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.

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100 thoughts on “What the US gets wrong about minimum wage

  1. If you can't pay your employees living wages, you're not really running a business, you're a slaver. This is easy math people

  2. Back in 2010 I ended up getting bit of money and went to Australia, oh I'm from America. Anyway, it shocked me how much stuff cost. It seemed around 3x as much as America. When I went to a McDonald's and got a McChicken it was about $3 which is 3x more than America. When I talked with the 18ish year old worker he said he was going to go to America the next year. I asked how he could do that. Did he have wealthy family, a second job? According to him it was just by getting paid a better wage, he guessed. I dont understand how that could work. If everything is 3x the price and they get paid 3x as much wouldnt it equal out? My only guess is they dont go bankrupt on medical bills. When I worked at McDonald's there is no way I would have ever dreamed of being able to take such a vacation as go to a different country.
    Can somebody help explain this to me.

  3. Some very thoughtful ideas here, people. Agree we need to Exclude the politicians from the wage debate, because Too Many of them are in the pockets of Big Business.
    Let's look at small increase every 12-24 months AND take the next giant step to assist working families on lower income: greatly expand the Earned Income Tax Benefit plus reduce the tax bracket on anyone at or below $10/hr. Make sense?
    Lower taxes should appeal to moderate Republicans…..maybe. But helping workers involves two steps: higher wages PLUS a lower tax take every payday. Can we convince the people in Congress that re-election comes to those who look after the people?
    A modest proposal from a reader in Canada…

  4. Minimum wage is actually a harmful decision to economy, in every possible way. If you wanna know more about it start with Milton Friedman.

  5. A $15 hr / $30K yr min wage helps everyone. Walmart Target Home Depot Sears employees will no longer use $3.4 Billion a year in Food Stamps MediCaid & Section8 housing. CA WA OR are already see a drop in usage of public services from the min wage increase.

    Pizza Hut clears over $18 Billion a year to pay all their workers $15 hr they then clear $17.6 Billion a year

    Pizza Hut pays AU$22 Hr/ US16.29 Hr min wage in Australia & New Zealand and still clears $4 Billion+ a year . McDonalds Dominos KFC Burger King Starbucks ALL pay the AU$22 Hr/ US16.29 min wage in Australia & New Zealand and ALL clear $8+ Billion annually.

    McDonald's in Denmark pays US$19 Hr / €16.25 Hr .. or US$11 Hr / €9.41 Hr if your are 17 or younger

    People who vote republican you could have looked up this info for yourself. Stop voting for the “wages are too high republicans”

    Stop watching fox. Fox Polit Bureau tells you they cant afford it & you fox viewers believe it. You could have looked on the internet & in 5 minutes found out that fox always lie on behalf of the rich & corps. Stop voting for the “wages are too high republicans”

  6. Notice how they barely mention how states can (and do) set their minimum wage higher than the federal minimum wage, and were using the federal minimum wage for their statistic comparison. As if they’re trying to make sure the viewers are shocked and hooked to their opinion

    Also love how they made sure to leave out that many illegal immigrants are being exploited and paid less than minimum wage

  7. A minimum wage ends up hurting minorities, because their work might not be worth the minimum wage. This creates a barrier to entry which was adopted by racists to protect the white working class

    Besides very few companies even pay the minimum wage, in most cases they pay more, to out compete other companies

  8. 4:22 Like with so many other policies, my state got it right before all or most of the others.

  9. I feel like there should not be a minimum wage people should get paid exactly what they are worth like what if the minimum wage suddenly changed to 15 dollars an hour then people who work at mc Donalds would be getting paid way more than they deserve to and its not that I think the poor should stay poor its just paying ppl more than they deserve will lead to it being cheaper for companies to fire ppl and hire more professional people for the job so actually having a minimum wage is bad for the lower class !!! and also when she showed the countries that have higher wages than ours those countries are poorer than the use

  10. in fact, when you solve for inflation, it shows that when minimum wage is higher inflation is higher. Funny how that works.

