Posted on 02/26/2021 9:06:09 AM PST by SeekAndFind
More than 90% of all countries have some kind of minimum wage legislation.
The debate about whether establishing a minimum wage is a good thing or a bad thing has been raging for over a century, but the concept is so common nowadays that it even sounds obvious that there should be a minimum wage. Many have trouble imagining the world without it.
However, the truth is that there are a few countries without this purportedly crucial legislation, and they seem to be doing just fine.
There’s one thing that the best economies in the world have in common: low government involvement. For most nations, that’s certainly not the case, and minimum wage laws have been a non-stop trend since the beginning of the 20th century.
This doesn’t mean that we at Nomad Capitalist want to pay people the bare minimum because we want to make more money for ourselves. On the contrary, what we would like to have is the power to make the decision of how much we consider to be adequate pay for someone in exchange for their services.
On the other side of the negotiation, we’d also like others to have the power to decide whether they accept the deal or not. A wage must be earned with hard work, experience, and level of skill, and to stimulate competition, a non-regulated job market is the next best thing.
In this article, we are going to talk about why the minimum wage isn’t as perfect as we often believe, and we are going to list the countries that thrive without it as an example of this.
Although many of us couldn’t possibly imagine living in a country with no minimum wage, the reality is that you don’t need a minimum wage to have a functional economy.
It’s actually quite simple. Let any market work on its own, and basic economics says that it will organize, balance, and regulate itself based on basic concepts like supply and demand.
Believe it or not, this applies to the job market as well. What happens if a particular job is in high demand, but there are few people capable of doing it? Employers will have to pay more to make sure that they find somebody to fill the position. What happens the other way around? If there’s a job that’s not as demanding and many people can do it, employers will hire the person who asks for the lowest salary.
What’s the best part of this free market? The fact that the final decisions rely on the people.
Today, countries like Sweden, Norway, Denmark, Singapore, Hong Kong, and Austria are great examples of how things should be done everywhere else. In fact, these societies might be a couple of steps ahead of the rest.
All of these nations have lower unemployment rates and higher average salaries than most of their European and Asian neighbors. They also permit a large degree of labor freedom by allowing employees to freely unionize. Through unions, employers and employees have the freedom to negotiate fair minimum salaries – and the government has no say in the matter.
Before we dive in too deep, let’s talk about the history of the minimum wage. The concept of a salary has existed for centuries, but the minimum wage is a modern development.
Minimum wage legislation first emerged in New Zealand in 1894. The Parliament of New Zealand gave recognition to unions and set a minimum wage to prevent employers from exploiting their workers. The minimum wage was born in New Zealand as a result of government negotiations with workers.
Two years later, the state of Victoria, Australia, created a wages board to determine and establish a minimum wage for industries that paid the lowest salaries.
In 1904, the British empire got on board with this idea after studying what happened in Oceania, and the country began to establish minimum wages in the most underpaid industries, too, as a part of a social reform.
The United States followed this trend in 1912 when Massachusetts set a minimum wage for women and children.
In the 1960’s, Latin American countries adopted these laws, but they set their minimum salaries very low, and to this day, some of them still are.
To this day, the main reason why governments continue to enforce laws on minimums wages is to prevent employers from exploiting desperate workers and to make sure that people willing to work can earn a decent amount of money. However, as you’ll see next, a minimum wage might do more harm than good on that front.
Although minimum wages seem to work on paper, they occasionally backfire. Some of the negative effects of minimum wages include:
Therefore, while a minimum wage does have some benefits, the idea that it’s an infallible economic policy is clearly false. Most business owners would agree that eliminating the minimum wage would be good for the economy.
In the US and other countries around the world, politicians have criticized current minimum wage levels as inadequate. US presidential candidate Bernie Sanders, for example, has called for a major minimum wage increase because the US minimum wage has not caught up with inflation and the rising cost of housing in many areas.
Raising the minimum wage, however, can be a gamble. On one hand, if you force wages up, people will spend more, which is good for businesses in general. This also means a major morale boost among workers, which would theoretically make them work harder and be more committed.
