The obsession with Denmark by American socialists is an odd one. We’ve seen the country mentioned many times in debates, on cable news, and in other venues where people are attempting to talk down capitalism. While doing so, they continually ignore all the context regarding Denmark’s economy, making wild pronouncements about its supposedly utopian environment.
Here was Sen. Bernie Sanders a month ago showing he has the economic understanding of your average poodle.
McDonald’s worker in the US: $9/hr
McDonald’s worker in Denmark: $22/hr, 6 weeks of annual vacation, a union, 1 year of paid family leave, life insurance and pension.
America must join the rest of the industrialized world and ensure that our working class can live with dignity.
— Bernie Sanders (@SenSanders) January 30, 2021
Now, Rep. Alexandria Ocasio-Cortez, being the brilliant mind that she is, decided to weigh in with the same argument. Apparently, she doesn’t have an original bone in her body and just lifted Sanders’ talking point.
It is utterly embarrassing that “pay people enough to live” is a stance that’s even up for debate.
Override the parliamentarian and raise the wage. McD’s workers in Denmark are paid $22/hr + 6 wks paid vacation. $15/hr is a deep compromise – a big one, considering the phase in.
— Alexandria Ocasio-Cortez (@AOC) March 3, 2021
What’s utterly embarrassing is a member of Congress being this economically illiterate, and to prove my point, let’s go through some facts about Denmark.
One, Denmark does not have a national minimum wage. Yes, you read that right. Any wage floors are regionally negotiated because that makes way more sense than mandating a single minimum that may be impossible in places were the cost of living is less. AOC is using a country without a minimum wage to stump for a minimum wage increase. The mind boggles. It’s likely she didn’t bother to do the least bit of research before popping off with her socialist mad libs on Twitter.
Let’s also talk about Denmark’s tax rates. Someone making $10/hr at a rural McDonalds in the United States has an effective income tax rate of essentially 0%. In fact, they probably qualify for credits. In Denmark, someone making $22/hr pays an effective tax rate of 32% on that income. Further, Denmark has a 25% VAT tax on goods and services. Sales tax in the United States is typically falls between $0.07-$0.10 on the dollar depending on what state you are in. To make matters even worse for AOC’s point, the cost of living in Denmark is about 28% higher than the United States.
Now, take $22/hr but factor in a 32% income tax with a 28% higher cost of living (including a 25% VAT tax) and what you see is that the $22/hr number compared to workers in the United States is highly misleading. Of course, AOC doesn’t choose to share any of those details because they’d destroy her point.
It’s also important to understand how a Denmark McDonald’s is fundamentally different from one in the United States. They don’t have drive-thrus, for example. That means they require less workers. Automated ordering kiosks are already in place. That gives stores there the ability to pay less people more money.
Lastly, let’s note that Denmark has a very strict immigration system. That makes it possible to keep their welfare state at somewhat manageable levels. A country with only 5 million people and a homogenous culture is far easier to run. Does AOC support Denmark style immigration restrictions? Of course she doesn’t because that would require some level of critical assessment.
Given all these facts, I’m still not going to make some definitive statement that the wage for a McDonald’s worker in Denmark is actually the same as the United States. Cost of living obviously depends on what you choose to buy, for example. How the stores operate there vs. in America is also a huge factor. What I can say is that pronouncing that McDonald’s workers make $22/hr in Denmark leaves out a lot crucial context and detail that, when taken into account, make things much closer than they appear.
Regardless, if AOC wants to be like Denmark, she should be stumping for no minimum wage, sky-high tax rates for the working class, and a strict immigration system. What she doesn’t get to do is continue to use Denmark as an example of her policy goals when the facts simple tell a far different story than what she’s presenting.