Proponents of raising the minimum wage often point to Scandinavian countries like Denmark as models for American labor policy. But the devil is in the details. Take this week’s New York Times profile of the comparatively high Danish minimum wage, for example. The authors ask, if the Danes can do it, why can’t the United States?
In the midst of a mostly-fawning piece on Danish labor policy, the authors unwittingly answer their own question: It would lead to higher prices and fewer job opportunities.
The piece points out that the associated higher labor costs mean that a Big Mac in Denmark costs 17 percent more than in the United States – $5.60 versus $4.80. Other analyses put the price discrepancy at around double this. For example, the equivalent of the “Dollar Menu” in Denmark is $1.41, and an extra value meal is nearly 40 percent more.
As a consequence of higher labor costs, Danish fast food restaurants are also far less profitable than their American counterparts–meaning that there are far fewer locations than in the United States. For example, there are 16 McDonald’s per million inhabitants in Denmark, compared to 45 per million in the United States. The corresponding lack of job opportunities for young and unskilled Danes is therefore significant.
So to answer the authors’ question about why can’t the United States follow Denmark’s example on the minimum wage another way: It could; it would just mean eliminating hundreds or thousands of job opportunities, and contending with a “Dollar Forty-One Menu.” It doesn’t quite have the same ring to it.