Another day another dollar, that’s how the old saying goes. The federal minimum wage in the United States of $7.25 per hour has been in the spotlight of late, in no small part down to newly-elected President Biden. He has proposed a pandemic economic relief plan that could involve pushing the minimum wage up to $15 per hour by the year 2025. That might seem like a wild jump—but hold that thought. That $7.25 figure hasn’t gone up since 2009, and presently it puts the United States in a pretty poor position in the overall international standards for minimum wage. A whole host of countries currently have a higher minimum wage including: Canada, Israel, South Korea, Ireland, France, Germany and the U.K.
The uproar over this possible rise of the minimum wage should also be considered alongside the context that the minimum wage in the United States has been creeping up at a state level anyway. Some of the biggest rises for 2021 come from the likes of Virginia, Florida, New Mexico, Connecticut and California. And California is the epicentre of a recent Twitterstorm that has gone viral around the United States and the rest of the world regarding this matter.
The friendly, neighborhood comic book store
Walk down the sun-kissed Californian street of El Camino Real in Sunnyvale—just west of San Jose—and you’ll stumble across the humble, well presented independent retailer known as Comics Conspiracy. On the face of it, there’s not much special about this store. It’s a comic book geek’s treasure trove, stocked with rarities and new releases that you could imagine spending hours in, if you were into that kind of thing. What makes it stand out is how it’s run. The store is owned by Ryan Higgins, who recently found himself internet famous after this tweet, in which he stated that he pays his staff $16.30 an hour. His logic? Billion dollar corporations could probably afford the same.
Now, it’s worth saying that in Sunnydale, that figure is in fact the minimum wage according to local law, but if one small independent retailer can make this work, then maybe many more can too. Given what the industry has been through in the last year with the pandemic and the subsequent surge of interest in fishing, perhaps there’s no better time to reassess your business model?
Minimum wage versus living wage
For comparison, it’s well worth taking a look across the pond to Europe, where minimum wages are generally higher than the United States. Overseas, there are many different approaches. In France, minimum wage is about $12.44 an hour. In the Netherlands, it’s more like $11.80. And in Germany $11.53*. There are even some countries that don’t actually have a minimum wage set out in law, these include: Italy, Denmark, Norway, Sweden, Finland, Iceland, Switzerland and Austria. In most cases, you’ll find these countries scoring very high on the citizen happiness and quality of life index – five rank among the top ten in this quality of life league table.
So, how do they make it work? There’s no simple answer, but perhaps it’s because many of these nations have well-documented successful social structures that mean nobody ever gets close to being paid a poor wage in the first place.
President Biden’s plan details a phased rollout of a $15 minimum wage in the U.S., one that would take place over four years. In phase one, the federal minimum wage would immediately be increased to $9.50. Annual increases would follow. The proposed legislation would also eliminated sub-minimum wages like those paid to restaurant workers, who often earn as little as $2.13 per hour before tips. The moves are intended to address a surplus of American workers living below the poverty line. (A full-time employee in America making $7.25 per hour would earn $15,000 annually, which places them below the poverty line if they have just one dependent.)
In the U.K., our minimum wage varies depending on your age, so for someone aged 18 to 20 it’s $8.91, for someone aged 21 to 24 it’s $11.33 and for a person of 25 years or over it’s $12.05*. There’s also a movement here for what is known as the living wage– this is a minimum amount to pay people according to the actual cost of living. It is not mandatory, but companies can sign up to it as a way to ensure they pay their employees fairly.
U.K. minimum wage currently stands at about $15 an hour If you live in London, and $13.13* if you live anywhere else in the U.K. Many believe this system is actually a more fair way of deciding how much to pay people – it’s based on the average cost of a basket of goods and is regularly reviewed. The State of New York replicates this system in New York City ($15 an hour) and New York State ($11.80 an hour).
Companies committed to the British scheme vary hugely in shape, size and market sector, just a few include: IKEA, Brewdog and Premier League soccer club Everton. There’s also plenty of small, independent retailers selling all kinds of goods including bicycles, curtains, greetings cards, coffee, kitchenware, books, knitting equipment and even vapes. No fishing tackle stores are on that list yet, but this scheme proves that it is possible to pay a fairer and higher wage than many business owners in the U.K. thought possible.
Stateside, large corporations like Target, Starbucks and Costco have already raised starting wages to $15 per hour. Eight U.S. states have also approved an eventual move to $15 per hour wages including California, Connecticut, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York, and Virginia.
Not all economists agree that raising the U.S. federal minimum wage will be a net win for everyone. A 2019 bi-partisan Congressional study concluded that raising minimum wage would lift 1.3 million Americans out of poverty, but could also cost about the same number of jobs as businesses look towards automation to maintain margins.
But the debate over minimum wage is about more than margins. It’s worth remembering that your business is your people, and happy, well-paid, valued people will work harder for you. At a time when consumers are going to need some coaxing to get them to be confident in coming back into brick-and-mortar retail outlets again, your staff are one of your most valuable assets. Their knowledge and their presence are the key differential between shopping online and shopping in store.
* Figures are based on XE.com currency conversions from Euro to US Dollar and British Pound to US Dollar (11 Feb, 2021).