  11. "So the US adopted something that had already worked in other countries."

    Won't be seeing the likes of those days ever again!

  12. How about people grow a spine and ask for what they think they are worth instead of crying to the government about the big bad employers

  13. C: The federal minimum wage is irrelevant, because individual states are able to set their own minimum wages.

    E: States are able to decide wether the minimum wage should be higher then the federal one. It that sense, the only purpose of the federal minimum wage is to act as a universal minimum across the whole country. In fact, if it were higher, then it would limit individual states because they are not able to have minimum wages lower then the federal minimum wage.

    R: Local minimum wages are more important then the federal minimum wage because they allow the state to choose their own minimum wage, which the federal minimum wage can limit.

  14. it seems you got it mixed. judging by the graphs you provided it seems that its not a matter of congress "not keeping up with inflation"  but rather congress only passes minimu, wage increase when inflation as eroded it down, and only to adjust it back to the pre eroded level – i.e there was at no point political will to actually increase it

  15. Here in the phillipenes a waiter at a fast food chain earns 300 Pesos or 6 dollars a day. So America ain't got that much of a problem

  16. You make it seem like the US is the only country who struggles with minimum wage… the same things happen with your neighbours of the North. Our premier of Ontario raised the minimum wage from 11 to 14 dollars per hour. Seems great right? Yeah sure….. until you have to pay more taxes for that year because you are in a higher tax bracket. You are dramatizing the data by using skewed charts.

  17. Yeah exactly
    I saw this mass movement with emotional tornado and everything about bernie's 15$ minimum wage, and I am thinking, will we need such hue and cry every time we want to raise it?

  18. so, I'm a bit confused on your chart of minimum wage v. average wage.

    If France's minimum wage is the same as their average wage…does that mean everyone makes minimum wage? That seems pretty weird and unlikely.

    Also how can New Zealand and Columbia have a minimum wage ABOVE the average? Are they also factoring in everyone who makes zero wages (homemakers, subsistence farmers, ect.)?

  19. The Obama DOL actually tried to set up an automatic increase for salaries of workers who are overtime exempt. It, and the rest of the update to FLSA rules, got halted by a Texas judge.

    Also, Federal minimum wage only applies if your business crosses state lines. There are currently 5 US states with no minimum wage legislation, and additional states with a minimum wage below the Federal minimum wage. Then there are the time and commission exemptions… there are employees who have to take out loans from their employers to float them (and their families) until their sales get high enough. Then they have to repay that loan over a few months out of their paycheck, first dibs after taxes and benefit deductions.

  20. If you take it out of a politicians hands, it will be controlled by someone hired by the president and the same issue will persist.

  21. So gov’t manipulates “basket of goods” thus understates actual inflation, therefore your Minimum wages are sheeples reward.

  22. I’m a Republican and I support attaching minimum wage to inflation and having it reviewed every year. I hope me fellow conservatives agree, it’s common sense

  23. My gripe is; the cost of living goes up almost every year,but minimum wage doesn't. An as long as politicians gets their raises
    they don't really care about anyone else. They never have an they never will.

  24. Very good video, I completely agree with how tying the minimum wage to inflation is a good idea. However, during the video, it was consistently implied that a higher minimum wage would be better, without actually citing a source or making an argument about it. The minimum wage is a very powerful economic tool, and its use should not be governed by "The higher the better". 4:02, 0:25, 1:44

  25. Agreed if we are to have minimum wage. However, the best solution is to abolish it.  
    Rather make sure everyone has guaranteed income through a UBI or negative income tax scheme. With that security workers would be able to negotiate fair wages with employers.

  26. bring cost of living down.
    – remove height and zoning regulation(single family zoning), done in texas , cheap rent, no homelessness
    – allow import of drugs to reduce cost of healthcare
    – force medical schools to supply more doctors, also remove restrictions on foreign doctors, except non-OECD ones.
    – replace patent with reward systems.

