International Minimum Wage

[Gustaf]

I'm not sure I'm following here...workers in developing countries would still cost a lot less so they would still take tje jobs. In fact, the market should basically create exactly this by itself as it is.

[Gustaf]

I'm a bit disappointed that no one answered my question...I'm gonna put it again. If the minimum wage is relative to GDP per capita I believe poor countries would STILL have much, much lower wages than rich countries. A poor African country has something like a tenth of the US GDP AND they're ready to live much poorer too.

[Gustaf]

I'm a bit disappointed that no one answered my question...I'm gonna put it again. If the minimum wage is relative to GDP per capita I believe poor countries would STILL have much, much lower wages than rich countries. A poor African country has something like a tenth of the US GDP AND they're ready to live much poorer too.

In poor countries there is generally a much larger gap between the upper and middle class and the poor (e.g., a person with a graduate degree could be earning more in Mexico than in Canada in the same job). There is an oversupply of the uneducated low-productivity workers and lack of educated high-productivity types, so this is only natural. Imposing a single standard even relative to GDP/capita without taking into account country-specific things like this would either cause tremendous unemployment among the poor (OK, not 90%, only 75%) or require relocation of hundreds of millions of uneducated from the poor countries where there is an oversupply to the rich countries where there is a (relative) shortage.  In fact, why would I hire an illiterate repairman at 2 dollars an hour, when I could get a junior-high graduate who will be able to read my instructions for that much? Mind it, even a relatively wealthy and educated country like Mexico (it is substantially above world's average in things like that)  has a 10% adult illiteracy rate.  Do you want all of them just to starve? That's 10 million people (well, 7 million, since you shouldn't count children).

Of course, it could, perhaps, be avoided, if the benchmark U.S. wage were to be set at, say, 25 cents an hour or less, but then it would not be binding for all but the poorest countries (it wouldn't be binding for Mexico). You just can't come up with a single simple standard that would work for the entire world.

 

That last sentence was sort of what I was getting at...even if you make it relative to GDP I doubt that a single standard could both be high enough to have any meaning for rich countries and low enough to allow people in poor countries to survive.