Wednesday, November 17, 2010

US Minimum wage of $5.85/hour versus Australia's minimum wage of $15/hour

Have a look at the table above listing the unemployment welfare payments available for the unemployed in Australia. Could this be why there is no incentive for people who are long term unemployed to actually go find work? In America, unemployment welfare expires after 99 weeks or so. In Australia, it gets paid indefinitely.
Assuming you're single and living in Australia, government welfare is around $235 per week. The people earning minimum wage in America needs to work the equivalent of 40 hours per week to even earn the equivalent that the unemployed Aussies earn for sitting on their backside and doing nothing. It's a bit loopy and crazy isn't it?!
It's even crazier when you consider that if married or defacto couple were living together, and they were both unemployed, the Australian social welfare payment would be $424/week. While this may seem generous compared to the income of minimum wage workers in the US, it would be a struggle to survive in Sydney with that amount unless you moved out to the suburbs and away from the CBD inflated living costs.
I've been to the US on holiday and things aren't cheap over there. New York is just as expensive as Sydney. Santa Monica was possibly even more expensive than Sydney. So if the cost of living is roughly the same as in Sydney, how does one survive if they earn $5.85/hour?
Over at GRS (Get Rich Slowly), J.D Roth blogged about minimum wage in the US(Edit 25/07/15 hyperlink removed by request of new site owners) - some of the comments elaborate about how most states have higher minimum wage than the Federal minimum wage. But seriously, it probably feels like living in poverty trying to survive on those wages. The best thing for anyone earning that little, is to try and learn new skills and get a new job. They can also cut their expenses by share housing and living in really dingy, overcrowded share housing, put up with the torture for a year or two until they can save up some type of financial cushion and then move out to something nicer once they've organised their finances somewhat.
Working 40 hours @ $6/hour would mean earning $240/week. That's what the Australian government pays our unemployed folks each week for doing nothing at all. Australia's minimum wage is around $15/hour. I know which country I would want to live in if I was given the raw end of the deal! If I was living in the US earning those minimum wages, I'd beg for that little bit extra for a plane ticket to OZ.

Poverty in Asia

Many Asian nations don't even have minimum wage protection. Or social benefits for those unemployed. Sure everyone defends the poor wages and counteracts the argument by saying that the cost of living is a lot cheaper. But a lower cost of living doesn't mean that they're living comfortably. I was talking to a friend about Cambodia and she was telling me that the average income there is $100 USD per month, which is approximately $3-$4 USD per day. If they can't find work, they starve.

Asking for a pay rise had a great article about how to demand and ask for a pay rise or negotiate your pay. There's nothing freakier and more offsettling than asking for a pay rise. Maybe that's why people find it easier to just change employers. If you're working at McDonalds or some fast food place, it's probably a dead end asking for a payrise - probably a better idea if you can get additional qualifications and move out of that industry. Most employers expect justification as to why you're expecting a pay increase. What value have you added to the company and your department. What measures have you exceeded and expect to succeed. Sometimes the best way for the increase is to change to a new firm or to get additional qualifications.
That's the best thing about passive investment income, you never have to justify why you've got a capital gain in your property or stock portfolio, it goes up with demand, you never have to demand an increase in dividends, because as the company earns more, you get an increased share of their dividends. If rent goes up in the area where you have an investment property, you don't even need to justify why your rent will go up, because renters can see that the rental rate for the area has gone up and they won't argue with paying your rent.

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