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Is It Time For A European Minimum Wage?

Tyler Durden's picture




 

Much has been made of President Obama's non-deficit-increasing desire to raise the minimum wage by around 20%. This all sounds so good in front of a teleprompter but, as we noted here, a higher price for a good (low cost labor) simply means less of it will be demanded (higher unemployment). However, while setting a federally mandated minimum wage may make sense in the mind's eye of a President's panderers, a glance at Europe will blow most people's minds. The disparity across the nations of the European Union is 12-to-1: from Romania's EUR157 to Luxembourg's EUR1874 per month. This compares with an equivalent EUR998 for the US. As Bloomberg's Niraj Shah notes, this disparity drops to 6-to-1 if adjusted for local prices but two critical points come to mind; first, how can a 'union' with such massive disparity in labor function under a single monetary policy (hint: it can't); and second, with nations such as France, UK, and Ireland offering higher minimum wages than the US, it is hardly inspiring for any benefits Obama hopes to reap from his new deal.

 

 

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Thu, 02/21/2013 - 10:28 | 3263040 Aunty Christ
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Huh does Germany not have minimum wages?

Thu, 02/21/2013 - 10:29 | 3263045 GetZeeGold
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How do those guys even still have any money left after paying for everyone else's minimum wages?

Thu, 02/21/2013 - 10:36 | 3263064 jay28elle
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Doesn't Ben send some of our $'s over every month?

Thu, 02/21/2013 - 10:43 | 3263091 WayBehind
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Like it wasnt obvious they took the Eastern block just to expend the market for the rich countries

Thu, 02/21/2013 - 10:43 | 3263092 GetZeeGold
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Doesn't Ben send some of our $'s over every month?

 

Watchoo Talkin' Bout, Willis!?

http://www.youtube.com/watch?v=wpcD2BV6abc

Thu, 02/21/2013 - 10:46 | 3263103 Sudden Debt
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A 52% payroll tax and a 25% VAT on goods... THAT'S HOW THOSE FUCKERS PAY FOR IT!!!

THEY...?!! WE!! I MEAN WE PAY FOR THAT SHIT!!! WE PAY FOR THOSE SLACKERS!!!!

OOOHHH!! BUT DON'T BE A RACIST OF DON'T YOU DARE TO DISCRIMINATE!!! OH PLEASE DON'T!!!

THOSE PEOPLE NEED CHANCES IN LIVE SO WE KEEP ON GIVING EVERYBODY FREE MONEY YEAR AFTER YEAR AFTER YEAR!!!

I sometimes get a bit upset about stuff like that...

Thu, 02/21/2013 - 10:56 | 3263129 GetZeeGold
GetZeeGold's picture

 

 

I sometimes get a bit upset about stuff like that...

 

Controlled breathing seems to work for me.

Thu, 02/21/2013 - 18:46 | 3265086 Hobbleknee
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When 75% of your income is stolen by the government, at what point are you considered a slave?  You're more slave than not, anyway, but when will the sheeple realize this?

Thu, 02/21/2013 - 10:36 | 3263053 Buckaroo Banzai
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Holy shit, they don't have a minimum wage in Germany. I just checked. This is funny:

http://www.nytimes.com/2011/08/19/business/global/many-germans-scramblin...

EXACTLY what you'd expect from Pravda on the Hudson.

Thu, 02/21/2013 - 10:47 | 3263104 tarsubil
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LOL, I'm surprised NY Times even touched that story since it is so out of the narrative. The kicker is youth unemployment which Germany has about two thirds less of than France.

Thu, 02/21/2013 - 14:14 | 3264043 Nussi34
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Merkel is now supporting a minimum wage.... Most Germans support it and do not understand that is absolute nonsense.

Let´s assume it is EUR 10 per hour. I will find noone in Munich who woud be willing to work for that kind of money and in East Germany very few businesses can pay that much money.

The logic must be that everything in the EU must be the same. Currency union, minimum wage union, feces union....

