This proposed Swiss minimum wage is therefore (roughly) equivalent to a minimum wage in the U.S. of $16.28 per hour (taxation differences and non living-expenses notwithstanding).
Before you dismiss it so fast, the question of how can a person live on $7.25 an hour still deserves some thought? $1,200 barely enough for rent, food and a bus pass.
Yet somehow, billions of people worldwide live on far less than that number after adjusting for purchasing power. The average Bulgarian subsists on roughly a US minimum wage salary (after adjusting for purchasing power - before adjusting for PPP it's about half a min wage salary). The average Indian subsists on far less.
There are social, cultural and infrastructural factors which you completely trivialize by neglecting to mention them. In Thailand, for example, working-class people do often live with others in small spaces, but either they are strangers in factory dorms or they are extended family members in small apartments.
The crucial role of the extended family may be the hardest for modern Westerners to appreciate. It is not our feel-good notion of family. My brother in law has spent the last 15 years continuously working out of country as a truck driver in Singapore, living in a ramshackle shelter on construction sites while sending most of his earnings back to his wife and kids. This is a somewhat extreme case, but milder instances are commonplace. People often have to work away from their families for years at a time to make ends meet and accrue any sort of savings.
Then there is transportation. Every day you will see mothers on scooters carrying several toddlers who are certain to die in even minor accidents. Another common sight and a less egregious example would be pickup trucks with the backs piled full of day laborers, or commuters casually hanging off the back of high-speed songthaew busses. This is highly efficient in monetary terms, but the human cost is huge.
It's a complex issue that is not reducible to PPP numbers.
I'm not sure why you say things aren't "reducible" to PPP numbers - low PPP-adjusted income corresponds quite well to the low consumption levels you are describing.
In any case, I'm glad we are agreed that unreal37 is incorrect, and it is possible to "live on" $1200/month. It's not anywhere near as nice as American poverty, but it's hardly clear that $7.25 is too low.
I'd propose an alternate direction for the discussion - if we believe the American poor are lacking in some necessary good or service, lets be specific and name it.
You can live on very little if you live in poverty but that does not make it ok or acceptable. It is something we should be trying our hardest to eliminate. The idea that somebody should work hard each week and still be in poverty is a disgrace.
Poverty is a major problem in India. Close to 40% of all impoverished children in the world live in India. Hundreds of millions of Indians lack basic services such as electricity or a toilet in their homes. Hundreds of millions lack basic education. Not something we want to emulate.
It is much better in the major cities though where median PPP income is close to 7.5k USD.
The US has other cultural problems which make cost of living far higher than they have to be. For example many minimum wage jobs in the US "require" a car! Even if the job itself doesn't involve driving.
A variety of household/family coping strategies, some anomic, and typically utilised together:
1. doing without
2. extended family help,
3. multiple low-paying jobs among family members,
4. subsistence agriculture,
5. family splitting, including emigration
6. informal economy,
7. corruption ('blat' in Russian). Core public services and government jobs pay poorly. But its also institutionalised in INGO's even though they pay very well comparatively.
8. crime.
Numbers 1-4 are classed by the troika as an 'informal welfare acheme.'
$7.25 is fine for teenagers looking to pick up some experience and extra cash. The notion that the minimum wage is supposed to provide a living is a good way to remove young people from the job pool.
The notion that minimum wage isn't supposed to provide a living is a good way to keep adults and the children they support in abject poverty. That's a little more important than teenagers who want after-school jobs for pocket money.
Why push that burden on the job creators? If the labour value someone provides is lower than a living wage, why not let them survive on welfare (food + clothing + shelter)
If this isn't happening, I'd think its more important to provide those basic amenities rather than raising the minimum wage.
Well, for one thing, welfare funding ultimately comes from tax money, and those noble job creators fight tooth and nail against social benefit programs just as they do against minimum wage increases, and anything else that threatens to make the world a better place at a cost to their bottom line.
The US in particular suffers under an entrenched and insidious myth that work is inherently virtuous and people who can't work deserve to starve. Reagan's imaginary legions of welfare queens have taken root in our national dialogue and made widespread, substantial improvements to public welfare virtually impossible. If you feel that progressives are grasping at straws, it's because that's all we have left.
Well it is their income being taxed, why do you feel they should feel obligated to give a portion of it up? (keyword: obligated) they obviously do not.
except now people work in minimum wage jobs all their life.
> The notion that the minimum wage is supposed to provide a living is a good way to remove young people from the job pool.
The minimum wage is supposed to provide a living period.
How can people be as selfish as you are is beyond me.There is enough wealth in this world to be shared so everybody can make a decent living,and it wont make whatever you think you are worth less valuable.
Not supporting a particular way of distributing wealth is not necessarily being selfish. There are good arguments for e.g. raisin/expanding the EITC instead.
I don't have an opinion on the matter (not being a US citizen, I certainly don't know enough about the situation), but I think your insult is completely inappropriate.
"except now people work in minimum wage jobs all their life."
Source please.
"How can people be as selfish as you are is beyond me.There is enough wealth in this world to be shared so everybody can make a decent living,and it wont make whatever you think you are worth less valuable."
Nice try on the appeal to emotion and shame, but the tactic is best left to talking heads on TV and not places where people actually care about this problem. I could respond with your utter indifference to the youth problem particularly it seems in minority communities whose starting businesses cannot afford $15/hr makes you a ..... well you get the idea. This is HN, not MSNBC.
