Debate over Minimum Wage versus Basic Income for Citizens: Those Employed Often Favor Defined Compensation - Investigation mandated to prepare a findings document on the subject matter
In a recent study conducted by the Wirtschafts- und Sozialwissenschaftliches Institut (WSI) of the Hans-Böckler-Stiftung, it has been found that full-time workers earning the minimum wage in Germany have significantly more money available than recipients of Citizen's Income.
The study, which applies to singles, single parents, and couples with children across all regions of Germany, compares the income of a minimum wage earner with that of a person receiving Citizen's Income. A single man earning the minimum wage would have a disposable income of approximately 1,572 euros per month after taxes and social security contributions, while a man receiving Citizen's Income would have a total income of approximately 1,015 euros per month. This gap is 557 euros.
For a single mother with a five-year-old child working full-time on the minimum wage, the net income would be 1,636 euros. With child benefit, child supplement, housing benefit, and maintenance advance, this total income would be 2,532 euros. In comparison, a single mother receiving Citizen's Income, including two standard allowances for mother and child, single parent supplement, housing costs, and immediate allowance, would receive 1,783 euros. This means a difference of 749 euros.
The study confirms the results of other investigations, such as the one conducted by Michael Hüther, the head of the employer-related Institute of the German Economy, in 2023. The findings contradict the notion that Citizen's Income is so high that the incentive for low-paid work is lacking.
However, it is important to note that people with such low income may also be entitled to additional social benefits such as housing benefit, child benefit, or child supplement. The income gap between minimum wage workers and Citizen's Income recipients is smallest in Munich, with a difference of 379 to 444 euros, while in Nordhausen and Vogtland district, it is the largest, with a difference of 662 and 652 euros respectively.
Michael Hüther, in a separate statement, criticized overtime in the low-wage sector often not paying off in 2023. He suggested that action is needed not in raising the citizen's allowance, but in creating affordable housing and qualifying employable people on citizen's allowance.
In summary, the study suggests that minimum wage workers generally have higher earnings and thus likely more disposable income than basic benefit recipients. However, exact figures and direct comparisons with Citizen's Income are not detailed in these sources. Additional official social and labor economic analyses would be required for a precise, evidence-based comparison.
In light of the study's findings, establishing vocational training programs could potentially provide additional sources of income for individuals on the minimum wage, thus bridging the gap with personal-finance receivers. Furthermore, finance, possibly through business initiatives, could be directed towards affordable housing and vocational training, empowering people on Citizen's Income to enhance their employability and income.
