Minimum Wage Around the World
About 90% of countries have some form of minimum wage. Headline rates range from under $1/hour in many low-income countries to over $15 in Australia and Luxembourg. Adjusted for cost of living (PPP) the spread compresses but is still wide. The 'Kaitz index' — minimum wage relative to median wage — is the better cross-country comparison and varies from ~30% to ~70%.
Key insights
Headline vs PPP-adjusted rates differ sharply
Australia, Luxembourg and France lead nominal hourly rates. In PPP terms (adjusting for cost of living), the gap to mid-income countries like Poland, Chile and Turkey narrows substantially. The US federal minimum sits at the bottom half of OECD economies in both nominal and PPP terms; many US states have set rates 2–3× higher than the federal floor.
The Kaitz index is the meaningful comparison
Minimum wage as % of median wage (the 'Kaitz index') captures how binding the minimum is. France's Kaitz index sits near 0.62 — the minimum is close to the median, affecting many workers. The US federal Kaitz is around 0.30 — the minimum binds almost nobody at the federal level. Countries with high Kaitz ratios have larger 'spike' employment at the minimum; low-Kaitz countries have hardly any.
Employment-effects evidence has shifted
Decades of US studies (Card-Krueger 1994 onward) and the UK Low Pay Commission's reviews found small-to-zero employment effects from moderate minimum wage increases. More recent UK, Germany and Korea natural experiments at higher Kaitz ratios show some disemployment in specific sectors but smaller than feared. The empirical consensus has moved towards 'moderate increases are largely harmless; large or rapid increases are riskier'.
Statutory minimum wage — nominal USD/hr (2024)
Where applicable, at current exchange rates
Key Finding: Australia tops the list at $16.88; the US federal minimum at $7.25 sits well below most OECD economies.
Minimum wage / median wage (Kaitz index) — OECD
Higher = more binding minimum
Key Finding: France, Portugal, Korea and Slovenia have the most binding minimums; the US federal level has the loosest.
Methodology & caveats
Coverage matters as much as the headline rate
Some countries set minimums by sector or by collective agreement (Italy, Sweden, Denmark have no statutory national minimum but high effective floors via union contracts). Coverage gaps — domestic workers, agricultural workers, informal sector — leave significant fractions of low-wage workers outside legal protection. A high headline minimum with weak coverage can be less protective than a moderate minimum with universal coverage.
Adjusting for cost of living
Comparing $7.25 (USA) to $5.48 (Poland) in nominal dollars overstates the US worker's purchasing power. PPP-adjusted figures compress the international range but still show meaningful gaps. Sub-national variation (US state minimums up to $16+ in California, NY) is often larger than international variation across OECD economies.
Beyond employment effects
Modern minimum-wage research has expanded beyond employment to look at: hours adjustments, price pass-through, productivity (efficiency wages), automation timing, business formation, household income distribution. Effects on these margins are typically more measurable than headline employment effects but get less attention in policy debates.