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Minimum Wages Do More Than Boost Workers' Income

A German report suggests sustainable success more than two years after a wage law took effect.
Employees sell currywurst in Berlin
Employees sell currywurst in BerlinHannibal Hanschke/Reuters

Minimum wages do far more than just improve the finances of low-income workers. So says a new report from Germany, where minimum wages introduced in 2015 have apparently boosted employees’ general wellbeing during working hours, bringing with them improvements in workplace atmosphere and employees’ work-life balance. The report may be an interesting case study for readers in the U.S., where debates are raging over the long-term effects of raising the minimum wage.

German workers weren’t entirely without protection before 2015: It’s just that the old German system saw wages negotiated between unions and employers rather than via the state. This system persists in several other European countries, including Denmark and Sweden, to this day. Active (and highly effective) collaboration between employers and unions, with the state acting only as a kind of referee, is a cornerstone of the so-called Swedish Model.