Swiss Voters Reject World’s Highest Minimum Wage
In a referendum held yesterday, Swiss voters rejected what would have been the highest minimum wage in the world:
BERLIN — Swiss voters resoundingly rejected on Sunday a proposed minimum wage that would have been the world’s highest, a move widely seen as reflecting an aversion to state intervention in the liberal economic policies that are the bedrock of Switzerland’s prosperity.
Trade unions had sought a minimum hourly wage of 22 Swiss francs, or $24.65, in what they said was an effort to ensure fair salaries for workers in the lowest-paid sectors, such as retailing and personal services. Switzerland has no national minimum wage.
The proposed rate — considerably higher than elsewhere in Europe and more than double the $10.10 President Obama has sought in the United States — found little support in a national referendum, with 76.3 percent opposed, according to initial results released by the government.
Switzerland, as one of the world’s most prosperous countries and home to major international banks and hedge funds, as well as big chemical, pharmaceutical and machinery companies, might seem an unlikely venue for a debate on wage disparity. But unions argued that many people in the lowest-paying sectors of the economy struggled to make ends meet because their wages had not kept up with a cost of living among the highest in the world.
The vote on Sunday showed, however, that most Swiss do not view low wages as a problem, or at least not one that the government should be asked to fix.
“A fixed salary has never been a good way to fight the problem,” said Johann Schneider-Ammann, the economic minister. “If the initiative had been accepted, it would have led to workplace losses, especially in rural areas where less-qualified people have a harder time finding jobs. The best remedy against poverty is work.”
This just happened to be one of those times where popular will and economic sanity ended up coinciding. When matters like this have been placed before voters in the United States, they have generally passed quite comfortably notwithstanding decades of economic analysis demonstrating the deleterious impact of minimum wage laws on the employment of people at the lowest end of the economic spectrum. Indeed it’s worth noting that in the current debate over this issue in the United States many large retailers are supporting increases in the minimum wage in no small part because they are better situated to absorb the costs of such an increase, perhaps even without passing those costs on to consumers, than their smaller competitors. Obviously, the voters in Switzerland know something that Americans could stand to learn.
“When matters like this have been placed before voters in the United States, they have generally passed quite comfortably notwithstanding decades of economic analysis demonstrating the deleterious impact of minimum wage laws on the employment of people at the lowest end of the economic spectrum.”
Or not
“Economists have conducted hundreds of studies of the employment impact of the minimum wage. Summarizing those studies is a daunting task, but two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers.”
Fixed that up for you.
It’s also worth noting that the other falsehood Republicans peddle in this area is that UE benefits keep people from working.
For the Republicans in the audience DATA refers to factual, verifiable information…you know…reality.
Is this a parody? The studies in fact that have showed that minimum wage increases little or no effect on employment, despite constant predictions of many conservatives to the contrary. This has been the story since as long as there has been a minimum wage. The latest:
When the University of Chicago economists believe that raising the minimum wage doesn’t affect employment, you should take that as gospel. It would be like Exxon saying that
global warming is a problem.
When you are to the right of Mitt freakin’ Romney on the minimum wage, Doug, you are officially in Crazy Town. Honestly, Doug, it’s time to skip those libertarian websites and to look at what actual economists are saying. What’s next? Opposing child labor laws? Calling for the abolition of the EPA?Repealing the seat belt laws?
FWIW, I do think the Swiss unions overreached on asking for such a high minimum wage. Note however that Switzerland has a a much stronger safety net than the USA, including universal health insurance, generous social security benefits, and strong unions. Did you look into that, Doug? Guess not.
Personally, I would be happy to swap Switzerland’s generous social welfare system for a lower or even no minimum wage. Since that’s not on the cards-partly due to opposition of economic conservatives like the OP-then I’ll take an increase in the minimum wage, even if the level spoke of -$10.10- doesn’t really recoup the decline in purchasing power of the minimum wage since the 1960s.
Minimum wages don’t create (much) unemployment, but they decrease the rate of employment. That is to say, companies don’t fire people, but they fail to hire new people or fill vacancies.
