So there is an article circulating online (citing a study by the National Low-Income Housing Coalition) stating that a full-time worker earning minimum wage can’t afford to rent a one-bedroom apartment anywhere in the US. The article seems to hint at the fact that this is the result of too low minimum wages (and too high inequality) in the US.
But is the situation any different in countries with lower inequality and more generous welfare states? What do the figures in Europe look like? In this post, I perform the same analysis for Europe.
Suppose that you earn $50,000 or its equivalent. How much is this amount exactly worth? What can you buy from it? The answer of course differs by country, matter of fact it differs by state and by city. The more you can buy from a dollar, the more purchasing power your money is said to have. Therefore, purchasing power is an important measure of economic well-being.
I have always argued that while GDP may be a good measure of economic activity, it doesn’t necessarily say that much about the quality of life. One very simple metric that I believe could shed more light on this question is simply quantifying how many “things” you can buy from an average salary in a given country. I will attempt to do just that in this post.