A lower minimum wage creates jobs?

For those of you wringing your hands over the issue of a minimum-wage increase in the US, perhaps the Spanish situation might teach you a thing or two.

Spain has a minimum wage that clocks in at a blistering 645 euros a month for full time. That works out to 4 euros an hour on a hypothetical 40-hour work week, but in reality the work week here is more like 50 hours for most people. So let’s say 3 euros an hour.

The daily minimum wage is 21.51 euros (employers hiring people at minimum wage have the option of hiring them by the month or by the day) which ends up being even less: 2.15 to 2.68 euros an hour, depending on how long the work day is.

Thus, a hypothetical family of four in which both Mom and Dad work full-time jobs at the minimum wage will live a glamorous lifestyle right at the government poverty threshold of 15,445 euros a year.

A neo-liberal let-the-markets-decide type of person would look at these numbers and say: Spain must be a paradise! A land of full employment! Not like those other countries in Europe, with actual living wages for the minimum wage…

And a neo-liberal let-the-markets-decide type of person would be totally wrong. 21% of Spaniards live in poverty, and unemployment just keeps going up. Now it’s at… wait for it… about 26%, according to the latest statistics.

Why? Well, I’d like to know. But clearly having one of the lowest minimum wages in Europe isn’t making us one of the richest countries in Europe. It’s keeping us one of the poorest. And we have a wealth distribution curve that would make any American oligarch proud.

Think of poor little Spain, then, the next time you’re arguing that a lower minimum wage would “create jobs.”

Daniel
 

How did I end up in Madrid? Why am I still here 12 years later? Excellent questions. With no good answer... Anyway, at some point I became a blogger, bestselling author and contributor to Lonely Planet. So there's that. Drop me a line, I'm happy to hear from you.