@Pinky: I should have noted that that applies to situations in which the legal minimum wage is higher than the market’s minimum wage. Otherwise, it’s meaningless.
@Pinky: “The market’s minimum wage.” There’s a new level of hogwash. What’s “the market’s” wage in Silicon Valley, where all the major employers conspired to keep wages artificially low? What’s “the market’s” wage when Walmart moves into town and pays as little a possible?
“The market” is a fiction created by thieves to keep fools in line. Glad to see it’s working.
@Pinky:
Your position represents the triumph of conservative dogma over data. Conservatives have insisted for decades that minimum wage law increases wiould decrease unemployment. Every single time the Minimum wage increased, conservatives have looked for an increase in unemployment – and they haven’t found it. Eventually the University of Chicago threw in the towel. You should too.
You and Doug sound. Like creationists who just know that evidence of Noah’s. Flood will turn up- any day now.
@Stonetools: As far as I know, this is one of the few topics that economists agree upon – or at least they did until about a year ago. The only question is how much distress the minimum wage causes.
I wonder how many of those lower-paid jobs in Switzerland are filled by migrant or immigrant workers.
My first instinct isn’t to praise the economic wisdom of the Swiss, but to ponder on their prejudices.
They don’t believe it doesn’t affect unemployment, they believe that the benefits outweigh the cost, that increasing wages are worth the job losses. Check out what the study says, not what a site devoted to raising the minimum wage says it says.
The main study in that link I find incredibly dubious, since it purports to correct for “publication bias” in finding no connection between minimum wage and unemployment. i.e, “we don’t like what the meta-studies say so we’ll correct them to what we think is a fair representation”. You might want to talk to Dean Chambers about that. Maybe they can correct for publication bias and conclude that there’s no global warming too.
For some reason, I don’t think a time of high unemployment that is hitting most heavily on the marginally employable is a good time to engage in a grand economic experiment to see if raising the minimum wage will make it tougher for them to find jobs. If we had low unemployment, I’d be willing to consider it.
Until fairly recently “everybody knew” the relationship between wages and employment levels was inverse and pretty much perfectly linear. It tracks with common sense, and it’s still an article of faith among Republicans, but as most of y’all probably know, it’s dead wrong. The relationship is not linear, not even close. The argument among economists nowadays is whether the disemployment effects of raising the minimum wage are a) modest or b) nonexistent.
WaPo: Economists disagree on whether the minimum wage kills jobs. Why?
CEPR: “Why Does the Minimum Wage Have No Discernible Effect on Employment?”
As to the notion that Swiss voters have some sort of economic insight not available to Americans or most of their EU neighbors — that’s certainly possible. Maybe Swiss kids all study undergrad economics in high school, and the grownups all read Keynes and Friedman during their month-long vacations or something. Maybe the Swiss population contains an absurdly high proportion of economists.
But lacking some sort of evidence that the Swiss electorate possesses special expertise or insight, we have to assume that they don’t. And in that case a minimum wage raise proponent could turn the argument around and, with equal bogosity, claim that the electorates in the couple dozen OECD nations whose minimums exceed ours “knew something that Americans could stand to learn.”
That´s more complicated. One can argue that the Swiss proposal was too high, on the other hand, one can argue that the problem in the United States is not unemployment, but underemployment, and that´s a lousy solution for unemployment. Creating extremely crappy jobs(Specially when these jobs are not for young people entering the workforce) can be really horrible idea.,
@Pinky:
Ok…then provide a link.
@Pinky:
As far as I know
That’s a real short walk.
Quoting the CEPR paper at length here because it summarizes, in plain language and with reasonable thoroughness, the findings over the last couple decades:
Here’s where somebody jumps up and hollers that CEPR’s liberal, Dean Baker is evil, etc. But in this paper John Schmitt is citing legitimate research and meta-studies, not spinning liberal bedtime stories. This is one of those cases where reality just happens to have a “liberal” bias.