Thu, 02/21/2013 - 18:35 | 3265052 vs-trader
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There is no legal minimum wage. Usually it is set by collective agreements. But I guess that is how it should be.

Thu, 02/21/2013 - 10:31 | 3263051 The Phu
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I think that this is proof that a high minimum wage equals high prosperity.  Lux has the highest min wage and one of the highest per capita incomes and high quality of life.  Romania... um... the opposite.  There must clearly be a strong correlation.  Onward, Comrade Obama!  All the Proletariat of the World, Unite!  </sarc>

Thu, 02/21/2013 - 23:27 | 3265843 thisandthat
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About Luxembourg... (sort per capita or % of GDP): http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

Thu, 02/21/2013 - 10:31 | 3263052 hardcleareye
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"...a higher price for a good (low cost labor) simply means less of it will be demanded (higher unemployment)."

 

With that logic perhaps we should be considering re instituting slavery, it might the solution to our unemployment problems.  <major sarc>

Thu, 02/21/2013 - 10:41 | 3263082 moriarty
moriarty's picture

Thought we had that already, albeit with none too visible shackles and chains that most folks willingly (or unwillingly if they see the game and have no choice) don.

Thu, 02/21/2013 - 10:36 | 3263054 Cognitive Dissonance
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While everyone watches underdeveloped country after underdeveloped country's labor force be used and abused until local wages begin to rise, only to watch the manufacturing circus leave town for the next low wage spot......has anyone noticed that the US has slowly moved from one of the highest wage nations around 2000 to near the middle of the pact now?

I can't wait until the manufacturing circus comes back to town here in the good old US of A.

Thu, 02/21/2013 - 10:44 | 3263097 forwardho
forwardho's picture

I sold my soul to the company.....Store

Thu, 02/21/2013 - 10:49 | 3263115 Dr. Engali
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It will come back when we get down below Romania's level.

Thu, 02/21/2013 - 11:46 | 3263371 NuckingFuts
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Yep,

And I spent a couple of weeks in Romania in the late 90's.  That place sucks.   Now Bulgaria on the other hand is OK.

 

Thu, 02/21/2013 - 10:57 | 3263139 tip e. canoe
tip e. canoe's picture

that does seem to be the Plan.

Thu, 02/21/2013 - 11:38 | 3263339 Spastica Rex
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Workers competing to offer their labor at the lowest possible cost - competition is a win for everybody.

Henry Ford was a Fascist.

Thu, 02/21/2013 - 11:43 | 3263356 shovelhead
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I, for one, will be proud to affix the MADE IN USA sticker for cheap rubber flip flops to be sold in Chinese 'Yuan Stores' next to the canned horsemeat Spam from France.

It Takes A Village.

Thu, 02/21/2013 - 10:35 | 3263061 jay28elle
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anyone know what the minimum in Germany is, by chance?

 

Thu, 02/21/2013 - 10:48 | 3263102 Tango in the Blight
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Germany doesn't have a minumum wage. In Germany 450 euro mini jobs are popular. 450 euro per month for a full working week. That's why Germany is so competitieve.

Thu, 02/21/2013 - 23:38 | 3265881 thisandthat
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Just like China. Still can't match early/mid 40s' labour cost, though...

Thu, 02/21/2013 - 10:48 | 3263108 Sudden Debt
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in euro's or marks?

Thu, 02/21/2013 - 14:17 | 3264051 Nussi34
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Currently in EUR, in a few weeks it is Marks again!

Thu, 02/21/2013 - 10:35 | 3263062 larz
larz's picture

Wow cool graphs is this what you pay six figures to learn in higher education?

 

Thu, 02/21/2013 - 10:41 | 3263084 SafelyGraze
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gratuitous use of polar coordinates? check.

gratuitous use of graph? check.

in the green segment between slovenia and the us, what exactly are the in-between values interpolating between the countries? ocean, maybe. 

Thu, 02/21/2013 - 10:38 | 3263066 sociologist
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Author, you say that increasing the minimum wage reduces the demand for low cost labor. Makes sense, I buy that we'd have higher unemployment if the minimum wage was raised to $50/hr. The problem is that we have no idea the strength of the mechanism you describe, and how higher purchasing power among low income households might speed deleveraging or increase consumer spending. 

