I rarely watch television news because my yelling at the TV frightens the cats. But my wife likes it so this morning while I was putting on my socks I saw our local business correspondent report on a recent vote to raise the minimum wage in Switzerland to the equivalent of $25.00 per hour. He noted with a grin that this measure was defeated, with 76% of the voters rejecting it. This was all offered ‘as is’ with no context and they went on to the next story.
What does this have to do with math, you ask?
Economics is math plus people.
Math is arithmetic with context. (If you add 2 and 3 you get 5 but what do you get when you add 2 apples and 3 oranges?)
Without context, this story was meaningless and by reporting it, they had stolen moments of my life that I could never get back.
I needed to add context to this story. I thought about what was missing.
What is the current minimum wage in Switzerland? – It turns out that Switzerland doesn’t have a mandatory minimum wage. Your pay is set either by negotiating with your employer yourself or through a representative, ie a union. (According to the OECD, union membership represented 17% of the work force as of 2010. By comparison, the US is 11%.)
How meaningful is $25/hour to the Swiss worker? – For that, we need to compare the cost of living in Switzerland versus the United States. But that’s a complex metric, so let’s pare it down to a few, everyday measurements (NOTE: I’m comparing Denver, where I live, to Zurich):
A tank of gas – Gas is $7.99/gallon in Switzerland. The average gas tank size is 18 gallons. It would cost you $143.82 to fill up your car in Switzerland. The average gas price in Denver (as of 05/19) is $3.44 so a tank of gas would run you $61.92.
A gallon of milk – $6.45 in Switzerland, $3.69 in the United States.
Average Monthly Salary (after tax) – $6652.07 in Zurich, $3466.28 in Denver.
It turns out that Swiss workers are among the highest paid in the world and 90% of them already earn more than the proposed minimum wage of $25/hour AND they work an average of 35 hours per week. In addition, the unemployment rate in Switzerland is a paltry 3.2%.
Now I have some context. It would appear that the Swiss are doing pretty well for themselves (at least, most of them) and now it’s not that surprising that this proposal was rejected.