  27. Why not set the minimum wage at zero. Let individuals determine what wage they a re willing to work at. The average wage in the US is 27 dollars an hour. That's quite high even in Europe.

  28. $7.25 is just a ludicrous amount for minimum wage. With todays cost of living, having a job that only pays that little amount is comparable to sweatshop wages.

  29. Please do a video that compares and contrasts the cost of living with some real examples such as price of bread, eggs, milk, rent, gasoline, electricity etc. that a person pays both before and after an increase in minimum wage.

    There is an argument the when you increase the minimum wage you actually decrease purchasing power of anyone working for minimum wage BECAUSE the price of ALL services and products goes up as a natural response to the higher wage mandate.
    The idea is that "Sure you are making more money but you are paying out much more money."

    I would like to see an objective comparison to see if this is real or not.


  30. What the nice folks at Vox fail to acknowledge is that taking minimum wage increases (or anything else) out of the hands of congress does not all of a sudden take it away from politicians. It gives the power to make decisions to federal agencies headed by the executive branch. Right now that would mean Donald Trump and his department heads would be making decisions on how much people are being paid. This same logic applies to healthcare for all and many of the other big government programs being advocated for right now.

  31. Instead of raising the minimum wage (which pushes impovereshed people into a higher tax bracket)… Why don't we lower the cost of living? The only reason the politicians want a higher minimum wage is so they can collect more tax revenue. A higher minimum wage raises a business expense called payroll (which gets passed on to the price of goods) and makes the cost of living go up for everyone allowing the politicians to cease more tax revenue via a higher cost of living. All of society loses and the politicians win. Lowering the cost of living is a regressive solution meaning the poorest people benefit the most, ALL citizens benefit but the most impovereshed will benefit the most.

  32. Minimum wage should go up with inflation, but the minimum wage isn't supposed to be a living wage, it's for entry level jobs, you're not supposed to stay at those jobs your whole life.

  33. In Gulf countries there's no minimum wage for expatriates. The street cleaner usually get $160 per for more than 10 hour per day work in 45 degree temperature. That's around 61 US cents per hour.

  34. raising minimal wage –> raising costs –> raising prices –>raising minimal wage –> raising costs –> raising prices –>raising minimal wage –> raising costs –> raising prices –>raising minimal wage –> raising costs –> raising prices –>raising minimal wage –> raising costs –> raising prices –>raising minimal wage –> raising costs –> raising prices –>raising minimal wage –> raising costs –> raising prices –>raising minimal wage

  35. Minimum wage is sadly the modern day version of slavery. Look again at the US map again with the states that strictly hold the line on minimum wage, and you will see it’s the south and mainly Red states that only pay basic wages. What a surprise. The blue states, which are the economic and educational powerhouses of our country have much hire minimum wages. Unfortunately, the blue state people struggle on $12-$15 an hour due to the high cost of living created by the demand to actually live there. The “south” wants to maintain their low cost labor (modern slavery), and put money in the pockets of corporations (a GOP virtue), and the “north” wants to empower people and attempt to provide a livable wage with a means to support oneself (a democratic virtue).

  36. Minimum wage goes down because wall street keeps the border open so they can pay the cheapest wages and make the most profit.

  37. Pizza Hut clears over $18 Billion a year to pay all their workers $15 hr they then clear $17.6 Billion a year

    Pizza Hut pays AU$22 Hr/ US16.29 Hr min wage in Australia & New Zealand and still clears $4 Billion+ a year McDonalds Dominos KFC Burger King Starbucks ALL pay the AU$22 Hr/ US16.29 min wage in Australia & New Zealand and ALL clear $8+ Billion annually.

