Why a global Minimum Wage?
Our view of traditional economics today is one that was originally founded on the assumption that labor is fluid and can move from place to place far easier than capital. This was because, without large international banking institutions that rely on the internet, it was much easier for a labor force to simply move to another country where major economic opportunity was available. Today, the inverse is true. Crossing international borders is harder than ever, and capital is so fluid that international markets fluctuate daily based on even the slightest change in local policymaking.
This presents a significant challenge to legislators around the world. People who might seek higher wages or improved living standards for their people will often find themselves either at the hands of international courts or as the victim of extreme capital flight. No singular government (not even the United States) is capable of preventing severe economic collapse, due to capital flight, on its own.
Without significant international labor solidarity wages in the US and around the world will continue to decline simply due to the ability of multinational corporations to simply shift their capital into a different national market without warning. This has become a favored method of strike-breaking and influencing global labor policy. Large multinational corporations are building their foreign production capacity so that local strikes don’t impact their bottom line, and that is a very effective strategy of breaking labor unions and depressing wages.
The good news is, that because the United States is the primary global consumer, we are in a position to have a significant impact on how goods are produced. If we were to impose a global minimum wage of even just $1/hour we would see a resurgence in local development and an improvement in the quality of life worldwide.
Can we manage to afford this? Yes!
The current global GDP per capita is about $11,727 and the median wage per capita globally is about $2,292. This means that there is plenty of room to expand wages globally, and given the benefits to the United States Economy as a whole, there is really no reason not to. To add another layer of context; in the US wages being at around 42.6% of GDP is a 100 year low. If we were to follow that standard then the global median wage should be around $5,000/year. A global minimum wage of about $1,920 annually is well within the range of possibility and would work to bring global labor standards up significantly.
Given all these factors, the fact that a global minimum wage would greatly improve the lives of working people globally and the fact that working people in the U.S. would see huge benefits in their pocketbooks, I think it is time we have a serious conversation about a global minimum wage. For starters, simply putting a tariff on companies that don't apply this wage would be a step in the right direction, and would greatly improve U.S. labor's bargaining power. Its time we realized our economic structure has changed since the time of classical economics.