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Minimum Wage in Germany and the United States

"Unlike the US and many other EU countries, Germany has no statutory minimum wage, and debate has reignited over introducing one. One side says it's about social justice; the other calls it a job killer," writes DW World:
Traditionally, wages in Germany are set according to industry-wide collective bargaining agreements and detailed rules determine what kind of work receives what kind of pay. Because of the strength of trade unions in Germany, wage settlements were generally pretty favorable to workers.
While the American minimum wage, which dates from 1938, was put in place to keep employers from exploiting workers and giving them an income on which they could survive, Germany's generous social welfare system provided that protection. No one would work for wages that were under a certain level, because welfare benefits could give them a basic income.
"That has acted as a kind of virtual minimum wage," said Joachim Ragnatz, an economist at the Halle Institute for Economic Research.
But more and more holes have developed in that system. Welfare benefits have been cut back. Unions have lost clout and some sectors, especially in the service industry, have opted out of collective bargaining agreements. (...)
A study just released by Ragnatz and Marcel Thum from the Ifo Institute for Economic Research says increasing the minimum wage to 6.50 euros per hour, as the Social Democrats have called for, would result in a loss of around 465,000 jobs. Raising it to 7.50 euros would kill around 621,000 jobs, according to the report.
The governing Christian Democrats and Social Democrats were unable to reach a compromise on a minimum wage this week.

Related story on poverty: The Washington Post writes about four members of Congress, who have pledged to live for one week on $21 worth of food, the amount the average food stamp recipient receives in federal assistance. That's $3 a day or $1 a meal. They started yesterday:
McGovern and Emerson have introduced legislation that would add $4 billion to the annual federal food stamp budget, which was $33 billion last year and covered 26 million Americans. (...)
"We're trying to get this debate going," McGovern said. "There are more working people today getting food stamps than six years ago... There's not a member of Congress that doesn't have hunger in their district." According to the rules of the challenge, the four House members cannot eat anything beside their $21 worth of groceries. That means no food at the many receptions, dinners and fundraisers that fill a lawmaker's week.
Both lawmakers keep blogs about the experience, McGovern at Food Stamp Challenge and Ryan on his House website.
The above mentioned Washington Post article "Lawmakers Find $21 a Week Doesn't Buy a Lot of Groceries" is currently the most popular story on Technorati, which indicates the huge interest.

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You know how the "intellectual" elite keep wanting the US to be more like those members of the EU? Atlantic Monthly points out that Germany has no minimum wage....

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Don S on :

" Related story on poverty: The Washington Post writes about four members of Congress, who have pledged to live for one week on $21 worth of food, the amount the average food stamp recipient receives in federal assistance. That's $3 a day or $1 a meal. They started yesterday:" The 'experiment' presupposes an interesting but unlikely idea - that most or all food stamp recipients (or indeed any welfare recipient) live completely on the proceeds from Federal programs - and that it is the duty of taxpayers to finance that kind of dependency. As unlikely as that dependency would seem to be in the majority of cases, where informal jobs, relatives, charities the undeclared father of the child, etc are helping out. It also discounts the effects of free food distributions (either dumpster-diving or distributions of products past their sell-by date but still good for human consumption. Congressman Ryan's choices are interesting and probably unsound given his limited budget. There are luxuries on that list - and the prices seem high to me even living in the UK where food is more expensive. I have had recent experience of living on a very minimal budget in very recent times after my bank screwed up my accounts this winter I lived for 2 months on a food budget of £25 a week. Yellow cornmeal $1.43 2 packages angel-hair pasta 1.54 3 cans tomato sauce 4.50 1 loaf wheat bread 0.89 Bread and cornmeal are sound choices, as are dried rice and pulses. A lot of eating for very little money. The pasta and tomato sauce seem expensive - I could get 5-6 meals out of a package of dried pasta (38 pence) and two large jars of store-brand pasta sauce (75 pence each). Six meals for £1.88 plus maybe 50 pence worth of cheese for £2.38 total for 5-6 dinners. I could buy a large loaf of long-life bread for 58 pence. Two of those would last me a week breakfast and lunch. I needed a tub of cheap olive-oil spread (75 pence) though that would last me more than a week. A large box of generic bran flakes 77 pence, and a couple quarts of long-life milk at 90 pence total gave me cereal and buttered toast each morning. I used cheap liver sausage for sandwiches for lunch (perhaps £2 a week). 2 jars strawberry preserves 4.80 1 jar chunky peanut butter 2.48 Chock Full o’ Nuts coffee 2.50 1 head of garlic 0.32 Coffe, particularly Name Brand coffee?!!!! Strawberry preserves? Peanut butter? All luxuries - particularly the coffee. I drank tap water and brewed tea. Tea is very cheap if you buy the cheap brands (at least here in the UK). The congressman showed little discipline in the store. He blew nearly half his budget on luxuries - more than half given that he seems to have paid for name brands on many of his non-luxury items. And he's surprised that he wwent hungry?!!!! Shopping on a tight budget takes time and discipline. You have to comparison shop to make sure you are getting the best deal - and never buy name brand anything!

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