So, I ask you, how many jobs will be "destroyed" if we raise the minimum wage by $0.50? what about $1.00? How would you go about making your calculations? Its easy to assert a plausible mechanism without empirical evidence. 

Thu, 02/21/2013 - 11:52 | 3263413 Clowns on Acid
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Wow.... you must be a sociologoist to ask a question that has been answered at least 100 times over the past 50 years....

Thu, 02/21/2013 - 10:38 | 3263068 q99x2
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The world is strange because of how old and antiquated the existing system that is shown on TV is compared to the reality brought about by technology. It reminds me of reading old English literature that depicts a society much like today and I then imagine the characters in the stories having modern technology. Something is going to break.

Thu, 02/21/2013 - 10:38 | 3263069 Haus-Targaryen
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Germans are getting minimum wage this year.  :(

 

Inflation here we come!

Thu, 02/21/2013 - 14:18 | 3264058 Nussi34
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No inflation will be small, the job just moves to Slovakia etc, but unemployment will be higher!

Heil Euro!

Thu, 02/21/2013 - 10:39 | 3263071 Freewheelin Franklin
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a higher price for a good (low cost labor) simply means less of it will be demanded (higher unemployment).

 

Why is so difficult to get people to understand this? Costs are passed on to the consumer. Do they think it is going to come out of my pocket? I'll just lay off workers. Eventually, I might get to the point where I can no longer do any business. Then, I'll be stuck working on the Gubmint farms. But that's what these Pinko Commies want, isn't it? They want everyone to be poor.

Thu, 02/21/2013 - 10:42 | 3263088 sociologist
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You need to pay workers enough so that they can afford to buy the stuff they make. Smart capitalists know this.

Thu, 02/21/2013 - 11:00 | 3263151 DOT
DOT's picture

Kewl, so if I get a job at a luxury yacht company...

btw We used to refer to sociologists as bussiness majors that couldn't do math. Now we know that neither of them can. ;)

Thu, 02/21/2013 - 11:07 | 3263162 Freewheelin Franklin
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I need to pay them what the market will bare. No more, no less. If someone is willing to do the same job for less, guess what? That's who I am hiring. If one of my workers can get more money from another employer, guess what? They quit and go work for the other employer. 

 

Smart business owners know this. 

 

 

Thu, 02/21/2013 - 11:26 | 3263274 slightlyskeptical
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Fuck Slave Drivers!

Thu, 02/21/2013 - 11:51 | 3263406 Clowns on Acid
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Surely you mean the Fed Gov't with their taxation and regualtion policies ?

Thu, 02/21/2013 - 11:16 | 3263230 slightlyskeptical
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If everyone who works for you is poor then you deserve to be poor as well.

There is a price wage equilibrium that can be reached even when paying everyone a living wage. Labor is generally about 20% of the cost of doing business. So if you raised wages 50%, prices would only have to go up 10% to keep the same profit margins. I'm sure the working class would be happy to pay 10% more if they are getting paid 50% more. Biz owners still make the same profit. Not sure why anyone has a problem with this.

Thu, 02/21/2013 - 10:39 | 3263073 Stuck on Zero
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Obama didn't bother explaining that the minimum wage needs to be hiked because inflation is eating away at the value of the dollar.  And who causes inflation?

 

 

Thu, 02/21/2013 - 10:44 | 3263078 IridiumRebel
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At this point, does it really matter?
Or to quote a "great stateswoman"..."what difference does it make?"

Thu, 02/21/2013 - 10:42 | 3263079 ebworthen
ebworthen's picture

Somewhat OT but Verifone down ~38% because they were honest about things in Europe ("weak", "not looking good").

So...they are being punished.  Harbinger for the entire markets when reality hits?

Thu, 02/21/2013 - 10:52 | 3263122 pomlad5
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adjust gdp per capita

Thu, 02/21/2013 - 10:52 | 3263123 Man Who Was Thursday
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Something is wrong in that graph, minimum wage in Portugal is less than 500€...

