What the US gets wrong about minimum wage

What the US gets wrong about minimum wage


This is an American sweatshop. They flourished in the early 1900s, when people
were desperate for work. And since there were no regulations on what
they had to pay, they paid workers next to nothing. So the US adopted something that had already
worked in other countries: a minimum wage. This is a chart of the minimum wage in the
United States over the past 60 years. You can see how it’s gone up, and up, and
up: from a dollar an hour in 1960 to $7.25 today. Go America, right? But this chart is actually pretty misleading. If you take the same line, but adjust it for
inflation, you’ll see the problem. Every time the minimum wage has been raised,
inflation has dragged it right back down. Really, America’s minimum wage hasn’t
gone up. It’s essentially stayed the same since the
80s. What you’re seeing here — this constant
up and down — this is weird. It’s not how the rest of the world does
it and it leads to a bunch of problems for American workers and businesses. But it doesn’t have to be this way. The minimum wage sets the smallest amount
that a business anywhere in the country can pay its workers each hour. But when that first bill became law in 1938,
it had one big problem. That first law didn’t actually set any kind
of guidance on when and how you’re supposed to raise the minimum wage in the future. That meant that if the minimum wage was going
to go up, Congress would have to pass a new law. That’s what these steps are. But as we already know, they aren’t occurring
enough to keep up with inflation. And this system also makes the US minimum
wage sort of unpredictable. Look at this period. Starting in 1997, the minimum wage sat at
$5.15 an hour for 10 years. Then, it was raised in 2007 to $7.25 by 2009. Cool, but that’s a 40% increase in a pretty short time, after a decade of inaction. How do you plan for that if you own a business? Not having that consistency does raise a lot
of problems for business owners. Will they have to lay off employees, will
they have to reduce work hours, or will they just raise prices on their customers? Imagine how much smoother that could all go if the minimum wage just kind of went up over time? Well, we don’t have to imagine it. In France, they automatically raise their
minimum wage every single year. They tie it to inflation and the average salary
of a French worker. In Australia, a commission reviews the minimum
wage every year, considering economic factors like inflation. The UK also has a commission made up of union,
business and economic experts. The Czech Republic’s commission consults
with employer and union representatives. Their line is lower overall than America’s,
but it still trends upwards. Same with Costa Rica. And their committee reviews the minimum wage
twice a year. In most countries, the minimum wage is in
the hands of economic officials. In the US, it’s in the hands of politicians. And that goes about as well as you’d expect. Today the federal minimum wage is a poverty
wage. Last thing we need are more one-size-fits-all
Washington mandate. It could eliminate up to 3.7 million jobs. It would lift 1.3 million Americans out of
poverty. Raise the wage for 33 million people, a quarter
of the workforce. Those wages are only available if you get
hired. Working people are doing their jobs, let us
do ours. Republicans have generally resisted increasing
the minimum wage. They tend to support a lot of pro-business
policies and business leaders do not want minimum wage increases. Democrats on the other hand, they have a lot
of support from labor unions so they’re the ones who are usually pushing for an increase to the minimum wage. So that’s why Congress rarely agrees on
raising the minimum wage. And what makes America’s system different than other
countries. This chart shows how much a minimum wage worker
makes compared to the average worker, in every developed country with a minimum wage. All these countries have some kind of commission
or formula to determine what the minimum wage should be. And they review it every year or two. And then there’s the US. Who does neither and is dead last. If the US had done something similar, like
tie the minimum wage to the average wage each year, we’d be here. Not amazing, but not an outlier. What we’re talking about is the federal minimum wage, which applies to everyone
who works in America. But states can set their own too, and about
half of them currently have a higher minimum wage than the federal one. Like Washington State, which in 1998 decided
to raise theirs every single year, base on inflation. Sound familiar? I mean it’s such a logical idea, it’s done in other countries. It really doesn’t make sense that it’s not done at the federal level. Like really it’s just
about politics. Right now politicians are yet again debating
what the minimum wage should be. Should it be $15, $11, or should it not be
raised at all. But maybe the solution to this never-ending
debate, is to just take the decision out of politician’s hands.

100 comments

  1. Its not the governments fault. The federal Gov should mind it's own business. Democrats always think they know best. Each state should be able to decide.

  2. Yeah it sounds good to raise the minimum wage but a minimum wage job isn’t a career that’s why we go to college to get degrees so we aren’t stuck at star bucks or stop and shop those aren’t careers and if you do raise the minimum wage the cost of living will go up with it so then you guys say “we need to raise the minimum wage again” and then cost of living goes up again so it just becomes this never ending cycle of I want more with out going to school but that’s not how to world works I’m sorry

  3. Being in California, a $7.25 wage seems so absurdly low. Like I literally get paid double that (as a student in my college)

  4. When the minimum wage raises, companies have to pay employees more, and charge more for their products. It doesn’t help anythinf

  5. What this video doesn't account for is state minimum wages. The reason the minimum wage in the US is so low on a federal level is because they allow the states to make their own minimum wages. In Texas the minimum wage is around $10 but in somewhere like California it's $15. The federal minimum wage only effects how low each state can make their minimum wage. So for me I live in Oregon, here we actually have two minimum wages, one for the greater Portland area which is I believe $12.75 and the rest of Oregon which is $11.25. In my opinion I believe states should implement a minimum wage per county because someone living in LA needs more money to live compared to someone living in northern California in a small town.

