Sunday, June 12, 2011

Earning a Big Mac in the land of the "fair go"

This point of this post is NOT that Australia is better than the USA.
The point is that Australia and the USA are very different countries.
On the one hand,  both countries are democratic, capitalist, English speaking, and former English colonies. But they have different histories and very different values about equity, economic freedoms, and government responsibilities. One effective way to see some of the cultural differences is to watch the iconic Australian movie The Castle with a mixed group of Australians and Americans. Most Australians think it is hilarious and the Americans just don't get it.

I believe there is one economic statistic which clearly illustrates some of the fundamental differences between the two countries. The legal minimum wage is currently about 2.5 times higher in Australia than in the USA. In concrete terms, someone working at McDonald's in the USA has to work twice as long as an Australian employee to buy their lunch.

Here, are some of the details. The Federal minimum wage in the USA is currently US$7.25 per hour. Americans may find interesting reading the Australian National Employment Standards (enshrined in law under the  Fair Work Act of 2009).
The minimum wage has just been increased to AU$589 per week.
The maximum number of working hours is 38 hours week.
[Also, the "casual loading" has been increased to 22%. I believe this is what you pay people who do not have long term positions with super-annuation, paid annual leave, and other "benefits".]
I calculate the corresponding hourly pay rate is  AU$18.90 per hour ($589/38 x  1.22).

What about comparing currencies and costs of living? The US$ and A$ fluctuate relative to on another but are currently comparable.
The Big Mac index data from July 2010 list the price of a McDonald's Big Mac in Australia as A$4.35 versus US$3.73. This illustrates how the purchasing powers of the two currencies are comparable.

What might we learn from all this?
  • Australia is a very egalitarian country. ["A Fair Go for all"]
  • Australia is a very prosperous country.
  • Perhaps, a significant increase in the minimum wage in the USA would not lead to the economic disaster predicted by some business leaders and conservative politicians.

1 comment:

  1. Great post. I'm very lucky to call Australia home. We chose to emigrate here, and we chose correctly!