Don’t get too excited. It’s in China. According to the Financial Times, low wage workers in Beijing will get a 21% wage increase. Across the country increases will range between 12% and 21%. Overall inflation in the country is up 5% with food costs increased by nearly 12%. The increases in minimum wages are meant to help those who have the least, a concept more and more foreign to American society.
A Chinese economic expert says that the government is seeking to keep tensions from rising between the rich, who are living very well, and the poor, who have not benefited from the country’s booming economy. The government estimates that 3 million people will be aided by this policy.
Moral of the story? It might not be as simple – or as good – as it sounds. While I want what is good for working people anywhere on the globe, this kind of increase might also foreshadow inflation problems in China. In the long run, no minimum wage laws can keep pace with inflation. In fact, it could make the problem worse. China’s policy of cheap money may be catching up with it, and those who have the least will suffer most.
Whenever we read or hear about China, it usually involves the words economy and booming. However, as the New York Times reports, new college graduates in China, like their counterparts in the U.S., are struggling to find jobs. The government supported higher education and increased graduates from 830,000 in 1998 to more than 6 million last year. There’s one big problem: Most of the new jobs in China’s factory-based economy don’t require a college education.
To make matters even worse, the increased number of college graduate means more people are competing for professional jobs, which has driven down salarys for those positions. College graduates are sometimes working for lower wages than factory laborers. Several academics quoted in the article point to these conditions as a source of potential instability.
This news is little comfort to young Americans (or Americans of any age) who do not have jobs. I believe the value of this story is to look below the surface of our media’s often too simple claims. China’s booming economy is based on the exploitation of labor and a totalitarian political system. This system seems doomed to collapse as Chinese workers become more educated and their expectations for a better life increase. How China deals with this problem will be one of the most important forces shaping the 21st century.