On the other hand, labor market competition would intensify because not everyone would be able to afford new employees. Raising salaries by law would probably spell doom for some small businesses that already run on a tight budget, and larger companies would even need to make strategic decisions, including layoffs and branch closures, to make up for this new cost.
One of the largest concerns surrounding raising the minimum wage is automation. McDonald’s, for example, has already started replacing employees with machines, supporting the real concern that a higher minimum wage will accelerate the path to automation.
Another concern surrounding a rising minimum wage is outsourcing. Although outsourcing has always been an issue, it’s a more pressing concern today thanks to the rise of remote working. If wages rise at home, employers will find it easier to outsource certain projects to other countries with lower costs of living.
Therefore, while raising the minimum wage can stimulate the economy in some ways, it could hurt businesses in others.
Something that frequently surprises people is that some of the wealthiest and most prosperous countries in the world have no minimum wage. Sweden, Singapore, Norway, Denmark, and Switzerland have all foregone the minimum wage – yet their economies are thriving. Although Sweden is often portrayed as a socialist utopia, its minimum wage policy encourages a free market.
The average salary in Sweden is about $2,500 per month with an unemployment rate of 6.0%. It’s also the 9th happiest country in the world.
Sweden is usually the reference for people dreaming about eradicating the federal minimum wage established by a government. However, these matters are wonderfully managed by very organized unions, which continuously negotiate wage rates in different industries to guarantee salaries’ fairness. Then again, if some are willing to work for less, they can.
The average salary in Singapore is about $4,152 per month. The unemployment rate is a remarkably low 2.2%. However, in terms of happiness, the country ranks 34th.
This small Asian country is an economic example for the entire world for a number of reasons. Singaporeans have a self-regulated job market that requires absolutely no intervention from the government. There’s no other country in the world that rewards employees more fairly based on their level of experience, skill, education, and capabilities. At the same time, this generates an extremely healthy competition among their workforce. This results in a country that’s very close to becoming the most high-tech economy in the world.
The only apparent drawback here is Singapore’s relatively low happiness rating, which is primarily due to social pressures in this very wealthy nation. However, among Southeast Asian countries on the World Happiness Report, Singapore ranks second.
Norway’s average salary is about $3,500 per month, and the unemployment rate is only 3.7%. It’s also the 2nd happiest country in the world.
Like Sweden, Norway is also a highly-unionized nation. Norway also has some of the best employee benefits in the world, such as job security, plentiful vacation time, fair wages in most industries, and better salaries overall – especially for workers in the construction or agriculture sectors. Denmark is another Scandinavian country with no minimum wage.
The average salary in Denmark is about $2,400 per month while the unemployment rate is 5.2%. Additionally, it’s the 3rd happiest country in the world.
Like in Sweden and Norway, Denmark’s high wages and standard of living rely on the very-well-managed relations between employers and workers. Trade unions determine how much should a particular sector or industry pay its workers. Until this day, everyone seems very happy with the average $2,400 salary. They also have one of the best economies in the world, and its population is accustomed to a very high standard of living.
The average salary in Switzerland is about $3,000 per month. The unemployment rate is 2.4%. It’s the 5th happiest country in the world.
In 2014, the Swiss firmly rejected a proposal to legally establish a minimum wage. According to the Swiss, their job force doesn’t need any sort of government intervention, and they trust in their trade unions to keep good relations with employers and to guarantee the fairness of salaries in each industry. This nation is also used to high living standards, and they are the third-richest landlocked country in the world.
Finally, the average salary in Iceland is about $2,900 per month while unemployment sits at 2.6%. It’s also the 4th happiest country in the world.
Rated as one of the happiest and healthiest countries in the world, Iceland workers don’t rely on their government to establish fair salaries in different sectors. With some of the lowest crime rates in the world, unique landscapes, and a solitary geographic location, this country serves as a wonderful example of a healthy free job market.
A major shift in the minimum wage debate is ultimately very unlikely. Like I said before, the notion of having a minimum wage is so rooted in most countries that the very thought of abolishing it seems like a crime. It will take a few more years for leading economies to realize that the healthier choice will always be to keep governments from regulating and interfering with free markets.
