How does the U.S. minimum wage compare to those around the world?

In his State of the Union address last night, President Barack Obama announced that he would seek to raise the federal minimum wage to $9 an hour, a measure that would form the centerpiece of an agenda aimed at reducing incoming inequality in the United States.

That announcement got us wondering: How does the U.S. minimum wage stack up against the minimum wage in other countries? The answer depends somewhat on how one chooses to measure the minimum wage and the standard against which it is measured.

One handy way of comparing the minimum wage across borders is to measure it relative to  median full-time wages, which indicates the gap between the lowest wage earners and the mid-point of the income spectrum. On that measurement, the U.S. minimum wage is about 38 percent of the median, which is indicative of high levels of income inequality in the United States. Countries like Australia, Belgium, France, Ireland, and New Zealand have both higher absolute minimum wages and minimum wages that fall closer to median wages. In other words, living on the minimum wage in one of those countries puts an individual much closer to achieving a median income than it would in the United States. Unstated in all of this, of course, is that the United States is significantly wealthier than all of these countries. The graph below, courtesy of the International Labor Organization, illustrates the distribution.

Minimum wage levels in selected developed economies, in PPP$ and as a share of median full-time wage, 2010

If one looks at minimum wage from an hourly perspective, the picture is much the same. Of the 23 countries for which the Organization for Economic Cooperation and Development has data, the United States ranks 10th in hourly income in PPP dollars, a measurement of purchasing power that indicates how much stuff an employee can buy with an hour of work.

All this is to say that, relative to its wealth, the United States underpays its least-skilled workers.

Whether Obama's minimum wage initiative has the votes to pass a Republican-controlled House remains a fairly dubious proposition, but his advocacy on the issue might at the very least bring attention to the U.S. wage gap.


Introducing the 2013 Gelber Prize finalists: today's nominees, Sonke Neitzel and Harald Welzer

Over the next few weeks, we're going to be featuring one interview per day with the authors of the books nominated for this year's Lionel Gelber Prize, a literary award for the year's best non-fiction book in English on foreign affairs. The award is sponsored by the Munk School of Global Affairs at the University of Toronto in cooperation with Foreign Policy. The interviews are conducted by Rob Steiner, former Wall Street Journal correspondent and director of fellowships in international journalism at the Munk School.

Today's authors are Sonke Neitzel and Harald Welzer. Here's the jury's citation for Soldaten: On Fighting, Killing and Dying:

Soldaten, in translation from the German by Sonke Neitzel and Harald Welzer, provides a compelling window into the views and psychology primarily of German prisoners of war held in American and British camps during the Second World War. Taken from secretly recorded transcripts of conversations among POWs, the book offers verbatim evidence of the horrors of combat and genocide, casually described soldier to soldier in yet more evidence for the banality of evil. The transcripts also provide insight into the culture of war itself, and the relationship of German soldiers to the Nazi leadership and regime. A memorable, disturbing chronicle.

Listen to the interview here.