U.S. Minimum Wage Boost Would Still Lag Much Of The Developed World

In his State Of The Union Address, President Obama proposed a minimum wage boost from $7.25 an hour to $9. Immediately, some in the business community denounced this as unworkable for them. And Senator Mitch McConnell(R-KY), whose own wife Elaine Chao was the former Secretary Of Labor under George W. Bush, claimed that business could not afford this wage increase in this bad economy. But, facts prove that the minimum wage in the United States lags many developed nations in world.

In France, the minimum wage is $12.68. In Australia, it’s $16.91 a hour. In the UK, it’s $9.50 an hour. In Canada, minimum wages vary from $9.73 to $10.27 an hour depending on the province. In Germany wages are so high, that carmaker BMW looked to South Carolina to build many of their cars because Americans workers work for such low wages, especially in a right to work state such as this Southern state. Americans became the cheap labor pool for a German company like this assemble their products. Other companies such as Honda looked to other right to work states, that also offered huge tax breaks as well, because the American labor was so much cheaper than in Japan. Cheap American labor has even attracted South Korean companies as well.

Although much of the cost of living is pretty low in China, where a gallon of gasoline only cost $1.28 for example, the Chinese wages of $2.24 an hour are about the same to live as American minimum wages of $7.25 considering that many goods in the United States cost many times what they do in China. For this reason, many American workers have a standard of living no better than many persons living in China.

Low wages, high rents, high utility costs with grossly exaggerated costs for energy such as gasoline and other price versus wage disparities have left many working Americans in a state of poverty where even a wage increase to $9 would still leave millions of American workers living at a state no better than many workers in China or some other developing countries, and still at a standard well below many living in Europe and in the developed nations. Many Americans have become the new poor of the developed world.

Interestingly, a White House fact sheet claims that an increase of the minimum wage to $9 an hour would only bring wages up to the approximate real value of the buying power of one dollar at the beginning of the Reagan Administration in 1981, rather than even really catching up American wages with prices or with wages that lag much of the developed world.

If it seems that many working Americans are only getting poorer, it might well be that indeed they actually are, where inflation is shrinking the buying power of dollar, and U.S. wages remain stuck at bargain basement levels.

For their part, the business community will claim that it might have to cut jobs if the minimum wage increases, yet this same business community is also suffering from lagging sales in this weak economy because the low wages many workers are paid only keep many consumers out of the market. How government can help to strengthen the buying power of consumers with more income on one hand, and not hurt jobs on the other hand is a delicate balance here.

One of the greatest market goods that the U.S. produces is entertainment products. How to get more income to more workers to buoy up this market for Cds, DVDs, movies, and other entertainment products is a good question. The magazine publishing business, as one example, is so hard hit in recent years that many magazines have recently stopped publication, and now publishing giant, Time Warner, is looking to spin off or discontinue many of it’s massive catalog of magazine titles it owns.

Low American wages are the ruination of many businesses in the U.S., yet there seems to be little consensus from business how to increase the wages of workers so that they become better consumers.

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