Global History of Minimum Wage

(graph from US Department of Labor)
When looking at the history of global wages, it is critical to assess the economic history of the nations around the globe. By looking at the economic history of some key regions or countries throughout the world, it is possible to see why wage conditions in the Current Situation article developed. Each continent can be grouped based on certain economic ideals and conditions. South America has been steeped in economic upheaval but many of the countries are beginning to modernize. In Africa, constant violence, government corruption, and lack of cohesive infrastructure has severely impaired economic growth there. Western Europe along with the rest of the European Union have grown into largely socialist countries with a high degree of commercial success. Lastly, Asia has been modernizing at a rapid pace due to the effects of the global market and globalization. Industrialization has become the primary interest of countries such as India, Indonesia and especially China. The economic development and climate of various world countries are the primary determining factor for their wages. Another factor could be social- prejudice for example. This view is detailed in comparison to productivity differences by Gernot Kohler in his Critique of the Global Wage System.

In China, and similarly in other Asian countries around it, Communism and its ideals of productivity influenced its wage development. Governments were strong enough to control their nations and institute reforms such as the Five Year Plan to start their countries on paths of rapid industrialization for the good of the state. Wages would remain low, but productivity would draw immense foreign investment. To support this productivity, wages would be set as low as possible, with globalization holding minimum wage growth back, as seen with IT technicians. This growth characterizes the economic development of many Asian countries based off industrial goals started by communist reform plans.

In Europe, mercantilist expansion starting during the Renaissance prove to be the backbone of the continental economy. Mercantilism allowed the Western European nations to flourish on a global scale, but their political philosophies began to shift toward a socialist angle. The prosperity of the various countries was spread amongst the populace through socialist reform. Taxes are extremely high, but this allows for much higher minimum wage that the United States and various other benefits such as medical treatment.

Lastly, the continents of Africa and South America have largely failed in many respects to establish a strong economic system and therefore the ability to set stable minimum wages. Internal strife and government corruption have left many of the countries without viable industrial growth or infrastructure. This originally arose with the advent of colonialism and the subsequent crippling of African and South American nations. Until Africa and South America can be stabilized, workers can be easily exploited and economic growth will be limited. A detailed essay of Africa's crippled economic history can be found here.

The Current Situation- Global Level

The United States is the not the only country with minimum wage, about 75% of the European countries have some sort of minimum wage for their workers, the majority of the countries in Asia also have a minimum wage (Japan, China, Indonesia, Thailand, Cambodia, South Korea and Vietnam, to name a few). Canada has a minimum wage, however different areas have different wages. Africa and South America are the two continents that are really lacking minimum wages, the majority of the countries in those two continents don't have any minimum wage for their workers. Due to globalization, the disparity between the rich and poor, especially in developing countries like India and China, has been growing exponentially. Companies in the U.S have been outsourcing jobs to these countries for very low wages, and many of the workers there are being left in the dust. A global minimum wage would help the low-wage earners rise up, closing the gap between the rich and the poor. A global minimum wage would also help U.S workers keep their jobs in America, because if companies have to pay workers the same throughout the world, they might as well stay in America(1).
France has the highest minimum wage in Europe and possibly the world. According to the European Industrial Relations Observatory(EIRO), France's hourly wages for workers is 7.61 Euros and the monthly wage is 1,286.09 Euros. Converted to U.S dollars, that is about $10.78 per hour and $1,796.12 per month(2). Compare this to the hourly federal U.S minimum wage of $5.85, France's wage is over twice as much as ours. Most of the other European countries have a wage similar to France, give or take a few cents. A global wage in Europe would have to be very high in order to support the workers there, because their costs of living are so high, especially in countries like Spain, France and Britain.
Many Asian countries have a minimum wage, however it differs from country to country. For example, Vietnam and South Korea have a single minimum wage for the whole country, however other countries like Japan, Cambodia, China, Thailand and Indonesia have decentralized minimum wage systems. That means that the government doesn't necessarily control the minimum wage, organizations and companies do. A global minimum wage would help many workers in these countries, because many workers, including children, are being exploited for their cheap labor(5).
Canada also requires its provinces to pay its low-wage workers a minimum wage, although this amount varies from province to province. Canada's provinces are very generous to workers, the lowest amount a worker can be paid is $7.25 a hour in New Brunswick, which is still very high, considering only a few states in the U.S have a higher wage than $7.25. Canada also has some regulations on who gets paid what, for example, in British Columbia, workers will only be paid $6.00 a hour for their first 500 hours of work, and after they complete that then they will be paid $8.00 a hour. If a global minimum wage is set, maybe regulations could be set like Canada's(3).
South America and Africa, the poorest continents in the world, do not have minimum wages for their countries. In Africa, the only country that has one is South Africa and there has been many arguments over black worker's rights there. A global minimum wage would certainly help many workers on these two continents. Companies and employers would be forced to pay their workers a decent wage, so that they can live out of poverty. At this time, the majority of Africa lives in poverty, the same with South America. The yearly income of some families can be about $200, which is not nearly enough to support a family. A global minimum wage would certainly help these families, and maybe take a large portion of the population out of poverty(4).
In conclusion, a global minimum wage would certainly benefit countries in South America, Africa and some in Asia. Companies would be forced to respect their worker's rights, by paying them a decent wage to live off of, hopefully taking some families around the world out of poverty. The World Trade Organization(WTO) would be a good organization to help introduce and regulate the world's minimum wage, however it is an idea that is met with mixed feelings(1).

