Minimum Wage – Europe Style

Minimum Wage with without

A quick look at unemployment in Europe with and without minimum wages.

10 responses to “Minimum Wage – Europe Style

  1. LOL! OK, give us the labor policies of Denmark, Germany, Italy and Sweden! They may not have a “minimum wage,” but they have strong worker protections, labor unions, guaranteed health care, and worker protections that they’re far far left of the US, and left of most other EU states. Denmark, Sweden and Germany put the US to shame in tough regulations on business and protection of unions. And yet they economically are doing very well and have high employment. The lesson is that strong unions, worker protection, and regulations on business do NOT harm employment.

    This also is an example of tricky/false use of stats. Minimum wages would be less protection of employees than what most of these states have, they have policies more intrusive than minimum wages. But most people don’t know it and so they’ll make the false conclusion that their lower unemployment is because they don’t have a minimum wage. But hey – give me Danish, Swedish, German policies towards labor, I’d gladly take them over what we have!

    • The lesson is that strong unions, worker protection, and regulations on business do NOT harm employment.

      The lesson is that minimum wages increase employment. Pure and simple.

      The debate should talk about the tradeoffs. Given that raising the minimum wage reduces employment for low skilled workers, do the benefits to those who remain employed outweigh the negatives to those who will lose their job or not be hired in the first place?

      The fact that a rise in the wage will reduce employment is not a matter of debate.

      • I do not believe an increase in minimum wages will increase unemployment. The variables are complex. But Germany has MORE than a minimum wage. So do Sweden and Denmark. Their worker laws are such that minimum wages would be giving workers less than what they now get. That’s what makes this graph so absurd – to shift to a minimum wage in those countries would mean workers would earn less and have fewer protections!

        • I do not believe an increase in minimum wages will increase unemployment.

          The concept is widely accepted as Econ 101 and acknowledged by all mainstream economists. Raising the minimum wage has a detrimental impact on employment.

          The only question remaining is whether or not the benefits outweigh the consequences.

          Oh, and the fact that Unions push these minimum wage laws because their pay is leveraged on that wage.

          Last comment – the minimum wage is most certainly detrimental to under skilled, undereducated and minorities. This is why white, racist labor unions implemented the laws after slavery was abolished.

  2. Taking Denmark for an example, it currently has unemployment just below 7%.

    It also provides almost $600 per week for unemployed people, which lasts for up to 2 years (recently cut back from 4 years).

    Germany provides unemployed persons with a monthly stipend for living expenses, plus housing and health care money.

    The real lesson here is that European countries that have really good social safety nets don’t necessarily need to have high minimum wages because the worker pool won’t bother working for less than their benefits.

    Speaking of unemployment safety nets, you always insist that unemployment insurance negatively affects employment. And yet, the labor participation rate for Denmark is identical to the United States. So, do you now support much higher unemployment benefits because it eliminates the need for minimum wage and allows for lower unemployment? Or is Denmark only useful for proving, in isolation, that minimum wage restrictions aren’t necessary?

    • Taking Denmark for an example, it currently has unemployment just below 7%.

      Yeah – I have little knowledge of conditions in Denmark. I’ll have to take time to study it and other nations’ methods.

      • Had a chance to look at those numbers yet?

        • Had a chance to look at those numbers yet?

          I’m warmed by you consideration of my education 😉

          Your whole thesis seems to be that normal and accepted economic realities don’t exist in Denmark – a darling of the Left for their various and generous safety net programs.

          I submit to you that those economic realities exist:

          Denark UI

          The labor participation rate is a measure that includes many factors – one of which is the fact that you must be IN the labor force to receive the safety net hammock benefits. So if Denmark allowed UI for 4 years, the participation rate would be artificially elevated.

          • You usually say unemployment makes people less likely to work. But now you’re saying it artificially raises labor participation because you need to work to be eligible. This doesn’t make any sense.

            Moreover, the very same restriction is true in the U.S.: you only get unemployment if you’ve been working. So, we should see higher employment in the U.S. due to our unemployment insurance, which is the opposite of your usual argument.

            Finally, your point in this post was that countries like Denmark had low unemployment because of a lack of a minimum wage. I pointed out that the lack of a minimum wage was only due to a number of other factors you normally say hurts employment (such as UI and unions). Are you now saying that Denmark’s employment is artificially high, and thus your point about minimum wage is inapplicable?

          • You usually say unemployment makes people less likely to work. But now you’re saying it artificially raises labor participation because you need to work to be eligible. This doesn’t make any sense.

            No. You need to be “in the labor force” to be eligible for UI.

            So, we should see higher employment in the U.S. due to our unemployment insurance,

            As a result of UI we would see higher unemployment [ people stay out of work longer ] but higher labor force participation.

            Are you now saying that Denmark’s employment is artificially high, and thus your point about minimum wage is inapplicable?

            I’m saying that just because we have 4 years, 2 years or 26 weeks of UI, people wait until it’s about to run out to get a job. And the longer they receive UI, the longer they are in the labor force.

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