The blogger’s assertion that “decades of economic analysis demonstrat(ed) the deleterious impact of minimum wage laws on the employment of people at the lowest end of the economic spectrum” is wrong, and sadly characteristic of the lazy blogging that so often ruins on line discussion of this topic. And while the economic intuitions of the Swiss may indeed be superior to those of Americans, not to mention the residents of most other OECD countries, I’ll need some evidence before I’ll lend more credence to Swiss folk wisdom than to the opinions of academic economists and the weight of several decades of research.
Obviously, American voters will never get the chance to approve or disapprove of a minimum wage at the level of $24/hour.
The Minimum Wage increases the cost of employment, and cost of employment has effects over employment levels. Many countries that have high employment costs have high levels of unemployment. On the other hand, I don´t think that high levels of underemployment is a good solution for unemployment.
Sure, there should be a balance, but I don´t understand this cult of underemployment.
@Pinky:
As you recent foray into discussing the Mexican economy showed, that’s a very brief ride.
The cost of employment is offset by the increased revenue by increased spending. The only people who don’t noticeably spend more when their income increases are the upper earners, not sure where that cutoff is but easily the top 5%.
I think that everyone would agree that the more people who earn above the minimum wage, the less impact a change in minimum wage has. Like a boxer swinging his fist, if it doesn’t connect with anything there’s no impact. Now take a meta-study of all boxing punches. Count all the blocked jabs and wide punches, and on average, you’re going to conclude that punches have little or no impact.
As for the citation from the University of Chicago, if you look at it carefully, the question is whether the benefits of an increase in the minimum wage outweigh the damages. A person can say yes and still believe that there are damages caused by raising the minimum wage.
The CBO recently concluded that an increase in the minimum wage would put at least 100,000 people out of work (that was the low-end prediction).
@Anonne:
Easily.
I’m in the 97th percentile…and when I make more I save more AND I spend more.
But it wasn’t so long ago that I really had no choice but to spend all of any increase.
@Pinky:
So give us a damage free alternative.
Or are you saying that paying workers at Walmart and MacDonalds poverty wages and forcing them onto public assistance has no damaging effects??? I mean…you and I are subsidizing those companies to the tune of millions so that they can enhance their bottom line. I can only assume by your comment that you think that’s perfectly OK.
@Pinky:
100,000 workers is .06% +/-.
The Public Sector has cut, on net, over 2M jobs since the Bush Contraction…and I never see you complaining about that.
The problem is not the minimum wage per se. It’s the culture of business where the success of any business model does not automatically include paying a living hourly wage to its employees, regardless of hourly commitment, such that 40 weekly hours from any list of current jobs actually supports a person into positive net worth.
Business instead, wanting desperately like Data to be a person but never will be, seems think it’s in business only for its own sake. That model has helped enable the transfer of wealth to people who do not need it.
As a result, the learning of the word “enough” never occurs. “Enough” stands in diametric opposition to “Profit Motive” in which we must always take more more more.
“Enough” will be learned the hard way, it looks like now.
@Pinky:
“As for the citation from the University of Chicago, if you look at it carefully, the question is whether the benefits of an increase in the minimum wage outweigh the damages. A person can say yes and still believe that there are damages caused by raising the minimum wage.”
True, however that is not what either you (“As far as I know, this is one of the few topics that economists agree upon – or at least they did until about a year ago. The only question is how much distress the minimum wage causes.”) or Doug (“decades of economic analysis demonstrating the deleterious impact of minimum wage laws on the employment of people at the lowest end of the economic spectrum”) actually said. You both said that the damages to low income workers exceeds the benefits.
@anjin-san: @mantis:
Up your games, please. It’s a sad day when you two and Cliffy give one line responses to the same comment, and his is far more substantive and far less pointlessly insulting.
@Moosebreath:
Don’t blame them…I’m off my game today.
@Moosebreath: Where did I say that the damages to low income workers exceed the benefits?
And when was Anjin-san’s game any better than it is now?
@Pinky:
“Where did I say that the damages to low income workers exceed the benefits?”
Both the quote from you in my comment above and “Minimum wages don’t create (much) unemployment, but they decrease the rate of employment. That is to say, companies don’t fire people, but they fail to hire new people or fill vacancies.”
