The Role of the State in Balancing the Minimum Wage in Turkey and the USA

Abstract

In this article, the direct role of the state in industrial relations is scrutinized by focusing on the political basis of decisions regarding the minimum wage. We argue that in order to ensure stability and growth, any state must balance the interests of capital and labour when taking this kind of distributional decision. This idea is operationalized using O'Connor's concepts of accumulation and legitimation as the basis for an analytical model. Application to Turkey and comparison with the USA reveals that in Turkey, governments take account of legitimacy concerns in their minimum wage decisions due to the large number of workers directly dependent on minimum wages and weak collective bargaining institutions. In the USA, despite rather similar industrial relations conditions, this tendency is not present, probably due to the much smaller number of minimum wage earners and their weakness in the political process. However, in the USA, too, we observe that there is a difference between political parties and historical periods in the way in which the minimum wage is determined. Copyright (c) Blackwell Publishing Ltd/London School of Economics 2009.

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“…In developing countries the coverage of minimum wage laws is often higher than in developed ones, in part because collective bargaining mechanisms are either weak or missing. Comparative studies, such as the recent analysis of the US and Turkey by Koçer and Visser (2009), suggest that minimum wage forms are most likely to be endogenous to country-level conditions, including the make-up of political coalitions, the stage of economic development, and the presence of otherwise of complementary forms of regulation. A perspective of this kind suggests a need for a more nuanced and contextsensitive approach to the study of the effects of statutory wage fixing than we have seen in most empirical studies to date.…”