Fast Food Workers Paid Double Elsewhere

Fast-food workers are holding strikes and demonstrations in dozens of U.S. cities. The Fight for 15 campaign demands a $15 living wage and the right to form a union without interference from employers.

Critics say a living wage would drive fast-food restaurants and other retail firms out of business — and millions of their employees out of work. But supporters observe that minimum wages in other countries can be much higher than ours, and they still have fast food.

Australia in particular has a very high minimum wage: 16.37 Australian dollars an hour. At current exchange rates that’s about $15 an hour, more than twice our minimum and equal to the Fight for 15 demand.

Not surprisingly, some U.S. media outlets are mulling Australia’s example. Jordan Weissmann, who writes about business for The Atlantic, points out that the Australian minimum amounts to just $9.77 an hour, after addressing the cost-of-living adjustments calculated by the Organization for Economic Cooperation and Development (OECD).

The U.S. minimum wage stands at $7.10 an hour, using the same adjustment. So instead of Australia’s minimum wage being twice the U.S. minimum, it’s just 37.6 percent higher, right? Wrong.

First, most fast-food workers would love a 37.6 percent raise. If the difference is “only” 37.6 percent, bring it on! Second, every Australian fast-food worker has full national health insurance coverage with no deductibles and no co-pays. Bring that on too. Third, very few Australians are paid the statutory minimum wage. Instead, nearly every hourly Australian worker is covered by an “industry award” negotiated with their employers by a government agency called Fair Work Australia. The fast-food industry is no exception.

The minimum fast food industry award for an entry-level adult fast-food worker is 17.98 Australian dollars an hour. In U.S. dollar terms that’s $16.50 an hour at current exchange rates or $11.99 an hour at the OECD’s “purchasing power parity” exchange rate. But wait — there’s more.

All full-time workers are entitled to four weeks of annual vacation time, 10 paid holidays, and 10 paid sick days, according to the minimum National Employment Standards. You also get up to 10 paid days off for jury duty. Fast-food employers also contribute at least 9.25 percent of their employees’ pay into the workers’ retirement funds.

If full-time workers are so expensive, why don’t employers just make everyone part-time? The Australians have thought of that too. Part-time workers get 25 percent extra pay to compensate for their lost days off, bringing their hourly pay to 22.48 Australian dollars an hour. That’s $20.66 an hour in U.S. dollars, or $14.99 an hour using conservatives’ preferred OECD exchange rate.

So we’re right back at…15 bucks an hour. Plus full, no deductible, no co-pay health insurance and 9.25 percent retirement contributions. Yes, part-time workers in Australia get that too.

And lest any pro-business readers retort that U.S. companies make retirement contributions in the form of Social Security payroll taxes, Australian companies pay payroll taxes too. Australian payroll taxes vary from state to state, but are in the range of 5-6 percent, just below the U.S. employer contribution of 6.2 percent.

All told, Australian fast-food workers are paid at least twice as much, and including benefits perhaps as much as three times as much, as American fast-food workers.

You can still get fast food in Australia. Fast food is also available all over Europe, where similar pro-worker rules are in place. The details differ country by country, but all western European countries offer ordinary workers a better deal than the United States.

For sure, the fast-food industry does not like the idea of paying workers more and executives less. But economic policy shouldn’t cater only to the interests of executives. Americans on the economic ladder’s bottom rung would benefit enormously from a $15 living wage. We should make that living wage the minimum wage.