  6. Vox, I like you, but don't talk nonsense. There are many countries which have no minimum wage and high incomes at the same time: Denmark, Norway, Switzerland, Singapore

  7. Better than minimum wage would be a universal basic income which would increase the quality of life for all people including those who cannot be employed and those who are starting their own businesses. A minimum wage only helps someone working for someone else, whereas UBI can help all people regardless of status, career path, or ability to work.

  8. I used to live comfortably with my full-time job until California decided to raise the minimum 2 years in a row. Even though I was making more then the minimum . In 6 months My hours went from fulltime 9-5 m-f to 11 whole hours a week. So now I work two part time jobs, I work every day of the week and only get to see my family 12-5am and im still making less then I did a year ago . .. so thanks for that guys

  9. Countries With The Highest Minimum Hourly Wages In The World, 2019

    Interestingly, Australia, Luxembourg, New Zealand, France, and the Netherlands offer the highest minimum hourly wages in the world, according to data from Germany’s Wirtschafts-und Sozialwissenschaftliches Institut (WSI).

    Where should workers move to in order to earn the best minimum hourly wage?

    The answer is Australia.

    The hourly minimum wage in Australia is US$14.14, Luxembourg at US$13.14 per hour, New Zealand at US$11.28 per hour, France at US$11.24 per hour, while the Netherlands offers US$11.01.

    The hourly rate in the United States yields the equivalent of US$6.63 of purchasing power, according to the report, almost four times that of Russia’s, which is worth only $1.87 in purchasing power terms.

    What is Purchasing power standard (PPS)?

    Purchasing power standard (PPS) is an artificial common reference currency unit used in the European Union which eliminates the differences of price levels between countries.

    Theoretically, one PPS can buy the same amount of goods and services in each country. The aggregates expressed in PPS are calculated by dividing the aggregates expressed in current prices and in national currency by the Purchasing Power Parities (PPP).

  10. I hate this narrative that bumping the minimum wage will fix anything. It won't. All that will happen is the cost of goods will go up in response. I live in a place where the minimum wage, within the past 10 or so years, has gone up twice. A chicken used to be around 5 dollars, it's now 12. A 2L jug of milk used to be 2.45. It's now 5 dollars. People will say it's inflation. It isn't. Inflation wouldn't double the price of some goods and not others. It's because of minimum wage going up.
    I get that people need more money, and they do. But unless the government can ensure that price hikes like that won't happen it won't fix anything. It'll be nothing more than a band-aid on a gunshot wound.

  11. The price of goods/services, adjusts to the minimum wage. Let me pay my workers, their worth. Stop forcing the hand of the business owners.

  12. Minimum wage is for 16 year olds living at their parents house , not a family of four . Want more money ? Gain a skill and get a better job .

  13. Why would anyone work for less than they can live on?!?!?! Hahahahaha
    It's your labor, your commodity, if you want it to be worth more do something of more value

    We should just get rid of the minimum wage

  14. No one seems to understand that people paid minimum wage will always be the poorest people. You are literally making the lowest legal wage possible. We could lower minimum wage and everything will get cheaper so that the new wage is equal to the $7.25/hr now.

  15. Raising minimum wage without rent control is a hamster wheel.
    Gives landlords permission to raise rent…
    Started working at $3.35 – $3.55 for 5 years…

  16. How about blame the government from creating inflation? Money printing without nothing backing it is why Americans are not living like they did in the 50s. Inflation is the problem.

  17. A universal federal minimum wage makes no sense. From an economic perspective wages below a "living wage" are a drain on the economy. It would make far more sense to set the federal minimum wage to the living wage, which would be calculated for each county based on their CPI. $15 is nothing in New England. $15 is a lot in rural regions of the US.

  18. You answered your own question in one minute. Minimum wage causes inflation because people can now afford more so companies raise their prices causing inflation. Great job vox we wrapped it up in under a minute

  19. Just a thought but I think it should be on the federal level but at the same time keep the division between states because states GDP per capita varies

  20. Only raising the minimum wage is problematic. I'm in trades and my wage hasn't gone up with the minimum wage. In the last few years minimum wage has gone up $4 in canada. Itll be $15 an hour in 2020. But my wage hasn't gone up anywhere near the same amount. It's just bringing the middle class into the low class.

  21. 15$ an hour sure itd raise inflation but not by enough to make that pointless it'd only I cease about 3% to 5% that year you could say they would fire people but they wouldn't large companies and easily pay there workers 15 or way more. Yes small companies you could say will have to fire people but you also have to rember that money will be coming out of rich business who dont spend it and going right into the peoples hand who are going to spend it on small businesses when they get there money then allowing them to pay them 15 an hour

  22. Here in Colombia the minium wage raises every year. It doesnt go up much but at least it increases steadily, and our inflation is pretty low.