1. http://www.sinceslicedbread.com/idea/19708
2. http://www.eurofound.europa.eu/eiro/2005/07/study/tn0507101s.htm#contentpage
3. http://www.gov.mb.ca/labour/labmgt/resbr/wages/minwage.html
4. http://www.ruralpovertyportal.org/english/regions/africa/index.htm
5. http://www.amrc.org.hk/4207.htm
Cartoon from http://thinkprogress.org/wp-content/uploads/2006/04/WJLA041406160019.jpg

Personal Influence on Global Minimum Wage

A single individual can’t change world poverty, but if many people work together they have a shot. There are many support groups out there that are trying to abolish global poverty. Groups like the Center for Global Development. You can contact them by clicking here and clicking in the “contact us” link in the upper right hand corner. This group can give you information on how to deal with global poverty and how to help.
A big thing people can do is to contact Congressmen and senators who are pushing for global poverty bills. Congressmen like Adam Smith, the Washington Post wrote, “U.S. Representative Adam Smith (D-WA) and U.S. Senator Maria Cantwell (D-WA) took steps this week to require the President of the United States to create a strategy to combat extreme poverty and to report to Congress on his progress. Smith reintroduced his Global Poverty Act, H.R. 1302, late yesterday in the U.S. House of Representatives.” If you want to contact congressman Smith you can click here and fill out the forms to write him and email for questions and concerns.
If the world continues to go on like this then we will soon have two very different classes. a very rich and wealthy class and a very poor class. The growing global economy is leaving more than 1 billion people behind. Congressman Smith comments on poverty in an interview with the Washington Post “Poverty grips nearly half of the world’s population, and 1.1 billion people live in extreme poverty, meaning they scrape by on less than a dollar a day.” Obviously the current minimum wages in the major economic powers of the world are not cutting it. There needs to be a raise in minimum wage or economic reforms in world trade, so we don’t end up leaving the poor further behind.

Governmental Influence on Global Wages

Nearly half the world's population in living under the poverty line, and the world's impoverished are rising in numbers. In the United States the number of people living in poverty rose to 34.6million in 2002. In China the poverty rate has fallen substantially, but the gap between the rich and poor has opened up. It is also said by Mr. Fang Jue in an interview with The Epoch Times, “I am of the opinion that China's poverty line standard is consciously, instead of unconsciously, set low. Its purpose is to cover up the widening gap in China between poor and rich, and also to conceal the Chinese regime's serious mistakes in poverty eradication. China sets a poverty line “defined according to Chinese characteristics," which is only one fourth of the international poverty line standard. This is an act to fool Chinese people and the international community”. This causes the world and China herself to turn away from the real underlying problems of China. This causes the poor to get poorer without government help and the rich to get richer. These problems could be confronted by trade reforms and reforms within countries. One thing that could happen is that the UN put a division together that would set a standard for all labor across the world. They could set minimum wages and make labor laws that made a safer environment for the world’s workers. This would be difficult, but then the poor would get the opportunity to raise up the economic ladder and achieve things they wouldn’t ever dream of. The down side to this would be that prices for everything would go up because the companies have to pay their workers more. Lots of Americans have lost their jobs to the fact that China has a minimum wage of fifty cents (USD). The global minimum wage would make cheap labor very hard to find.
China could also raise their poverty line. This way they cold actually see what is happening to their country. Instead of only seeing the good they would also see the bad things that poverty is doing to their population. This would lower the standard of living in China and make their cheap labor force even bigger, so it is a bad thing and a good thing. The good thing is that the people in need will finally get the attention they need. The bad thing is that the government would need to do something about the poverty level, and this takes time and money.

National History of Minimum Wage

(1)

Ever since the American industrial revolution, low wage earners have had to contend with the issue of minimum wage. Following suit with the English Industrial revolution, the mid to late 1800’s in American witnessed a rapid expansion of technology and urbanization. Technologies such as the steam engine, steel production and mechanized farming were spreading throughout the country, and vast industrial centers were able to flourish. This was in part due to the vast raw resources the United States possessed and also in part the constant supply of new immigrant labor. These new immigrants were largely from Europe, hoping to find a fresh start and new opportunities in America. The constant influx of raw materials and labor allowed for the rapid development of commercial manufacturing. No sooner had the new industries developed, than the captains of industry were exploiting workers.

The so called “robber barons” of the late 19^th and early 20^th centuries were known for their brilliance in accumulating wealth, but also for their lack of compassion toward their employees. The laissez-fair economics of the day allowed these powerful businessmen such as Andrew Carnegie and John D. Rockefeller to give minimal compensation toward their workers. There were no benefits, and barely enough money to support a family if only the man worked. This immigrant, working-class families were often forced to live in tenement conditions. Tenements were cheaply built housing structures that would often become extremely overcrowded. This was largely due to the fact that people were moving into the cities faster that the cities could develop effective infrastructure. The worker’s wage was usually only enough to barely keep a family in this sort of housing. (2) Deteriorating conditions for the immigrant workers eventually led to the Homestead and Pullman Strikes. These major strikes in the steel and railroad industry characterized the attempts of workers to improve their conditions. Most were put down with a combination of company and government support. It would take the Great Depression for legislation that would permanently secure workers rights.

