On Thursday, Germany’s parliament approved the country’s first ever minimum wage at €8.50, or $11.60, an hour.
The new minimum will take effect in 2015 with a two-year transition period for some businesses. The law also allows some groups to be paid less, including people under 18, short-term interns, and the long-term unemployed. Future increases will be set by an independent commission made up of unions and business representatives, and the first increase could come as early as 2017.
Before the passage of the law, Germany was one of just seven countries out of the 28 members of the European Union without a minimum wage.
And it is already far outpacing the minimum wage in the United States. Ours currently rests at $7.25 an hour and hasn’t been raised in five years. It’s lost much of its purchasing power to inflation over the years; if it had kept up with it since its peak in the 1960s, the wage would be over $10 an hour. And if it had kept up with increases in workers’ productivity, rewarding them for their harder work, it would be nearly $22 an hour.
President Obama and Congressional Democrats have pushed for raising the minimum wage to $10.10 an hour, but Republicans blocked a bill that would have done just that. Despite warnings that a higher minimum wage will cost jobs, states that have raised their minimum wages have experienced healthy job growth, even among small businesses. A $10.10 wage would also lift millions out of poverty, particularly helping women and people of color.
In light of this evidence and a lack of Congressional action, states have been raising their own wages, although none have gotten to quite the same level as Germany’s. Massachusetts comes the closest, raising its minimum wage to $11 by 2017. Vermont put its wage at $10.50 an hour and three others, Connecticut, Hawaii, and Maryland, have passed the $10.10 level sought by President Obama. But some city wages surpass Germany, such as the $15 an hour wage agreed upon in Seattle.