{"id":2513356,"date":"2025-12-02T01:10:00","date_gmt":"2025-12-02T06:10:00","guid":{"rendered":"https:\/\/monetizemail.com\/magatoon\/?p=2513356"},"modified":"2025-12-02T08:58:53","modified_gmt":"2025-12-02T13:58:53","slug":"the-truth-about-those-high-minimum-wage-countries","status":"publish","type":"post","link":"https:\/\/monetizemail.com\/magatoon\/2025\/12\/02\/the-truth-about-those-high-minimum-wage-countries\/","title":{"rendered":"The Truth About Those \u2018High Minimum Wage\u2019 Countries"},"content":{"rendered":"

When debating raising minimum wages<\/a>, proponents will often point to Australia and Finland as examples that contradict the warnings from (typically American) economists. On the surface, this seems like a fair point. After all, from our American perspective, things in Australia seem fine (other than the fact that even the trees are trying to kill you<\/a>) and Finland has been romanticized<\/a> as a triumph of progressive politics \u201cdone right<\/a>.\u201d\u00a0 But before minimum wage proponents declare victory, we should read the fine print.<\/p>\n

Looking beyond the simple story of \u201chigher minimum wages\u201d and into the underlying structures of these countries\u2019 respective economies reveals a web of exemptions, alternative employment structures, and differing educational emphases. Mandated high minimum wages with built-in escape hatches and exemptions large enough to drive a truck through are not really \u201cminimums.\u201d<\/p>\n

The Land of Oz<\/h2>\n

Australia loves to mention that they have one of the world\u2019s highest minimum wages, at $24.95 per hour<\/a> (the equivalent of about $16.16 in USD). This headline-grabbing figure only tells part of the story, however, as there are exemptions to this depending on an employee\u2019s age<\/a>, industry<\/a>, and myriad other conditions.\u00a0 Helpfully, the Australian government has put together a Pay and Conditions Tool<\/a> to help figure this all out.\u00a0 As a rough approximation, a person who is 17 years old can roughly count on a minimum wage equal to about 60 percent of the \u201cadult\u201d pay rate, giving them an effective minimum wage of $14.42 ($9.34 USD) and $17.04 on their 18th birthday ($11.04 USD).\u00a0\u00a0<\/p>\n

But what about workers with a disability?\u00a0 The Department of Social Services will determine how much a disabled worker will be paid based on the nature of their disability. Under the Supported Wage System<\/a>, \u201ca special workplace arrangement can be made for employers to pay wages to a person with disability based on how productive they are in their job. Under [this system] an employee\u2019s work capacity is assessed to find out their rate of pay\u2026 For example, someone with an assessed work capacity of 70 percent is entitled to 70 percent of the relevant pay rate in their award or registered agreement.\u201d\u00a0<\/p>\n

In other words, the Australian minimum wage that Americans have heard so much about only applies to people without disabilities who are at least 21 years old, and even then, only sometimes. But this still doesn\u2019t scratch the surface of the employment situation in Australia. Most of the jobs where the minimum wage actually applies are in industries such as restaurant and retail, where the work is so highly standardized that there are no real, appreciable productivity gains year over year.\u00a0 Are we really to believe that a 21-year-old waitress carries plates or restocks inventory 44 percent better than her 18-year-old counterpart?\u00a0<\/p>\n

As a result of the age-based pay scale, Australian workers in these industries are laid off<\/a> at a disproportionately higher rate<\/a> as they approach their 21st birthday, though effects can be seen<\/a> at every birthday up until the worker turns 21.<\/p>\n

Employers defend this system with a simple story: young workers lack experience and are therefore less productive because they\u2019re still learning. They need training, which costs money, and are consequently paid less to \u201cpay for\u201d the training they receive on the job.<\/p>\n

It\u2019s a nice story and one that comports with much of what Americans might experience, too. The truth is that many young workers in Australia have already completed pre-employment training, earning certificates and such, before they even start work. And in the sectors where the junior minimum wages are most common, the work is highly standardized, such that there isn\u2019t much productivity gained between 18 and 21.<\/p>\n

