There are plenty of countries where wages are higher than in the United States. In America, CNN Money reports, the minimum wage is $7.25 an hour. That’s less than half the minimum wage in Australia and Luxembourg. The minimum wage is also higher in Canada, the U.K., Holland, Ireland, New Zealand, Belgium, and France.
When it comes to average annual salaries, the United States with slightly over $57,000, falls far behind Switzerland, where the average is $95,000. Norway and Luxembourg are also doing much better than the States with average wages around $80,000 per year. One thing, though, the exchange rate changes affect these differences. If Swiss frank declines to a dollar, the gap will narrow.
In recent years, wage growth in America has been slow and the middle class began to shrink. In fact, adjusting for inflation, wages are only 10 percent higher than they were in 1970s. This brings an average annual wage growth in the U.S. to 0.2 percent a year.
Many fear that globalization and upcoming robotization will further depress, or even lower, wages, while many workers will lose their jobs. However, there are optimistic signs as well. In the past year, wages have increased by 2.4 percent, while unemployment rate has declined further. Similar economic growth is happening in Europe and beyond. These are good economic times. But, we may be late in the economic cycle.
Yet, the Federal Reserve Bank (the Fed) has already raised interest rates and more hikes this year are possible. The aim is to stop the economy from overheating, so there’s a soft landing rather than another severe recession.