Minimum wage – US vs. Australia

There are a number of issues with this meme. First, the wrong facts:

  1. The $16/hour figure is inflated. The Australian minimum wage is 16.87 A$/hr., which is less than 15 US$/hr. as less than writing this. Click the link for the figure based on today’s exchange rate.
  2. “Big Mac” isn’t the same thing. In Australia, it is 201 grams. In the US, it is 215. So about a 6.5% difference.

Next, the misleading ones:

  1. This minimum wage starts at age 21, which means it only applies to about 70% of the US fast food work force. I couldn’t find statistics about the age of Australian fast food workers.
  2. Big macs are only part of the cost of living picture. If you look at the whole picture, Australia is an expensive place to live.

There are a lot of other differences between the US economy and the Australian economy, but these are the ones that spring to mind with a short search.

You can read more about this here and here.

Edit: I’ve been informed that a Big Mac costs less than $4.62 in the US. I apologize for the mistake and plead vegetarianism as the excuse for my ignorance.

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One thought on “Minimum wage – US vs. Australia

  1. Jeff Zumbach wrote an argument on this:

    Sources are at the bottom. 10 Nations With the Highest Minimum Wage…and What They Pay For It
    minimum wage 02 500×200

    Liberals keep tossing numbers at us about other countries that have higher minimum wage than the US, but they often omit important factors like, cost of living, tax rates and the resources available in that nation. So here are a list of the nations with the highest minimum wage, why it’s high and how much it actually costs the people of that country to maintain it.

    Australia—$20.00 in International Currency*

    Australia’s minimum wage is graduated based on age, from $6.21AUS for 16 year olds to $16.48AUS for 20 years old and up. While almost half of working Americans pay no taxes, Australia’s income tax begins at 15% for anyone making just $6,000AUS and leaps to 30% for those making $35,000AUS and goes up from there. And then there’s the 10% national sales tax. So while lower income Americans are wailing for a minimum wage hike, it’s doubtful they would want it at the cost of actually paying taxes, too.

    United Kingdom—$22.00 in International Currency

    All Brits making the equivalent of about $59,000 or less pay a 20% tax rate. The top tax bracket pays 50%. The national sales tax is 18%. The minimum wage for under 16 and 17 year-olds is just $5.90US. By the time they are 21, it maxes at $10.19US, so after the taxes that American minimum wage earners don’t pay, it’s just $6.68US.

    Luxembourg—$19.00 in International Currency

    Luxemburg, like Switzerland has enjoyed a thriving economy by hiding the wealth of the world’s richest people from being taxed in the nations those wealthy people live in. They used that excess wealth to invest in industries like iron, steel, aluminum. In other words the kind of industries Liberals like to hamstring with massive government regulation. You can see why Liberals tend to skip over Luxembourg when spouting examples of countries with a higher minimum wage than the US, in spite of the fact that Luxembourg has a 40% income tax.

    Netherlands—$19.00 in International Currency

    Every Dutch citizen who makes the equivalent of $41,000 a year (€32,738) pays a 41% income tax. It jumps to 52% for everyone making $68,000 or more. And then there’s the 21% national sales tax. Oh, and their minimum wage is graduated as well as based on a day, rather than an hour. 16 years old must make at least €20.70 (about $26) a day, regardless how many hour that may come to. It graduates up to a whopping €69.01 ($86.53) a day for 23 year-olds and up.

    Belgium—$18.00 in International Currency.

    Belgium’s minimum wage is also graduated, starting at €6.26 for 16 year old and increasing to €8.94 for anyone 21 and older. Belgium also has a tax rate of 24% starting at the very first penny you earn, and graduating to 50% for anyone making €34,330 and up. And of course, there’s the 21% national sales tax on top of that. That means the typical Belgian family actually gets to keep only 26 cents out of every “dollar” they earn. So their real minimum wage is €2.32 and hour or just $2.90 American.

    Ireland—$18.00 in International Currency

    If you make €36,400 ($45,645US) or less (there is no lower limit) in Ireland, you pay a 20% income tax. If you make more, it’s 41%. And then there’s the 21% national sales tax. Minimum wage is graduated with people under 18 making €6.06 ($7.59US) an hour and topping with experienced (“trainees” can be paid less) adults earning just €8.65 ($10.84) an hour. When you factor in the taxes that Americans who earn minimum wage don’t pay, the poor Irish bloke gets just $6.85 an hour.

    France—$17.00 in International Currency

    France is able to sustain such a high minimum wage because it taxes its citizens 40% on their income, plus a national sales tax of 20%. That means a French family that earned the equivalent of $40,000 would take home just $24,000 and then lose another $4,800 in sales tax added to almost anything they buy.

    New Zealand—$16.00 in International Currency

    All New Zealander who makes the equivalent of about $11,000 a year or less pay 11.5% income tax. It graduates up until those making about $55,000 and up pay 35% income tax. And yes, there’s a 13% national sales tax. Untrained or under 20 workers earn the equivalent of $8.94 an hour. The rest have a minimum wage of $11.18US.

    Canada—$16.00 in International Currency

    Canadians who earn about $36,000US or less pay a 15% income tax. It graduates up to a 29% top tax rate. The national sales tax in Canada is 5%. The minimum wage in Canada varies according to jurisdiction, but ranges from $8.59US in Alberta to $10.72US in Yukon.

    United States—$15.00 in International Currency

    Yes, the US ranks #10 in the nations with the highest minimum wage. Almost half of working Americans pay absolutely no income taxes at all. The bottom 40% actually have a -9% (that’s negative, as in the government pays them) tax rate. The current minimum wage set by the Federal government is $7.25. It can be higher depending on the state.

    *International Currency is a measure of currency based on the value of the United States dollar in 2009.

    SOURCES: Bloomberg.com, Minimum-Wage.org, Tax-Rates.org, WageIndicator.org.

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