Today, Barack Obama announced his intention to push for the US federal minimum wage to be lifted to $9 per hour by 2015, and then indexed to inflation.
In case anyone is interested in how the Australian minimum wage[fn1] stacks up against other advanced economies, I thought I’d post a few charts. As at February 2012, the National Minimum Wage is $15.96 per hour, which works out to $606.40 per week for full-timers. The rate is higher if you’re a casual employee (and therefore don’t accrue paid annual leave and sick leave). To find the minimum wage that applies in a particular circumstance, try the Fair Work Ombudsman.
Here’s the real minimum wage over time:
A common way to compare minimum wages over time and across jurisdictions is by expressing them as a proportion of the median or meanwage of a full-time worker. I tend to use the median. During the 1980s and 90s, the ratio of the minimum to the median in Australia was the highest of the OECD advanced economies. We’re now falling back towards the middle of the pack.
In 2011, our minimum wage was worth 53.6% of the median. That was the seventh highest of the 23 OECD countries for which OECD Stat has data.
Here’s how our minimum/median ratio compared to America’s. Note that for us, real median wages have grown in recent decades, and so have real minimum wages. In the US, both have been pretty much stagnant.
Another way to compare minimum wages across countries is by converting them to a common currency, by using ‘purchasing power parity’. This expresses each one in terms of the quantity of goods and services it can buy. In 2011 the minimum wage was $AU15.50 – the OECD thinks this would’ve bought you goods and services equivalent to what an American could buy with $US9.50.
Finally, I’ll just note that there are countries that have relatively high minimum wages and low unemployment (The Netherlands, Luxembourg, Australia), some that have high minimum wages and high unemployment (Ireland, France), and some that have a low minimum and high unemployment (Spain, Greece). By presenting this chart, I’m not trying to suggest that a higher minimum wage lowers unemployment, nor am I trying to pretend that this simple scatterplot controls for all differences between countries. I’m just pointing out that there isn’t much of a relationship across countries between the level of the minimum wage in a country and its unemployment rate.
[fn1] Australia has a National Minimum Wage, plus a range of minima that apply in awards based on your skill, experience, industry, etc. In this post, references to “the minimum wage” are to the NMW and its equivalent, the C14 rate in awards.