Having a job is essential for everyone. The rising community of freelancers all around the world show that people want to take control of their work life and be less tied into government-enforced rules. The internet is making it possible for workers to determine by themselves how much they want to earn and how much employers are willing to pay, which is great news for digital nomads and international entrepreneurs like us.
No matter what is legislated, our Minimum Wage will ALWAYS be $0.
Timeframe doesn’t matter: $0/hour, $0/week, $0/year.
We have states with zero minimum wage Mississippi, lousiana, Alabama, South Carolina and Tennessee.
On the other hand the lowest average salary in the United States is Mississippi! Not shocking really.
Aren’t taxes through the roof? Don’t many of them still want to settle here?
RE: We have states with zero minimum wage Mississippi, lousiana, Alabama, South Carolina and Tennessee.
How could this be when there is a FEDERAL minimum wage of $7.25 and hour? Wouldn’t they be in violation of US labor law?
When businesses are granted the right via government to pay a minimum they all will do so...
I’d imagine if they have federal jobs in the state they are paid the minimum wage at least. I’m just saying Mississippi doesn’t pay very much compared to other 49 states. Why?
The minimum wage is the tool of the self-fulfilling opinion that the government needs to regulate wages. The labor market distortions that the minimum wage helps foster INSURES the condition that no minimum wage is ever enough - thus the policy (cure??) helps perpetuate its need. Any new minimum wage when proposed is trying to help “solve” conditions that prior minimum wages were part of creating.
Those always hurt the most are those at the lowest end of the wage scale with the least education, least skills and least experience. The minimum wage permits/forces the logical action of hiering whoever with the most education, most skill and most experience will work for the minimum wage.
The minimum wage helps increase the permanently unemployed, by continually pricing them out of the labor market.
Its a GREAT policy when your goal is to try to insure the government plantation society - folks that cannot live without government assistance - never lacks for folks it must serve.
Those 6 countries might not have a min wage but they have free healthcare, free college and other benefits we do not have.
Regarding so-called U.S. national minimum wage, patriots are reminded that, regardless of politically correct interpretations of Congress’s very limited Commerce Clause powers, the states have never expressly constitutionally given the feds the specific power to regulate labor wages, including minimum wage.
In fact, not only had 19th century, state sovereignty-respecting Supreme Court justices emphasized the already clear meaning of the Commerce Clause, but Justice Joseph Story had used “the wages of labor” as an example of a power that the Commerce Clause does not give to Congress.
"Article I, Section 8, Clause 3: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"
"State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, &c. are not within the power granted to Congress [emphases added].” —Gibbons v. Ogden, 1824.
"Agriculture, colonies, capital, machinery, the wages of labour, the profits of stock, the rents of land, the punctual performance of contracts, and the diffusion of knowledge would all be within the scope of the power; for all of them bear an intimate relation to commerce. The result would be, that the powers of congress would embrace the widest extent of legislative functions, to the utter demolition of all constitutional boundaries between the state and national governments [emphases added]." —"Justice Joseph Story, Commerce Clause (1.8.3), 1833.
”From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added].” —United States v. Butler, 1936.
Patriots who would appreciate a minimum wage please note that there is nothing stopping a given state from making its own minimum wage laws, ultimately depending on what the legal majority voting citizens of a given state want.
In fact, consider Justice Brandeis had volunteered his “laboratories of democracy” metaphor that each state was free to experiment with things like minimum wage (my words), depending on what the legal majority citizen voters of a given state want.
"It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose [emphasis added], serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” —Justice Brandeis, Laboratories of democracy.
The bottom line is that many lawmakers of the desperate Democrat-controlled Congress need to lose their jobs under Section 3 of the 14th Amendment imo for repeatedly passing legislation based on constitutionally nonexistent federal government powers.
"14th Amendment, Section 3: No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same [emphasis added], or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability."
Additionally, politically correct federal departments that deal with INTRAstate labor issues need to be eliminated.
