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The Hyperwage Theory of Economics
The Hyperwage Theory is a theory of higher purchasing power. It is not single number or amount, it is a policy, it is a strategy.
The minimum wage shall be set to a level that shall give purchasing power to the minimum wage earners, including domestic helpers.
Currently, the domestic helpers have almost zero purchasing power and worse, they are not even covered by the minimum wage law.
A hyperwage resulting in real purchasing power will stimulate domestic demand which in turn will stimulate production which in turn will stimulate employment.
This domestic demand, under the power of the economic multiplier, will result in increased production of goods or services which in turn will result in more employment in a positive upward spiral.
The theory rests on the proposition that Hyperwage does not automatically result in the same proportion of hyperinflation in a Third World country.
For instance, a ten-fold increase in the wages of the domestic helpers will not necessarily result in the same ten-fold increase in the prices of goods and services.
Furthermore, a ten-fold increase in the domestic helper’s wages does not also automatically mean that all wages of the other workers will be increased ten-fold across the board; only the minimum wages of the lowest worker, which is the domestic helper, is fixed.
The other wages such as wages for sales clerks and bank manager will adjust according to market forces. The logic for this is that many goods and services in Third World countries are already being sold at First World prices.
This theory is applicable only to Third World countries, not to First World countries.
Under the current economic theory, the discussion on minimum wage is limited to issues such as whether or not moderate increases in minimum wages will result in higher inflation or more unemployment.
Furthermore, under the current theory, all economists agree that if the minimum wages were raised to a very high level (not a merely moderate increase), supposedly, there will be massive unemployment.
On the other hand, under the Hyperwage Theory, the minimum wage is considered as the central factor of the Third World economy.
Thus, this is the only theory available that places the primary responsibility of redeeming the country’s economy in the hands of the minimum wage. Not on interest rates, not on exchange rates, not on foreign investments, not on monetary levels, not on forms of government, not education, not on taxation structure. The latter are a secondary factor.
The Hyperwage Theory is the only theory that addresses, by way of chain-reacting proximate causes, many externalities and non-economic social problems such as population control, inefficiency, corruption, brain drain, underdevelopment of intellectual capital, separated families due to overseas work migration, underdeclaration of business income taxes, and the slow justice system.
In short, the Hyperwage Theory purports to be the panacea with an actionable plan to solve the economic problems of a Third World country.
For discussion purposes, the minimum wage shall be set to be P20,000 per month for domestic helpers.
This is US$400 at $1=PhP50, or PhP770 per day based on a 26-day month, or PhP77.00 per hour based on a 10-hour day for domestic helpers, or $1.50 per hour.
In Hong Kong, the minimum wage of the domestic helper is about PhP25,000. We don’t have to equal that amount.
If we set our Hyperwage to P15,000 only, then there’s still the temptation that our teachers will go to work in Hong Kong as domestic helpers because the P10,000 difference is still a considerable amount.
I figured paying P20,000 to our domestic helpers will prevent the brain drain to Hong Kong.
Thus, the PhP 20,000 level ($400).
Fresh college graduates should earn about PhP70,000 per month or $1,400 per month or $6.70 per hour.
This is deliberately set comparable to Hong Kong and Singapore to avoid the labor wage arbitrage that is causing our school principals to work in Hong Kong as domestic helpers.



Typical Range of Wages under Hyperwage ($1=PhP50)

Job

Monthly (PhP)

Monthly ($)

Hourly (PhP)

Hourly ($)

Note

Domestic Helpers

20,000

400

77

1.5

10-hr day
Janitors

22,000

440

85

1.7

8-hr day
Factory Workers

25,000

500

96

1.9

Sec/Sales clerks

50,000

1,000

192

3.8

Fresh college

70,000

1,400

269

5.4

Middle Managers

150,000

3,000

577

11.5

Bank Managers

200,000

4,000

769

15.4

Note: Throughout this book, the data tables use the currency conversions at the time the data were first published in 2005. In mid 2008, the exchange rate was $1=PhP43. However, for simplicity we use $1=PhP50 to make PhP20,000 = $400, a round figure.