This whole minimum wage foolishness is a cover for politicians that have failed our poor. We need to understand why adults cannot get jobs that employers when jobs go empty. We also need to look at our safety net and see how full of holes it is. Its time for looking at new way to elevate our at risk population (basic income is often discussed here) and education (vocational education to fill the infrastructure jobs that are long vacant and not outsourceble for example).
Maybe it's different where you are, but in the Kentucky area I see plenty of people in their 50s and 60s working in fast food, gas stations, and Wal-Marts. Have you really not seen this?
Further, your solution is basically going to get some of those people fired. How about treating the problem of why those people are working minimum wage jobs instead of glossing over it and making things worse.
> The notion that the minimum wage is supposed to provide a living is a good way to remove young people from the job pool.
Exactly. Imposing a price floor on labor does nothing besides driving up unemployment.
I wish people would stop pushing for an increase in minimum wage. Fundamentally people are trying to subsist on low-skill jobs where the supply/demand realities aren't in their favor. That's the problem we need to address, either through a universal basic income (decreasing the supply of labor) or increased training.
A minimum wage just distorts markets and leaves nobody better off.
> Imposing a price floor on labor does nothing besides driving up unemployment.
Do you have any evidence to back that up? I know it was orthodoxy like twenty to twenty-five years ago, but I remember there were plenty of other theories in my university days.
Pushing young people out of the job pool isn't such a bad thing if there's an educational alternative. Besides, people on lower incomes spend a larger proportion of their income, rather than saving.
Directly increase their disposable income with a minimum wage and I find it hard to believe there won't be an increase in spending in the economy - and that has its own multiplier effects.
Besides, even if what you say is true, then you could pragmatically combine policies for effect; an increase in minimum wage with say, government spending on education initiatives, or raising the mandated school leaving age.
> Do you have any evidence to back that up? I know it was orthodoxy like twenty to twenty-five years ago, but I remember there were plenty of other theories in my university days.
> Pushing young people out of the job pool isn't such a bad thing if there's an educational alternative.
That might indeed be true, but the problem with a price floor is that you have no control over which workers are displaced. I actually think in many places employers would prefer to keep the teens who can, ex. carry more boxes per hour, than older and potentially more vulnerable workers.
Hence, the right solution is to attempt to shift the supply of minimum wages by ex. providing more support/incentives for college education.
> Directly increase their disposable income with a minimum wage and I find it hard to believe there won't be an increase in spending in the economy - and that has its own multiplier effects.
I'm actually not convinced of that. People living on minimum wage often have negative net worth and depend on credit for day-to-day expenses. Hence all that marginally increasing their wage will do is decrease their indebtedness, not increase their spending. Of course, a huge jump in the minimum wage would be enough to push every employed person into the middle class. But it would provide substantial incentives for automation and essentially eliminate low-skill jobs, creating mass unemployment.
>Exactly. Imposing a price floor on labor does nothing besides driving up unemployment.
Uh, no. My state, Washington, has the highest minimum wage in the country and is doing better [1] than most states in the US in terms of job creation. I expect Seattle's recent move to a $15/hr minimum wage to improve the economy and the lives of low-wage workers there.
That logic is flawed because you're comparing apples to oranges without controlling for exogenous factors.
Perhaps the Washington economy has been growing which allows employers to both pay the higher minimum wage and continue hiring.
If you want to do these terrible comparisons, I'll give you Norway where there isn't any minimum wage yet the unemployment rate is far lower than in Washington (3% vs 6%).
I had a conversation with someone tonight about just this topic. If it takes two full time jobs just to make ends meet, then you can't have a reasonable expectation of them learning a new skill to get a better job. Not only do they not have the time to learn whatever potentially lucrative skill people want to imagine up, but the fatigue from putting in that much time is probably reducing their ability to fully function at either job. Combine that with the fact that being responsible for two jobs limits promotion chances, and you've got people stuck in a perpetual cycle of poverty.
I didn't dismiss anything, and I'm not saying $7.25 is okay. I'm merely saying that cost of living should be taken into consideration when comparing countries' minimum wages.
The way I see it all work should be sufficient if worked standard fulltime 38-45 hours a week for a person to survive with some free time to better themselves with.
The alternative is people working huge numbers of hours just to survive and having no time to improve their situation, becoming trapped in a cycle of endless low-end jobs and poverty. You can't actually upskill if you spend 12-16 hours a day working dead-end jobs.
Wow. You have guts. Unproductive is a very mean word to use for people who work their ass off and still get underpaid. Something can be exploitation while it's still legal. And the blame does lie with the employer in that case. If they can't pay their workers a reasonable living wage, they should raise their prices or they have no business, or at least the law should make it so that they don't have one.
Productivity has absolutely nothing to do with how hard you work. Productivity refers to the value you produce. Also, in cases where a person is free to leave the job there is no such thing as underpaid. If the person is underpaid he should leave the job and join somewhere else, if he cant get a better pay it means he is getting paid what he is worth unfortunately for him that is far too less than what it takes to live a good life.
Employers which are corporations in which you and me could be investors have no right to waste our money one some else. Their only responsibility is to deliver returns on our investments by hiring the cheapest possible labor while generating maximum possible value.
If there are poor people around us who need help, it is the responsibility of the society and not of corporations. I would help a poor kid get education by spending my money on him but I will not let a company I am invested in to waste my money on such kind of nonsense.
http://www.wolframalpha.com/input/?i=cost+of+living+switzerl...
This proposed Swiss minimum wage is therefore (roughly) equivalent to a minimum wage in the U.S. of $16.28 per hour (taxation differences and non living-expenses notwithstanding).