Claremore Daily Progress

Community News Network

April 21, 2014

Do White Castle prices tell us anything about the minimum wage?

NEW YORK — Economists love hamburgers. Specifically fast-food burgers. This is partly because all right-thinking human beings love ground meat on a bun, but it's also because the sandwich makes a handy yardstick for international financial comparisons. The ingredients and labor involved in preparing a Big Mac are pretty much the same no matter where you are in the world, so by looking at how many hours of toiling it takes a worker to earn enough to purchase one, you can get a sense of how wages really stack up across countries. The Economist famously created the Big Mac index in 1986 to see which currencies were overvalued. It started as a joke. Now, as the magazine proudly notes, it's a subject of academic study.

Sadly, I don't think The Wall Street Journal's cheeky "White Castle Minimum Wage Index" is destined for the same longevity. The paper looked at how many delicious steamed sliders the minimum wage has been able to purchase over time. The point is that as it notes, in 1981, the $3.35 minimum could buy a whole dozen. Today, at $7.25, it could purchase just 10. This is supposed to illustrate "the dilemma caused by raising the minimum wage" - namely, that it leads fast-food chains and other low-wage employers to raise prices. When the federal minimum jumped about 24 percent between 2007 and 2009, burger prices popped up by the same.

Which is fair enough. Economists have regularly found that the minimum wage impacts fast-food prices, which, as the WSJ notes, makes sense because the industry is so reliant on unskilled labor. But two big problems. First, when I look at this chart, I mostly see the effects of steady inflation on burger prices post-1980 (presumably, they didn't only rise when labor costs went up). Second, if the goal is to capture broader living standards, it doesn't make much sense to measure the value of the minimum wage over time using the price of a single product that's so closely tied to it. The Big Mac is a great tool for geographical comparisons, because its production is so standardized across countries. You don't need to control for those same cross-border differences when you look at wages and living standards in a single country over time. Better to just use inflation.

If you are going to use a single expense to measure living standards, though, you're probably better off using something major like rent. As far as I know, nobody actually counts White Castle Burgers as a major line item in their monthly budget. Tasty as they might be.

 

1
Text Only
Community News Network
  • Arizona's prolonged lethal injection is fourth in U.S. this year

    Arizona's execution of double-murderer Joseph Wood marked the fourth time this year that a state failed to dispatch a convict efficiently, according to the Constitution Project, a bipartisan legal group.3

    July 24, 2014

  • 072214 Diamond Llama 1.jpg Llama on the loose corralled in Missouri town

    A llama on the lam cruised Main Street Tuesday before it mistook a resident’s fenced backyard for a place to grab a meal and freshen up.

    July 22, 2014 2 Photos

  • NWS-HB0713-HowardMartin-004.jpg Airman laid to rest back home in Indiana six decades after death

    The mystery of what happened to a military transport plane that disappeared in the fall of 1952 into an Alaskan glacier was solved two years ago when a helicopter crew spotted the wreckage. But it took another two years to retrieve the remains of Airman Howard Miller and 16 other servicemen passengers. Saturday, Miller was laid to rest in his hometown of Elwood, Ind., with full military honors. Hundreds turned out for the funeral and burial services.

    July 13, 2014 2 Photos

  • New York to offer free lunch to all middle-school students

    New York's $75 billion spending plan for the fiscal year that began last week includes the first step toward offering free lunch for all 1.1 million students, expanding a program now reserved only for the city's poorest children.

    July 9, 2014

  • Screen Shot 2014-07-09 at 11.24.10 AM.png VIDEO: Pilot buys pizzas for storm-delayed travelers

    A Frontier Airlines pilot went above and beyond the call of duty when a recent flight from Washington, D.C. to Denver was diverted to Cheyenne, Wyoming due to bad weather.

    July 9, 2014 1 Photo

  • Why North Korean cheerleaders may soon descend on the South

    When you think of North Korea, "cheerleaders" may not be the first thing that springs to mind. The Hermit Kingdom is perhaps better known for less savory things like gulag-like labor camps and leadership purges.

    July 8, 2014

  • Screen Shot 2014-07-08 at 11.46.13 AM.png VIDEO: Foiled beach gear theft goes viral

    Video capturing a bizarre confrontation with two women allegedly attempting to steal beach gear on a Florida beach has gone viral.

    July 8, 2014 1 Photo

  • Screen Shot 2014-07-08 at 10.40.20 AM.png VIDEO: Sleeping fan suing Yankees, ESPN for $10M

    A fan caught on camera sleeping during a recent game at Yankee Stadium has filed suit against the Yankees and ESPN, claiming he suffered emotional distress when two announcers mocked him on the air.

    July 8, 2014 1 Photo

  • VIDEO: A boom in firework sales

    This year could be quite the boom for fireworks sales across the U.S. According to the American Pyrotechnics Association, or the APA, sales are already off to a good start.

    July 4, 2014

  • Happy birthday, America. Now legalize fireworks.

    Through the smoke of Roman candles and bottle rockets, the absurdity of Americans' obsession with do-it-yourself explosives is nonetheless clear: One day each year, we gather with neighbors, friends and loved ones to blow stuff up in our backyards. Go, U.S.A.!

    July 4, 2014