@Moosebreath: Huh?
@Pinky:
Huh what? Did you not say the words I quoted? Do they not mean that minimum wages harm those on the low end of the wage scale (edit) beyond the benefits of the minimum wages?
@Moosebreath: No. Consider:
1. The minimum wage does economic damage through reduced employment.
2. The minimum wage does economic benefit through increased wages.
3. The benefit of the minimum wage outweighs the damage caused by the minimum wage.
I’ve only said (1). I believe (2) to an extent, although it’s mitigated by inflation. I don’t think I’ve addressed (3). The University of Chicago question was about (3). Again, the only question is how much economic distress the minimum wage causes, and I believe that it more than outweighs its benefits.
@Pinky:
That estimate — and other commonly cited figure, 500,000 — were cherry-picked from the CBO report and passed around with little thought or scrutiny:
In addition, the CBO report has gotten the side-eye from economists because its (admittedly modest) predicted negative effect on employment is contrary to predictions of a solid majority of studies over the last few decades. That’s not to say the CBO report was wrong, necessarily, just on this particular point it’s an outlier — something to keep in the back of the mind when reading media reports citing it.
Anyway, even if the 100,000 (or 500,000) figure does prove out, the emphasis on the raw number to the exclusion of the rest of the analysis causes readers to lose the forest for the trees:
@Pinky:
“Again, the only question is how much economic distress the minimum wage causes, and I believe that it more than outweighs its benefits.”
To the extent you believe you did not opine on 3 before (and I disagree with you on the meaning of your prior statements), you certainly have now.
Why CBO differs from other economists on the minimum wage
I apologize for the extensive quoting but it seemed necessary to support my point, which is that blithely citing the CBO job loss figure as proof that “raising the minimum wage causes job loss, period” is a gross oversimplification. If that oversimplification continues as the dominant “meme” it will lead us to push policy makers in the wrong direction.
@ Pinky
This is coming from the guy who was telling us how the Mexican economy is non-productive, then proceeded to flee the thread when other commentators respond with actual economic data.
Well, I guess it’s understandable that you would prefer your comments on that subject be forgotten.
Physician, heal thyself.
@anjin-san: …didn’t Moosebreath say that?
@anjin-san: “Flee the thread”? I said what I meant to. Mexico is not an economic success. It doesn’t much matter to me whether people stick around that thread, or this one, and say things I disagree with. (It matters a little to me, but more than it should.) Sometimes the internet is pleading your case; sometimes it’s just getting your objection on the record.
@Pinky: What’s that? Anjin-san hasn’t replied yet? I guess he fled!
I am king of the hill!
I am king of the hill!
@ Pinky
Actually, that’s not what you said.
@anjin-san: What was the original, then? Something like “Central America is incapable of running an advanced economy”? I wasn’t the one who said it, but I did point out that Mexico’s GDP is 60% of ours, and if I recall correctly, they have the strongest GDP in Central America (except for Panama, which has a unique source of revenue). Whatever it was I said, I stand by it. Unless it was blithering nonsense, in which case I utterly reject it.
@ Pinky
John425 made some claims that basically did not rise to clown car level, and you leapt to his defense. When other commenters brought actual data into the conversation, you went silent.
Water tends to seek it’s own level.
@C. Clavin: yes, illinois- the barometer of economic success in this country. slackers that won’t go where the jobs are will always be slackers- but it’s not their fault, it’s societies….gag.
@anjin-san: are you counting the cartels and their contribution to mexican success?! not many “successful” countries export their own citizens at such a rate, just sayin’! sure, the “non-border” areas may have something going on but on the whole of mexico is a borderline 4th world hellhole of festering corruption and despair. maybe not cancun and the like, what Americans see of it.
@ bill
So if the brown people have any money, it’s from drugs.
I see.
Aside from Native Americans, all of us came from countries that were “exporting” their own citizens. My people came from dire poverty, killing poverty, in an advanced western European country. My grandfather was sent down into the coal mines when he was eight, and he almost joined 5 of his siblings in death.
I guess some people just need to look down on others to feel better about themselves. It’s sad, but it is very common.