That said, there are legitimate programs where younger workers earn lower wages than their older counterparts.\u00a0 Australia\u2019s apprenticeship program is incredibly robust. A first-year electrician earns around 60 percent of the wages of a qualified tradesperson because they are genuinely learning and getting demonstrably better<\/em> each year thanks to the supervision and training they receive from their more senior coworkers. Wages in these settings increase not because of age, but because competence grows, and by the time the worker has completed their training, they earn full rates and have a valuable qualification they can take with them elsewhere, not to mention an all-important line on their resume attesting to their productivity.<\/p>\n

Finnish Wage Floors<\/h2>\n

Unlike America and Australia, Finland actually does not have a formal, statutory minimum wage.\u00a0 Instead, they use collective bargaining agreements<\/a>, which cover somewhere around 90 percent of workers<\/a>. Like Australia, however, they also have exemptions for workers who are \u201ctraining\u201d or in \u201capprentice programs.\u201d The difference is that in Finland, the training programs last for a specific amount of time irrespective of the employee\u2019s birthday. They\u2019re based on skill<\/em>, not age<\/em>.<\/p>\n

Finland also boasts a remarkable vocational and education training program<\/a> (VET) that \u201cprovides students with knowledge and skills necessary in further studies and promotes employment.\u201d\u00a0 According to their own figures, around half of the students who complete their basic education in Finland matriculate on to VET rather than \u201cgeneral upper secondary education.\u201d In other words, at around the age of 16, roughly half of the students decide to go into vocational training rather than continue on to what Americans commonly refer to as \u201ccollege.\u201d<\/p>\n

While Finnish students are enrolled in the VET, they can work for pay at the agreed-upon rates covered by the collective bargaining agreement through formal apprenticeship programs.\u00a0 According to the European Centre for the Development of Vocational Training, about 26 percent of VET students are enrolled in such a program. The remaining 74 percent, however, are either in the classroom or are engaged in \u201ctraining agreements,\u201d some of which allow the student to be unpaid while being formally employed. Others are informal, handshake agreements \u201cunder the table\u201d whereby the student is not<\/em> an employee and thus receives no wages.<\/p>\n

Thus, what Finland has is a high, collectively agreed-upon wage floor. But they do this by pushing most of the vocational training into the (unpaid) education system. The high wage floor exists, but workers don\u2019t get to stand on it until they\u2019ve completed their training, formal and sanctioned or otherwise.<\/p>\n

Reforms in America<\/h2>\n

The next time someone tells you about Finland\u2019s wonderful labor market or Australia\u2019s high minimum wage (or any other country, for that matter), ask about the fine print. When you look at these issues more closely, the surface-level claims of minimum wage proponents simply do not hold water.<\/p>\n

Still, as the US continues to wrestle with reforms<\/a> to our education system<\/a>, we can learn from these countries\u2019 experiences. Finland in particular, with its curricular focus on career preparation instead of rote memorization of obscure knowledge (when was the last time any of you, dear readers, used your knowledge of trigonometry<\/a>?), provides an important example where lessons for reform can be learned.\u00a0\u00a0<\/p>\n

We should carefully guard against the headline-grabbing claim that Australia and Finland have high minimum wages. We should especially reject the idea that this somehow proves that raising the minimum wage does not always lead to trade-offs. <\/p>\n

The post The Truth About Those \u2018High Minimum Wage\u2019 Countries<\/a> was first published by the American Institute for Economic Research (AIER)<\/a>, and is republished here with permission. Please support their efforts.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

When debating raising minimum wages, proponents will often point to Australia and Finland as examples that contradict the warnings from (typically American) economists. On the surface, this seems like a fair point. After all, from our American perspective, things in Australia seem fine (other than the fact that even the trees are trying to kill …<\/p>\n","protected":false},"author":118,"featured_media":2324418,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[],"class_list":["post-2513356","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2513356","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/users\/118"}],"replies":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/comments?post=2513356"}],"version-history":[{"count":1,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2513356\/revisions"}],"predecessor-version":[{"id":2513357,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2513356\/revisions\/2513357"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media\/2324418"}],"wp:attachment":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media?parent=2513356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/categories?post=2513356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/tags?post=2513356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}