  23. What if we just got rid of the minimum wage and let the people decide how little or much they’ll work for- that’s true freedom

  24. Raising the Min Wage will only worsen the economy as a whole, this is fact.
    Not surprised many are for it, higher overall wages mean more tax revenue for the government.. it's always about the money it's NEVER about the people and your blind if you think this is being done for the people.
    If you want to help the economy try abolishing income and property tax and raising sales tax (that way EVERYONE is paying taxes) The more money you make, the more money you have to spend, the more you buy and the more you pay in taxes.

  25. 50s: one person could work and support a household.
    2000s: two people work and can't support a household.
    Government: but we raised minimum wage what's the problem?
    People: 7 years ago. And what about inflation?
    Government: …..

  26. I think we need to have a $15 minimum wage, this is unreal no one can live on $11 or $12 an hour especially in todays world where goods keep going up

  27. If minimum wage jobs are so bad, do something where you demand higher than minimum wage… Anyone who is motivated at all can earn more than minimum wage

  28. This doesn't account for the fact that modernized industrial nations with no minimum wage have lower unemployment and higher average income….

  29. Every time the minimum wage goes up, the price on all products and services goes up. It will always be an out of control train running down the tracks.

  30. All the worst wages are paid in red states, and these people keep voting for the party that will never care about their poverty issues. But at least they have their guns. How they can even afford guns is beyond my comprehension.

  31. Minimum wages are for non skilled workers, the reason turnover is so high is because people in these jobs can be easily replaced and trained over a short period of time. The US has a large population with few actual skills since most schools don’t have jobs programs for high schoolers due to our fear of letting our children do anything. There’s a simple solution and it’s called an apprenticeship program, where for people who don’t want to go to a university can apprentice themselves on a skilled labor job like in construction, or an electrician or a plumber. All these jobs pay well and offer Beni fits for their employees. I’m sure there are plenty of businesses that would jump at the opportunity to train our youth in these jobs, and if not there is always the incentive of tax write offs for volunteers. Instead of putting pressure on small businesses to force them to pay their employees more, if there were less people in the unskilled pool then these businesses that pay minimum wage would need to offer more to entice people to work for them instead of taking advantage of free training programs and it would fix itself naturally or these businesses would go broke.

  32. The US is such a beautiful country with so much potential. It’s a real shame that there’s so much that’s utterly backwards about it.

  33. America is an outlier in so many areas compared to other developed nations. It’s almost like the quest for unbridled capitalism and ‘freedom’ is destroying the country

  34. When the minimum wage began it was enough money for just the father to supply the whole family with since he was usually the only one with a job in the house

    Now the minimum wage can only supply half a person

  35. 4:30 “It’s such a logical idea, it’s done in many other countries”

    Yep. Universal healthcare, government sponsored college, gun background checks and tests, and drinking age 18 are all there too

  36. Vox reporters have either not taken an economics class or don't remember what it taught them…nor bothered to interview actual economists for stories involving economics. If you are going to show a graph adjusted for inflation, then how – pray tell – would a line showing increases in the minimum wage ADJUSTED FOR INFLATION be a good thing? Raising the minimum wage is also a CREATOR of inflation (among many things including the Fed itself), so why would you want the rate to outpace inflation? Outpacing inflation IS political – which would defeat your own arguments in this video. Also, it would just increase inflation at a faster rate.

  37. the minimum wage should be tied to inflation, but whether that rate should go up is a completely different debate. all of those compared countries' lines trend upward in spite of inflation, not in accounting for it. that's effectively arguing the minimum wage worker should make vastly more in today's dollars as time goes on.

  38. I live in Massachusetts and we're doing this. Minimum wage is 12$hr right now, and each year it goes up a 1$. Till it hits 15$

  39. This video is really misinformed about the practices that happen in other countries beside the US. In the Balkans, the minimum wage isn't enough to survive a month living with your parents.

  40. If you want to hear a practical explanation of how to implement minimum wage checkout the congressional candidates take on my channel

  41. Since a home in San Francisco or New York City costs more than one in Alabama or the Midwest – by maybe TEN ORDERS OF MAGNITUDE – a National minimum wage makes no sense.  Even within states like NY or California, the difference in the cost of living in different areas is so dramatic that a statewide minimum wage doesn't work at all.  I could live on $15 per hour in some places – but no way in Manhattan, Boston or DC.  So, much of the minimum wage "debate" is ignorant blather.  Those on the left are smart enough to know better, they are just buying votes.  On the right, the fear of a national minimum wage – that is too high for much of red state America –  is a terrifying and very real prospect that could have a devastating economic impact on those areas.  Hence no easy bipartisan solution.  Of course there is probably enough statistical information available to tie a national variable minimum wage to an existing economic benchmark, but it is too complex for many politicians to comprehend, much less be able to explain in a sound bite!

  42. There shouldn't be a minimum wage. I like how everyone in the comments has no idea how minimum wage works or even the free market.

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