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Taking a Closer Look at Fast Food Minimum Wages

Posted By Barry Ritholtz On December 17, 2013 @ 8:00 am In Data Analysis,Wages & Income | Comments Disabled

Last month, we discussed in this space McDonalds and Wal-Mart as America’s biggest welfare queens [1]. As it turns out, both retail giants are the beneficiaries of a surprising amount of Federal aid: Their employee’s receive an inordinate amount of Medicaid, food stamps and other public assistance. This allows them to maintain very low wages, and keep profits relatively robust.

I wondered aloud at why profitable, publicly traded private sector firms were receiving so much taxpayer largesse. With these corporations having their full time employees’ paychecks effectively subsidized by taxpayers, I decided to do a little do more digging. What I found about minimum wages in the United States surprised me. I suspect it will surprise you, too.

We begin with a little minimum wage background: In the US, it is currently pegged at $7.25 per hour. The law mandating these wages began post-depression in 1938 at 25 cents per hour [2]. (New Zealand [3] beat us by 40 years). Individual states [4] have the option to mandate a higher minimum wage, and about half of them do [5] with Washington State requiring the highest pay at $9.19/hour. Amongst developed economies, Australia and Luxembourg have the highest minimum wages ($15.75 and $14.21 respectively) while the other end of the scale includes Korea ($3.90), Poland ($2.69) and Hungary ($2.24), according to OECD. The United States sits in the middle of the range.


Continues here [6]

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/12/fast-food-minimum-wage/

URLs in this post:

[1] welfare queens: http://www.bloomberg.com/news/2013-11-13/how-mcdonald-s-and-wal-mart-became-welfare-queens.html

[2] 25 cents per hour: http://www.dol.gov/whd/minwage/chart.htm

[3] New Zealand: http://www.amazon.com/Minimum-Wages-David-Neumark/dp/0262515083

[4] states: http://www.dol.gov/whd/minwage/america.htm

[5] half of them do: http://www.ncsl.org/research/labor-and-employment/state-minimum-wage-chart.aspx

[6] Continues here: http://www.bloomberg.com/news/2013-12-17/the-minimum-wage-and-mcdonald-s-welfare.html

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