The Depression was a very difficult time in American history, but it led to the FLSA or Federal Labor Standards Act which would begin a federal minimum wage. This among other laws curtailing the power of trusts and giving workers the right to unionize gave workers the opportunity for improved conditions. (3) The minimum wage however, would rarely increase and is always trying to keep up with the current “real” livable wage. The different states have deal with this problem differently, but some of the poorer states in the country such as Louisiana and Mississippi have not made state legislation surpassing or even meeting the federal minimum wage.

http://www.tenement.org/ (2)

http://oregonstate.edu/instruct/anth484/minwage.html (1)

http://www.dol.gov/esa/whd/flsa/ (3)

Government Influence on National Minimum Wage

As of July 24, 2007 the Fair Labor Standards Act (FLSA) has increased the federal minimum wage to $5.85/hr . This is a step in the right direction, but seeing that thirty states have had to raise their minimum wage over that, it obviously says that there is still much work to be done. In states that have a lower minimum wage or no minimum wage at all there is a higher poverty level than in the states that have raised the minimum wage. For example Georgia has an hourly wage of $5.15/hr, it also has a poverty level of 14.4% of the population under the federal poverty line
This shows how Georgia needs to raise their minimum wage to counter the cost of living wage there. In Missouri the minimum wage is $6.50/hr , and their poverty level is 11.5% , that’s a whole 2.9% less than Georgia! The rule of thumb is that if you raise a minimum wage anywhere companies won’t hire as many people and the unemployment rates with go up, but that’s not true. In Georgia the unemployment rate is 4.7% , but in Missouri it is 4.4% . It may only be .3% less, but at least it’s something. If this is something you wish to talk to your State legislator about here is a website where you can find your state legislator to get their contact information.
Another thing that could be done is that the federal government could make the state governments pay at least the federal minimum wage, and increase it as the federal one increases. For now the plan is for the federal minimum wage to go up seventy cents every year until the year 2009 when it will hit $7.25/hr. This would allow states who have wages about the federal minimum keep their wages, but the states which don’t must raise them. Also the federal government could cover more people with the FLSA. Currently, some people that are not covered by it are teachers, fishermen, newspaper delivery men, and many more. There are also a number of professions that are partially exempt also . All these professions could be put under the wing of the FLSA, and maybe more people will pick up jobs that require not as much training as a job that would pay well.

Personal Influence on National Minimum Wage

If you own a small business or a big business one thing you could do to alleviate the gap between what is being done and what needs to be done is to raise your wages. This is a gamble, however, because then you might need to lay off workers, but on the other hand, you might get more workers to turn out a bigger profit and expand your business. The odds are on you side, as mentioned in the previous article, Missouri’s unemployment rate is 4.4%, with a minimum wage of $6.50/hr, while Georgia’s unemployment rate is 4.7%, with a minimum wage of $5.15/hr. This shows that there is a greater chance of more workers coming than going out if you raised you wages.
Also you could write to your Congressmen. Currently only the District of Columbia, Hawaii, Massachusetts, Minnesota, and New York have bills that are currently dealing with the gap between the minimum wage and the living wages of their states. If you wish to have a voice in this matter contact your state legislators to inquire more about the minimum wage using the link provided in the previous articles. If you wish to go higher in the political system here is a site that can direct you to your congressmen and senators.
If this situation continues like this, unchecked, there could be horrible consequences. In Kansas, minimum wage is at $2.65/hr, the projected unemployment rate for 2008 is 4.8%. Right now it is at 4.5%. This shows how unemployment could go up and up until there is something like the Depression of the 1930’s. This would prove fatal to America’s economy, with it being in its fragile state right now. Also as inflation goes up the living wage will go up, and if there is a gap now between living wage and minimum wage, there will certainly be a big one then. Some states have foreseen this and prepared to raise the minimum wage, like in Kentucky with its minimum wage at $5.85/hr right now, but in 2008 they will raise it to $6.55/hr and in 2008 they will raise it to $7.25/hr. Some states, however, have not planned to raise their minimum wage, like the states mentioned in this and previous articles, Georgia and Kansas.

http://www.dol.gov/compliance/guide/minwage.htm#who
http://www.dol.gov/esa/minwage/america.htm#content
http://www.ncsl.org/programs/employ/livingwage2006.htm
http://www.fdic.gov/bank/analytical/stateprofile/Atlanta/Ga/ga.xml.html
http://www.acfb.org/advocacy_and_education/facts_and_links/GeorgiaPovertyHungerData.pdf
http://www.heartlandalliance.org/maip/documents/CensusFactSheet2007Missouri.pdf
http://www.dra.gov/media/article_detail.aspx?articleID=67
http://www.ncsl.org/public/leglinks_search.cfm