Last year, I posted about the minimum wage in Canada. That same debate has also flared in the United States. During the recent state of the union address, U.S. President Barack Obama argued for an increase in the minimum wage in the United States. The Federal minimum wage in the US is $7.25, which applies to jobs covered by the Fair Labor Standards Act (generally applying to employees engaged in interstate commerce). For US employees governed by state law, the minimum wage can go from $5.25 (Wyoming) to $9.19 (Washington State). In Canada, the vast majority of employees are governed by provincial legislation and the minimum wages stretch from $9.75 (Alberta) to $11.00 (Nunavut). Quebec, Ontario and B.C. currently hover around the $9.90 to $10.25 range.
A U.S. employee making the federal minimum wage and working 40 hours a week would make an annual salary of $15,080. A Canadian employee making $10/hour would make $20,800. According to some U.S. commentators, keeping the minimum wage low boost productivity. Others, like the Financial Times argue that it does not, pointing out that had the minimum wage in the US risen with the cost of living, it would be $10.27 now. President Obama agrees. Is he right? Should the market set the minimum wage or should legislators?