Thu, 02/21/2013 - 23:40 | 3265887 thisandthat
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x14...

Thu, 02/21/2013 - 10:56 | 3263136 Svendblaaskaeg
Svendblaaskaeg's picture

Equal gravity for all planets now!!!

Thu, 02/21/2013 - 11:05 | 3263177 Artful Dodger
Artful Dodger's picture

It must be time for a European minimum wage to prevent price discovery of labo(u)r -- let's see, if 1500 people apply for 7 barrista jobs, the private market would probably settle at about 50 EURO-CENTS an hour... (don't forget the tips! you're working for the tips, honey!)

Thu, 02/21/2013 - 11:21 | 3263248 slightlyskeptical
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The only problem is people don't tip in Europe. The equivelant of tips in the US is just built into their wages and menu prices.

Thu, 02/21/2013 - 11:25 | 3263263 azzhatter
azzhatter's picture

Not to worry, when the NWO finally takes over, we will have a global minimum wage and everyone will be happy and green shoots will abound. Central planning is certainly the way of the future. It's been so successful in the past, how could it not be?

Thu, 02/21/2013 - 11:43 | 3263358 Schmuck Raker
Schmuck Raker's picture

OT

Uh oh... the Senate is in session, grab the KY:

http://professional.wsj.com/article/SB1000142412788732386430457831643404...

 

"Immigration Talks Mull [Biometric]IDs for All Workers"

Aides to several senators in the group said that a biometric card would be used only for employment verification and that it wouldn't become a mechanism for linking other personal data or replacing drivers' licenses. Still, privacy advocates fear that governments and companies would in time require people to use the biometric card in other spheres of daily life.

"I subscribe to the 'if you build it, they will come' school of regulation," said Chris Calabrese of the American Civil Liberties Union, who said he worried that the card would be required to board airplanes, to vote or perhaps purchase a firearm. "It becomes in essence a permission slip to do all of the ordinary things that are your rights as an American," he said.

Alex Nowrasteh, an immigration-policy expert at the Cato Institute, a libertarian think tank, said: "It's not only a gross violation of individual privacy, it's an enormously high-cost policy that will have an incredibly low to negligible benefit."

 

Thu, 02/21/2013 - 11:51 | 3263403 permafrost
permafrost's picture

This chart would have been better had it also included each state's minimum wage.

Thu, 02/21/2013 - 11:54 | 3263430 Clowns on Acid
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The minimum wage graphic reminds me that we are in the Year of the Snake. Will the Snake recoil inward or elongate ?

Thu, 02/21/2013 - 12:22 | 3263550 Kirk2NCC1701
Kirk2NCC1701's picture

Look, over here, a distraction! 

How is it that everyone questions the wages of the serfs and no one asks about the profits of the feudal lords?  Profits achieved on the backs of these very serfs/peasants!  After all, it's not as though the Lords 'earned' their profits it by working 24,000 hrs/day, having brains that are 10,000 larger and better, or that they risked their own wealth -- when cost-free 'money' (debt!) was conjured out of thin air. 

What's even funnier/sadder, is that the serfs are at each other's throats and complaining that one is paid too much, or that another shouldn't even have a daily minimum ration of soup & bread.  Bah, ram ewe! 

The Overlords must be laughing their fucking asses off.  I would.

Thu, 02/21/2013 - 23:47 | 3265906 thisandthat
thisandthat's picture

It's the Brave New Amerika™ - dignity and pursuit of hapiness is now socialism.

Thu, 02/21/2013 - 12:25 | 3263593 Glass Seagull
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Could've easily slapped a label on the chart that said:  "Per Capita Banker Population per 10,000 Persons"

 

I wouldn't have known the difference.

Thu, 02/21/2013 - 13:49 | 3263937 Madcow
Madcow's picture

yes - why not start with $100,000 / hour ? 

 

Thu, 02/21/2013 - 23:58 | 3265943 thisandthat
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