By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian family where both adults are earning the minimum wage would have to increase their income four-and-a-half times to reach “middle class living standards” on New Providence, researchers are asserting.

Lesvie Archer, a University of The Bahamas (UoB) researcher, in a 14-page paper published in the International Journal of Bahamian Studies, disclosed that the total $27,040 annual income for such a family is far removed from the estimated $122,400 annual earnings needed to enjoy “a decent middle class life on New Providence”. For Grand Bahama, the figure was pegged at $121,200.

The study, which did not seem to define what ‘middle class’ is in the Bahamian context, said it focused only on “determining the cost of acquiring and maintaining certain middle class status symbols in The Bahamas” such as food, housing (rental), clothing and footware, recreation, communications, household needs and other items. Inflation was also factored into the calculations.

“The well-being of the middle class typically indicates the overall economic well-being of a nation, but little empirical research exists on financial costs associated with living a ‘decent’ middle-class life in The Bahamas,” the study added, seemingly seeking to build on the findings of a 2020 UoB paper that sought to estimate what was required for ‘a living wage’.]

That paper estimated the net living wage to be $2,500 per month for New Providence and $3,400 for Grand Bahama, but Ms Archer said narrowing what she described as a “gap” on how much it costs to sustain a middle class life in The Bahamas was vital to allowing policymakers to make better informed decisions on labour and economic-related issues.

“The study reveals that, as of March 2024, a middle class family of four requires an income of $10,200 monthly if living in New Providence, and $10,100 monthly if living in Grand Bahama. These estimates are higher than the updated estimates generated for lower-income families by 104 percent in New Providence and by 53 percent in Grand Bahama,” Ms Archer wrote.

Multiplying these figures by 12 gave the annual earnings required by such families to attain middle class status on both islands. And, given that working class families were “assumed” to be minimum wage earners, the study said persons in this income group would need to more than quadruple their earnings to achieve middle class status - a goal that, for many, may be well out of reach.

“This means that a reference-sized family where both adults are employed full-time earning minimum wage ($260 per week per person, or $27,040 per family per year) would have to increase their income by an estimated 350 percent to meet the living standards that characterise the New Providence middle-income household profile determined in this study,” Ms Archer wrote.

“A family of four should earn an estimated $122,400 per year to afford a decent middle class life on New Providence, and $121,200 if desiring to have a middle class life on Grand Bahama..... This brief report may be a starting point for informing policies related to living costs and standards in The Bahamas. It also offers insight into economic loss associated with quality of life debates.”

The report is likely to revive debate about income inequalities in Bahamian society as well as renew calls, in some quarters at least, for greater progress towards the so-called ‘livable wage’ promised by the Davis administration although such a concept has yet to be clearly defined.

Peter Goudie, head of the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour division, told Tribune Business yesterday after reading the study that the findings are “no surprise” but questioned what the study’s true purpose was.

“The whole thing from Archer didn’t prove anything,” he said. “It says if you want to live at that level this is how much it will cost you. I don’t know what it’s trying to prove. I really don’t know what the purpose of the study was other than to find out if you want to at a certain level, this is how much it costs.

“That doesn’t surprise me. If you want to live at a certain standard it’s going to cost you. I don’t know what the point is. You and I live at a certain standard because we’ve worked hard for it.” Ms Archer’s study said the data that informed her research was collected from areas located on New Providence’s western, northern and eastern shores.

This included communities that Mr Goudie described as higher income, or at least “upper middle class”, such as Lyford Cay, Cable Beach, Paradise Island and Eastern Road. On Grand Bahama, the areas targeted were Freeport, Eight Mile Rock and West End.

Housing costs focused on the rental, rather than mortgage, market. Using a sample of 55 rental units on New Providence, Ms Archer wrote: “On New Providence, prices range from $800 for an unfurnished unit in Stapleton and several eastern communities to $3,000 in Cable Beach.

“Upper middle income rental homes were distinguished as ranging in cost from $3,000 to $8,000 per month and included areas such as Cable Beach, Westridge, Sandyport and Paradise Island. On Grand Bahama, prices ranged between $1,200 for a two-bedroom in Dolphin Cove to $3,000 in Lucaya Beach,” she added.

“It is important to keep in mind that Grand Bahama possesses a limited availability of rental accommodations as it is still recovering from Hurricane Dorian. For both New Providence and Grand Bahama, I added the cost of utilities to the cost of rent.”

And the UoB researcher added: “Estimated sustainability and emergency expenses represent 20 percent of the total cost-of-living estimate. While this percentage may seem high, it is below the Central Bank recommendation that Bahamians allocate 25 percent of their income for savings: 5 percent to pension funding (retirement), 10 percent to general savings, and 10 percent to religious participation (including tithes) and charity/giving.”