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German Minimum Wage – Not Just The Money

The statutory minimum wage has significantly improved job quality and work satisfaction of low-paid employees in Germany.   note that hourly as well as gross wages increased after its introduction despite a drop in working time. Although jobs of minimum wage employees have become more demanding, workers have also reported a more motivational management style, an improved atmosphere among colleagues, and a better work-life-balance. Raising the lowest wages appears to have led firms to increase the workload on the one hand, and to focus on motivating employees on the other.

rehm_graph01

Changes in job quality and happiness of minimum wage workers in comparison to the control group.

Happier, more motivated, more productive

Our results indicate that firms reacted to the introduction of the minimum wage in Germany by compressing work on the one hand, and improving the at-work atmosphere on the other. This made it possible to upgrade low-paid jobs through re-organization and to better utilize human potential. Employees appear to have appreciated their jobs becoming more demanding while their work conditions improved.

An assessment of minimum wages thus needs to look beyond the macroeconomic employment effects. At company and individual level our findings point to higher job quality and increased happiness as a result of raising the lowest wages.

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