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 Replies to “What the US gets wrong about minimum wage

  1. One thing that I kind of wish would have been pointed out in this video, is that the Republicans are kind of right(read the whole comment before replying). As mentioned in the video, having large dramatic minimum wage increases spread out over many years does cause a loss of jobs. However, they are mostly wrong because it's not so much that minimum wage increases inherently causes layoffs, but rather the way that we go about minimum wage increases that's causing problems.

    I really wish politicians would recognize some of the criticisms given from their opposing sides, that way they could improve their own proposed policies and create better systems of government. But then again, that's probably why this kind of thing shouldn't be decided by politicians.

  2. 1. Good employee gets raise.
    2. Minimum wage goes up.
    3. Businesses raise prices.
    4. Good employee is back at minimum.

    The only thing raising the minimum wage does is increase the number of people working for minimum wage.

  3. The minimum wage is supposed to stay at the same spot and only grow incrementally that’s why it’s called MINIMUM WAGE! And this “horrible” system allows for an amazing economy.

  4. We don’t do it like other countries because we aren’t other countries has it ever occurred to you that we don’t adjust our minimum wage based off inflation because we don’t want inflation to happen. Its this half assed socialism and half assed capitalism that gets nothing done in this country.

  5. Minimum wage kills youth employment moreover only 5% of workers get the minimum wage. So this is a half truth

  6. When will people see that raising minimum wage is a big scam? Everything will be more expensive causing you to be in the same boat. Find a better job smh

  7. A majority of US citizens live in locations with states wages that are $10/hr or above, this whole video is debunked…

  8. Mmmm so the 50- 60s ( baby boomers) had it better but they call all the other generations entitled, seems legit…..

  9. Minimum wage says it all. The minimum a job could pay aka why the rich stay rich amd the poor stay poor. Capitalism at it's finest

  10. One problem with raising minimum wage is that it may very well force companies to increase the price of their product to compensate for the amount of money lost to higher wages. All of a sudden your $1 menu will become $2, $3, $4 and so on. One of the main reasons they can afford to sell burgers that cheap is because they can pay their workers less money. If they raise the minimum wage to $15 per hour, which is more than double the origional, then buisenesses will most likely have these options:

    1) get rid of many employees and force those that remain to do more work to compensate
    2) Double the price of their product so it can still be profitable
    3) Go bankrupt.

    So does raising the minimum wage really help?

  11. Look, the argument should not be that 'politicians shouldn't be in charge of the minimum wage' it should be that 1. Politicians in Washington need to represent the people, not wealthy corporations 2. Pro-union legislation needs to be passed 3. A minimum wage law needs to be passed that ties the wage to inflation, with an agency/committee set up to review it bi-annually and report back to congress. We need accountable politicians, not more bureaucrats.

  12. Do not pay Anyone on minimum wage higher wages!!!!! It's hilarious how people's short comings and laziness is anyone's problem but their own.

  13. The minimum wage was originally implemented to remove undesirables from the workforce. It was very effective
    Today, less than 1% of workers make the federal minimum wage.

  14. A lot of the graphics you use are highly disingenuous. For instance, you put a list of developed countries and place the US at the back. Fair enough. Except, a lot of those countries aren’t developed are they? Costa Rica, Colombia and Romania for instance just are classifiable as fully developed. This makes the US look worse than it really is. You then go on to blame republicans, except some of the people in your own clip speaking on favour of wage rises are republicans, but you didn’t mention that did you?

  15. Minimum wage jobs are supposed to be transitional, ex. young adults, in-between jobs, etc. They are not meant to be permanent careers. If you want more money learn to develop a skill, earn a degree, find a niche or do jobs that other people are unwilling to. Problem fixed.

  16. In Sweden we do not have a minimum like the federal one here:
    Ours is set by the Unions, and it increases every year, you can always get more.

  17. I believe the reason why we don't have similar systems when compared to other developed nations is that we, as a country, are still very young and grew too big, too soon.

  18. A more accurate term for “pro-business” is “anti-worker”. Don’t let Republicans control the language that defines their reprehensible ideology

  19. Sears kmart JCP papa murphy's are on the list , the media has to support rude people who just don't know how to live on it I buy expensive things then live off the social security

  20. Minimum wage = disposal labour which requires no actual skills. How to fix it? Education, learn what others don’t know. Be of use to the society and your country. If it was up to me I wouldn’t even pay wage but instead do a commission based pay, which would force the people to work harder while allowing them to make more.

  21. Loved that in this particular case Colombia was considered “developed”. Funny how when it fits we just suddenly changes a country’s status

  22. A little economics for you uneducated people:

    If the US raises the minimum wage (let’s say 7.25 to 15.00) products and goods would increase in price dramatically, many businesses would let go of many of their workers, overall everything would be unaffordable.