    McDonald's in Denmark pays US$19 Hr / €16.25 Hr .. or US$11 Hr / €9.41 Hr if your are 17 or younger

    People who vote republican you could have looked up this info for yourself. Stop voting for the “wages are too high republicans”

    Stop watching fox. Fox Polit Bureau tells you they cant afford it & you fox viewers believe it. You could have looked on the internet & in 5 minutes found out that fox always lie on behalf of the rich & corps. Stop voting for the “wages are too high republicans”

  38. Its not weird because almost nobody pays min wage because no one will work for that amount. Wages have not changed on your graph because the value of entry level work hasn't changed.
    Abolish min wage and no one would even notice.

  39. Raising the MINIMUM wage will only RAISE INFLATION! Besides why would you want to work for a company that wont pay you a survivable wage. Be your own company.

  40. I never realized how low American minimum wage was. That is completely unusable after taxes, rent/mortgage, utilities, as well as health, education, etc.

  41. If you raise the minimal wage the labour force would bo more expensive so the prices of products will rise and the money supply would be bigger so you wouldn't be able to buy much more anyway. Apart from that the competitiveness of American workers will decrease because you would have to pay them more for the same job that someone in another country could do for much less. Don't listen to socialists kids, everything day say might sound great but in the long therm it is not going to bring anything good.

  42. The raising of the minimum wage causes inflation. Business owners will raise prices to keep their profit margins consistent. Or they will lay off employees. Also keep in mind that the minimum wage is still just that; minimum. These people are still at the bottom of the food chain. Sad but true.

  43. Vote Bernie 2020 and get what we get around the civilized world. From the worlds most happy people.( minimum wage 16,50 USD + 6 weeks of payed vacation)

  44. You raise the minimum wage and then the business owner has to raise the price of his/her products in order to maintain the employees and then there will be people that still can't afford the goods that they need.
    And this rule always applaise weather if we use the USA minimum wage sistem or the french one.
    Minimum wage just doesn't cure poverty, it's only an illusion. Those are only my thoughts.

  45. Minimum wage is not a vehicle for economic prosperity in itself. If it were, then please raise it to pay me $999 trillion/hour right now!

  46. Hah! I like how this video criticizes republicans and places them in a bad light .
    Hun, if the democrats were to run the US , the result would be homeless people on drugs and welfare, increased taxes on the middle class till that class is no more (how else are they gonna distribute free government stuff on their zombie supporters) , and open borders . I don’t need to be told which party is on the right side . I need only to compare at democrat-held strongholds vs republican-held strongholds , and I don’t even need to go into that because the contrasts are quite stark in everyone’s knowledge .

    Demonrats, if you are so insistent on turning the US into a utopian dream of “diversity” but hate the state of affairs in it , u can leave and live out that dream of yours in a country of your choice . New York increased its minimum wage to 15 $ and look how that turned out . Bernie sanders increased his employee’s minimum wage to 15$ and is cutting down on his rank and file .

    This country was founded on the basis of a city on a hill , where human potential and our god-given rights are valued most of all . The Republican Party serves only to maintain the sanctity of the republic and should be voted into office at all costs . The Republican Party is , by no means , a party is the white man only . Conservatives have a history of placing value on accomplished people of color . We do not differentiate between color but demand that all aspire to their dreams and toil to the extent of their abilities .

  47. The minimum wage should definitely stay at the state level. This will allow more conservative states to decide themselves whether or not to have it, and more progressive states like California to raise the minimum wage according to its own cost of living which is well above most other states.

  48. $15 would be a huge jump in a little amount of time, we should increase it gradually at a constant rate. Also take it out of politicians' hands.

  49. there are downsides to a high minimum wage, one of which is higher unemployment levels! in france you're way more likely to be out of work than if you lived in america.

  50. Ok but if businesses start raising minimum wage for everyone then they’re gonna have to start cutting hours to pay for all of these salaries so the employees aren’t really getting payed more than before.

  51. Im a conservative republican but even I think the Federal minimim wage should be $10. It still might not be enough to live on but $7.25 is ridiculous.

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