US agency would need to put a lot into a campaign for low wages in Haiti, because buyers (clothing, whatever) have many places where low wage workers can be 'used'.

The point this misses is that Haiti, along with the Dominican Republic, is used to provide a wage floor that is effective throughout the Western hemisphere. Had Aristide's proposed wage increase been adopted, wage costs in Haiti would have slightly exceeded that of the D.R. ($.76 per hour in costs after factoring in productivity in Haiti, as opposed to $.72 in the D.R. See NLC report, Appendix D.) In other words, if Haiti is a live option for manufacturers seeking to pay the very lowest wages, then manufacturing there will increase profits not only for those companies directly involved but also for virtually every other manufacturing company in the hemisphere, because of the dampening effect on all wages.

Knowles seems to believe that the US Govt could not or would not try to keep wages down in Haiti, although he allows that some crook or bum in the Govt might do such an absurd thing. What extravagant faith! But all too common in the USA. Stewart King, on the other hand, just thinks that Govt agencies are too inneficient to have any effect: Having worked in government, I generally doubt the ability of any foreign affairs agency of the U.S. government to implement any evil plots they may be meditating. Well, Stewart, why don't we just look at the results? Instead of calling the thing an evil plot and making it look absurd, why don't we recognize it as policy, or logic, as Dupuy says, and see that it has been in place now for a long time and that the plight of the Haitian factory worker and peasant is steadily worsening?

May I suggest that if we call it a plot we are able to distance ourselves from it? If we recognize it as policy, we must realize that we (as US citizens) bear some responsibility for it in a democratic form of government.

-- Tom Driver