  23. But we have freedom! *Shoots one bullet because the price of ammo is too high and currently makes minimum wage

  24. Glad I don't live in the south. In california you can make 18 dollars an hour givin' you find a decent job.

  25. Minimum wage should is and should be controlled on the state level because every state has different levels of wealth. Why should a business owner in Alabama who makes less and his employees have a lower cost of living have to pay the same as an employer in California who makes more money and has employees that need money to live. By comparing to the average American instead of average state citizen you are cheating higher cost of living states and over paying lower cost of living states. The system how it is set up now makes sense and all the states that are higher cost of living have a higher minimum wage.

  26. "But maybe the solution to this never-ending debate is to take the decision out of the politicians hands," (4:45). Okay… But how, karen?

  27. If our currency was still linked to gold and silver, everyone would be happy because $1 is equal to one ounce of silver. So minimum wage would be above $15. Look it up.

  28. Here in America Large Corporations Lobby against things like Minimum wage increases, and they have all the money.

    America will never be a true Democracy until Lobbying(legal bribes) is eliminated, No if and or buts.

  29. Our economic system is in stark contrast with the ideas of a minimum wage. Raising it will only cause more inflation. We need to start educating our population to create more skilled workers and businesses to drive up exports. That's the only way to improve the quality of life for Americans

  30. As usual Vox is full of lies. All of this is PRATT (Point refuted a thousand times), can you guys come up with something original please?

  31. Although I agree with minimum wage; especially as I am on it, there is an economic factor to minimum wage that people overlook.

    Firstly, if you raise minimum wage, this will force employers to pay their employees more money. Thus, this increases the costs which the employer incurs. Therefore, generally they will raise their prices for products to cover this cost. In turn this near cancels out the effect that the raise had in the first place.

    Second is that by increasing minimum wage, you are increasing the general populations purchasing power as they will technically have more disposable income. Basic economics shows that in times like this, companies and corporations increase prices of their products because they know that people are willing to spend more when they have more money.

    Finally, I do feel that the problem with minimum wage is that jobs that pay at that level, are usually low skilled jobs. If you work a low skilled job, you get a low pay. Simple as.

  32. Take the decision out of the hands of those who given themselves very generous raises over the years.
    12,500 a year in 1950
    165,000 a year now, plus unlimited sick time, lifetime pay.

  33. Well, i would love to be paid 7.25 dollars an hour, I work for less than half than amount, and I do not have minimum wage (Uruguay)

  34. Take the decisions out of the hands of government officials you elect, and place them in the hands in government officials you don't elect

  35. The minimum wage isn't supposed to be a living wage, it's supposed to be what people make at fast food joints. Not an amount of money a 30 year old would want/need to be making. To raise the minimum wage is to restrict companies to the point where teens and adults can't get jobs. Who is anyone to tell me what my labor is worth? And I'll probably end up losing 30% of it to the same people anyway.

  36. America does a lot of things that don’t work just to be different from the rest of the world and it never makes sense to me 😂

    Healthcare, minimum wage, college etc.

  37. Minimum wage should be lowered that way my $16 an hour actually has value. Here in California $16 ain't nothing. When i was making $16 in Nevada my money lasted. Rent in cali $1200-$2000. Rent in Nevada $500-$1500

  38. In the US, shouldn't it be tied somehow to cost of living or some other local metric due to the massive disparity in how much it costs to live in, say, rural Alabama vs. San Francisco? It sounds complicated to have a different minimum wage by something like Zip Code, but implementing those kinds of things aren't hard anymore. Everything financial is done by a computer.

  39. Are we going to ignore the fact that when the minimum wage is raised, unemployment increases as well? Tell the full story. The answer is not so simple and there's an inevitable trade-off. Educate people on both sides, don't just brainwash people with one side.

  40. The bit that most people don't understand is that minimum wage laws are laws that prohibit workers from working for less than a set amount. In effect it makes certain types of work illegal. The part this video doesn't tell is that if there had been a $1.00 minimum wage law in the early 1900s then there wouldn't have been any jobs for those immigrants or significantly less. The assumption minimum wage advocates make is that companies would pay the higher wage. They won't and you can't force them. They won't do anything that doesn't make them a profit to their liking. They will close the doors long before paying a wage that makes their operation unprofitable. If anything the federal government should remove the minimum wage and pass a national right-to-work law that prohibits states from setting a minimum wage. The free market is the only way to establish fair wages.

  41. i’m making quite a bit above California’s minimum wage but i can’t afford to move out because of how high housing costs are, even at full time 😞

  42. this video gets so many things wrong about the concept of minimum wage that it is insulting how many people are agreeing with this

  43. 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.

  44. 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

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

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

  47. 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.

  48. 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

  49. 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.

  50. 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

  51. 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).

  52. 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.

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