Pay dirt

By THE DATA TEAM

ON MAY 19th the Los Angeles city council voted to raise its minimum wage, from $9 an hour to $15 an hour. Los Angeles is just one of many American cities using a rise in the minimum wage to try to address poverty and inequality. State and local governments are acting where the federal government has not. Just over half of American states have legal minimum wage rates above the federal minimum, which has stood at $7.25 an hour since 2009. Across most rich countries and American states, minimum wages tend to rise with income levels. Australia, with a real GDP per person of nearly $45,000, sets a minimum wage rate of $10.5 an hour—well above the $2.9 wage floor in Chile, where income per person is about half Australia's. Richer American states like Connecticut and California also tend to set higher minimum wage levels than poorer ones, like Florida.

Yet America as a whole is an outlier among advanced economies. Given the pattern across the rest of the OECD, a group of mostly rich countries, one would expect America, where GDP per person is $53,000, to pay a minimum wage around $12 an hour. That would mean a raise of about 65% for Americans earning the minimum pay rate.