https://www.cnn.com/2020/10/03/world/geneva-switzerland-minimum-wage-trnd/index.html
Geneva, Switzerland citizens voted to increase their minimum wage to equivalent of $25 USD. This is believed to be the highest set minimum wage in the world. A minimum wage this high is very foreign to Americans who are used to the highest minimum wage being ~$15 and the federal minimum wage being south of $8. One interesting note from the article is that Switzerland does not have a federal minimum wage, but the need for a minimum wage is being taken on by their equivalent of states.
There is a good deal of speculation that the COVID-19 pandemic helped to push this vote to pass. This makes sense because of the amount of essential workers that needed to continue to work throughout the pandemic and there could be an increased appreciation for these workers.
Do you think that it is feasible that we could see a minimum wage this high in the U.S. in the near future? Do you think that it would result in inflation and/or an increase in unemployment? What other factors should be taken into consideration when making a decision like this?
7 comments:
It is super interesting to hear that this is happening now, in light of Biden's proposed $15 federal minimum wage. A $25 minimum wage makes Biden's proposal looks modest (like his other policies). However, I do not think Geneva's new minimum wage will alter American perceptions about a $15 federal minimum wage. Most Americans are convinced, perhaps rightfully, that such an increased price floor will drive up prices for the goods, which lower income people purchase. While research on this relationship does not clearly suggest that increasing wages leads to equally large increases in price, many Americans view such high minimum wages as counter to the American ideal of working your way up the job ladder. Many Americans subscribe to the notion that high minimum wages induce laziness and disincentivize workers from seeking to obtain better paying jobs. Therefore, I do not think international changes to minimum wages will change the pay structure in America.
I definitely believe that the US could see a $25 minimum wage in the future but maybe not in the near future. We already have cities like Seattle, NYC, and DC that have minimum wage rates of $15 or higher, so to see an increase in the future either due to the pandemic or other economic factors seems almost inevitable. However, I don't think it is feasible to create a federal minimum wage that high because the USA is almost like the EU where each state has different standards of living, wages, taxes, etc., so making a $15 or even a $25 federal minimum wage may create a lot of chaos for poorer states/cities.
I agree with both Maia and Max. I think that an increase in the minimum wage in the US is definitely possible. However, I do not think it will be a drastic increase. Biden's goal to increase the federal minimum wage to $15 could be feasible if he gets elected, but following Switzerland's example might not be realistic for the U.S. Also, oftentimes when talking about this possibility we mostly think about the negative consequences, I believe it should also be noted that increasing the minimum wage has the potential of stimulating the economy, and even if there could be inflation initially, the long term benefits outweigh the disadvantages. Some states have a minimum wage as low as $7.25 which is simply not livable. Increasing the minimum wage might be a step to reduce poverty so that should be taken into consideration.
I see the US getting a minimum wage boost in the very near future but I definitely don't see the increase this substantial. It will be pretty interesting seeing if this will have any impact on future wage increase of the US
I definitely see the US raising the federal minimum wage, but a figure of $25 is way too polarizing to be implemented. Also, the impacts of boosting the wage may be overstated by politicians and their constituents. $7.25 in a 40 hour work week simply is not livable. Max is right when he describes many Americans perception on what raising the minimum wage could do to the economy. Though, what is the point of having a strong economy while many Americans barely get by weekly.
That high of a minimum wage in the US would not be good. Products and Services in Switzerland are much more expensive than in the US so the $25 really doesn't go that far. If the US increases minimum wage this could increase unemployment because businesses can only afford to hire so many workers at a higher wage. Overall, this makes the outcome better for those who have a job getting paid a higher wage, but people who don't have a job become worse off and it will be harder for them to find jobs.
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