The Benefits of Increasing Minimum Wage

Do you want some real data on how the benefits of minimum wage increases are not cancelled out by increases in cost of living?

Take this OECD source 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. Seems obvious no? Sure if you just "cherry pick this data".

Let's look at Australia as our first example. The minimum wage in Australia is $13.85 USD per hour ($16.87 AUD) (Source can be found here). The minimum wage for a casual worker in Australia (no sick or annual leave) is $18.08 USD per hour. All calculations will be performed with the $13.85 rate. 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, according to this TIL the minimum wage (for McDonald's workers as example - Denmark doesn't 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 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, as demonstrated by this TIL, is a whopping 2.89 times greater than in the U.S. Additionally the same website demonstrates Denmark having a grocery price index of 88.59 and the U.S at 81.81; the Danish minimum wage McDonald's 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; they're leaps and bounds ahead.

But then what's 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%. Whilst in the U.S GDP growth was only 1.60%. However Denmark's GDP growth in the same period was only 0.10%. So perhaps minimum wage is not considerably accountable for a countries growth or collapse.

So why are we in U.S still faced with a pauper's minimum wage? Well maybe it's because, as you said, the facts are hushed and all the data has been cherry picked.

Edit Denmark has no 'official' minimum wage: After research it seems that Denmark does not have an official minimum wage. The higher wages are a result of union bargaining. Which occurs across the industries in Denmark.Sorry for the mistake.

Edit "You haven't accounted for Exhange Rates: Also in my laziness I forgot to adjust the dollar values for Australia according to the U.S exchange rate. I have done this now. Apologies again.

Edit "You haven't accounted for tax. The Americans would make much more if you did" This source shows that a minimum wage worker in the U.S would take home about $13,328 after tax. This source shows that a minimum wage worker in Australia would take home $27,760 USD after tax. And this source shows that the Danish McDonald's 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 subsidised tertiary education, free healthcare, subsidised 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.

Edit "CPI is not an appropriate measurement to compare cost of living": Regarding user complaints that I used the CPI index instead of a more appropriate PPP based comparison. I have changed the CPI comparisons with the OECD sourced "comparative price levels" data. This is naturally more reliable. After doing so the comparisons in cost of living between Australia and Denmark and the U.S changed only slightly; by about 0.1 times. So the comparisons still stand. Apologies.

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