Correct.
The market always sets prices (including wages) regardless of legislation, because a trade is, by definition, entered into willingly by both parties.
If either party is forced, it is not a trade - it is something else - it us government redistribution.
Setting a minimum wage means those who were earning less than that will lose their jobs, and others will receive a slight raise for assuming their duties.
For example, let’s say a shopkeeper is paying two people worth $8/hr to sweep the floor, and two people worth $16/hr to work the registers. Total cost $48/hr for $48/hr worth of work.
Then a federal $15/hr minimum wage is imposed.
The shopkeeper will have a choice: either pay the floor sweepers nearly twice what the market says they are worth, throwing $14 of profit per hour right down the drain, or restructure his workforce.
He really has no choice: he will immediately fire the two who are worth $8/hr, and hire a third person worth $16/hr to sweep the floors.
Thus, he will still be paying $48/hr for $48/hr worth of work, yet be perfectly legal - the only difference is two low skilled people lose their jobs - the very people the minimum wage was supposed to help.
It won’t take the shopkeeper even two seconds to figure this out - and the shopkeeper will have no choice. And it won’t just be that shopkeeper, it will be every shopkeeper and every employer of low skilled workers in the nation.
“RE: We have states with zero minimum wage Mississippi, lousiana, Alabama, South Carolina and Tennessee.
How could this be when there is a FEDERAL minimum wage of $7.25 and hour? Wouldn’t they be in violation of US labor law?”
There are a few sectors of the economy that are exempt from federal minimum wage laws (e.g., family members working in family-run small businesses). States have the option of enacting minimum wage laws to cover these exemptions. Also, states can have minimum wage levels that exceed the federal minimum for covered sectors but they cannot be lower than the federal minimum for those sectors covered by the federal law.
The UK diidn’t have a minimum wage until 1999.
Raising the minimum wage during a jump in unemployment and an inflationary reaction to the pandemic when businesses are shut down and supplies are decreased, is a huge mistake. It is going to hammer businesses all over the country.
But getting rid of the minimum wage, at state level, is not the answer. It kind of reverts back to the old saying, “If you can’t raise the bridge, lower the river.
The reason minimum wage is a problem is because of how it is applied. Professionals don’t work for the minimum. And minimum per business should be different.
So, here’s how to do it:
You don’t use minimum wage on all people coming into a business. You have minimum wage for part time staff that work after school and those that wrap your packages at Christmas time with the intent of its worth. And you create a entry level wage for those skilled in the areas you need anywhere from security staff to new vice president, both at worth levels.
And you take out the federal law that says an employee can be paid the lowest wage available from any of the states you do business in.
An example in Washington state is Walmart. In 1995 when I went to work for them the state minimum was $4.90. Arkansas was $4.75. They employees got Arkansas wages even though the local determination was 15 cents an hour higher. Walmart’s main offices are in Bentonville. In some states it was very noticeable like Hawaii and New Mexico. It does all add up in time. And don’t get me started on their stock scam.
But don’t unprotect lower level workers and pay skilled what they’re worth. Bullying the states into committing too much creates unemployment and too little for highly skilled positions chases them out of state and costs companies their businesses. Let the market create the need. And vote in intelligent people, not panderers.
wyu69
lefturd loons don’t care about common sense. They have to force minimum wage laws so that they can feel good inside because they have “done something”
The left always say "Look at Sweden. Why are we not more like them?".
Well ok, there is no minimum wage. How do ya like them apples?
The right minimum wage: 0.00
https://www.nytimes.com/1987/01/14/opinion/the-right-minimum-wage-0.00.html
The Left’s argument will be:
“Well, let’s say we do go to no minimum wage. Mr. Greedy Capitalist will hire someone. They work all day for the guy, and when payday comes, the boss says ‘Here’s your pay....01 cent’. Hey, there’s no minimum wage, so that’s what your pay is! have a good day! Har har har!”
These nations don’t have very high immigration that drives the wages down.
Also, they have very good education systems where 2+2=4.
And last, they tend to be smaller countries.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.