Last night the President asked Congress to increase the minimum wage for American workers. The Republican responses did not address this issue; the official Republican response was, “Many families feel like they’re working harder and harder, with less and less to show for it,” Senator Joni Ernst said before abandoning the topic. One argument against raising the minimum wage is that the increase in wages will only be cancelled out by increases in the cost of living. Do you want some real data that disproves this theory? Take the recent OECD report that lists the comparative price level of each country (Measures PPP). Countries with high minimum wages, like Australia, Denmark, and Sweden dominate the upper end of the list. Countries with low minimum wages like the United States are much lower. Lets look at Australia as our first example. The minimum wage in Australia is $13.85 USD per hour ($16.87 AUD). The minimum wage in the U.S. is $7.25 per hour. This means that the Australian wage is 1.91 times greater than the U.S wage. Similarly, the minimum wage (for McDonalds workers as example - Denmark doesnt have an official minimum wage) in Denmark is 2.89 times greater than in the U.S. The OECD comparative price level for Australia is $136 USD. In the U.S the comparative price level is $100 (As it is the baseline comparison country for this measurement). This means that the cost of living, and prices for general goods, is only 1.36 times more in Australia than in the U.S. However to reiterate the minimum wage is 1.91 times greater. The OECD comparative price level for Denmark, the fifth most expensive country in the world, is a staggering $140 USD. Hence this means the cost of living in Denmark is 1.40 times greater than in the U.S. But the minimum wage in Denmark, is a whopping 2.89 times greater than in the U.S. Additionally the same report demonstrates Denmark having a grocery price index of 88.59 and the U.S at 81.81; the Danish minimum wage McDonalds worker could afford almost 3 times as many groceries as a U.S minimum wage worker. So in reality the McDonalds workers of Denmark possess far more purchasing power than their counterparts in the U.S. Combined with their free healthcare, and cheap education; theyre leaps and bounds ahead. But then whats the other argument against minimum wage? Minimum wage harms businesses and impairs growth. From the data of GDP growth between countries the GDP growth in high minimum wage countries like Australia is 2.50%. While in the U.S GDP growth was only 1.60%. So why are we in the U.S still faced with a paupers minimum wage? Well maybe its because the facts are hushed and all the data has been cherry picked. A minimum wage worker in the U.S would take home about $13,328 after tax. A minimum wage worker in Australia would take home $27,760 USD after tax. A Danish McDonalds worker would take home $26,776 after tax. The Australian and Dane will take home 2.08 and 2.01 times more salary than the U.S minimum wage worker after tax. The increase is still greater than the increase in cost of living between these countries. However tax money in Australia and Denmark goes toward subsidized tertiary education, free healthcare, subsidized pharmaceuticals, and welfare (money for the unemployed/disabled/retired). So that should theoretically further increase the income of Australians and Danes, if isolated and factored out. Tell me again how keeping the minimum wage low is good for anyone? But if you do be prepared to offer evidence for your assertions.
Posted on: Wed, 21 Jan 2015 23:05:44 +0000
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