Modest poverty rates prevalent among population.
In a recent study by the WSI, housed within the Hans-Böckler Foundation, the earnings of full-time minimum wage workers and basic income recipients have been compared. The findings suggest that full-time minimum wage workers generally earn significantly more than basic income recipients.
Income Comparison
The study highlights the varying minimum wage rates across countries and regions. For instance, in the European Union in 2025, monthly minimum wages range from €551 in Bulgaria to €2,704 in Luxembourg, adjusted for purchasing power. In contrast, basic income proposals typically offer a fixed income to all citizens, intended to cover basic living expenses, but generally set below or near the poverty line.
Implications for Employment and Poverty
Because minimum wages represent earnings from active labor, they provide a direct incentive for individuals to work full-time. Basic income, on the other hand, provides unconditional support, which some argue might reduce the urgency to seek employment but also can alleviate poverty without stigma or complex eligibility tests.
Both systems aim to reduce poverty, but in different ways. Minimum wage increases lift earnings for employed workers, potentially reducing in-work poverty. Universal Basic Income delivers income universally, supporting those unemployed or underemployed as well as workers, thus possibly having broader poverty alleviation effects.
Summary
The study reveals that full-time workers on minimum wage generally earn more than basic income recipients, which promotes labor supply but may exclude the unemployed. Basic income provides a universal safety net that can reduce poverty more broadly but may affect employment incentives differently.
The debate on the minimum wage and basic income continues to be a topic of interest, particularly on social media. There are reservations among both full-time workers and basic income recipients about the value of employment compared to basic income. This skepticism is not limited to specific groups, such as women, who often earn less and have a higher risk of ending up in poverty due to their employment histories.
The study does not delve into the potential long-term consequences of basic income versus employment on pension benefits, nor does it address the issue of gender wage gaps in the comparison between full-time minimum wage and basic income. Employer associations view calls to further increase the minimum wage critically, as it would drive up labor costs, potentially burdening smaller businesses.
In conclusion, the comparison between full-time minimum wage and basic income provides valuable insights into income distribution and poverty alleviation strategies. Further research is needed to address the specific challenges faced by women in the workforce and the long-term implications of both systems on pension benefits.
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