Garth Rattray | Are you behind the earning curve?

Many people know about the learning curve, it is “… the representation in graph form of the rate of learning something over time or repeated experiences. Learning curves are a visualisation of the difficulty estimated in learning a subject over a period of time as well as relative progress throughout the process of learning”. However, it seemed to me that our progress or our ability to keep up with our daily expenses should be called the ’earning curve’.

I found out that the term ‘earning curve’ already exists. In essence, it refers to the expectation of earning based on the educational, financial, or expertise used in earning a living or in building a business. In other words, a graduate from a tertiary institution is expected to earn significantly more than a high school graduate. This does not always hold true, but the expectation, and the mechanisms, and therefore, the potential for greater earnings by those who possess a university/college degree is much higher than it is for those who only possess a high school diploma.

However, I have been thinking of the earning curve in terms of our ability to keep up with all our bills, save for a rainy day, and put a nest egg aside for a time when we are no longer able to earn an active, or perhaps even a passive income. It is a miracle that some of our citizens are able to buy food on a regular basis.

ACCURATE BAROMETERS

The supermarkets are accurate barometers of the health of our dollar. Like other retailers, supermarkets spend to purchase goods, add the requisite markups (to cover all their expenses, spoilage, pilferage, and profit), add the mandatory taxes (if applicable), then they must estimate the cost of restocking goods before pricing the products for sale. It is here that the cold facts of the spending power of our dollar is revealed. Our dollar is weak and, despite the figures being spewed out by the powers that be, the money that we earn is slowly getting weaker over time.

When our economists talk, we hear about the bank rate, balance of payments, national debt, inflation, unemployment, fiscal policy, trade deficit,

The GDP, national income, and other dizzying terminology. We hear how well Jamaica’s economy has done and is doing, we hear how wonderful we handled the worldwide economic crisis brought on by the emergency phase of the COVID-19 pandemic. Things are looking up for Jamaica (the country… on paper) but when Jamaicans (our citizens) earn and spend, they have little, or nothing left.

The reality of hard financial times for Jamaicans may seem strange when you consider that the World Bank rates Jamaica as an upper middle-class economy. Due to excellent fiscal stewardship, Jamaica surpassed its pre-pandemic level, and growth was driven by tourism, exports and mining. There was a record low unemployment rate, but the annual inflation accelerated to 7.4 per cent (January 2024 figures). Food price inflation was 8.8 per cent in January 2024, and one-third of Jamaicans were severely food insecure in 2023.

A foreign national once asked me how it is that Jamaica is seen as poor on the international stage, yet the World Bank sees us as an upper middle-class economy and she sees opulent residences and the most up-to-date, top-of-the-line vehicles all over the place. There is a lot of wealth here, but it is mostly confined to a very limited sub-sector of our society. In principle, that’s all well and good; but, in a system of limited funds, there is an inverse relationship between the rich and the poor. The richer that some people are, the poorer other people become.

PURCHASE IN US DOLLAR

Most of us earn based on our Jamaican dollar, but we purchase based on the American dollar (plus taxes and plus markup). Even when we eat what we grow, we are paying for the farm products based on a fairly high US dollar component. Farming requires imported fertilisers, imported herbicides and insecticides, imported farm equipment like tractors and all the machinery and tools needed for farming. The US dollar figures into the cost of the trucks that transport the goods to market. It also figures into the cost of fuel, servicing, repairs, replacement parts, and into the clothing that farmers must wear.

Many among the working force and most professionals know that they are [ de facto] subsidising the Jamaican economy. If they were to demand what they are worth, our economy could not sustain it. Inflation would skyrocket and the country would literally collapse. Whereas retailers price their goods based on what it cost them (ultimately in US dollars, since we import almost everything), service costs depend on the economic climate.

For example, the basic cost to visit primary care physicians in the United States ranges from US$150 to US$300. That represents an average of $171 across major cities. That converts to J$26,771.78 (per basic office visit)! I am certain that other professional groups can provide similar observations. Imagine if everyone treated their knowledge, expertise, time, invested debts, and operational expenses just like an imported commodity, and then add a markup like retailers do.

Most Jamaicans should be earning a lot more than they do. However, the country cannot sustain that situation. The least that the powers that be should do is to make basic necessities affordable for all.

Garth A. Rattray is a medical doctor with a family practice. Send feedback to columns@gleanerjm.com and garthrattray@gmail.com