Monday, February 18, 2013

An observation on how we think about minimum wages

Let's take Los Angeles County, California and Jefferson County, Alabama.

Minimum wage in LA County: $8.00
Fair market rent for a one bedroom apartment in LA County: $1,101
Ratio of minimum wage to fair market rent in LA County for someone working 100 hours a month (so, part-time 25 hours a week for four weeks): 0.726

Minimum wage in Jefferson County: $7.25
Fair market rent for a one bedroom apartment in Jefferson County: $662
Ratio of minimum wage to fair market rent in Jefferson County for someone working 100 hours a month (so, part-time 25 hours a week for four weeks): 1.095

Obviously part-time minimum wage earners aren't necessarily living off that income alone, but even if you add other workers the point is the same: in real terms, it's probably safest to say that Jefferson County, Alabama has a higher minimum wage than Los Angeles County, California.

I'll let readers draw their own conclusions about the implications for empirical analysis.

5 comments:

  1. Perhaps I'm being a rube, but what do you make of this graph? Seems like a nice correlation btw min wage increases and teenage unemployment.

    http://www.aei-ideas.org/2013/02/lets-review-the-adverse-effects-of-raising-the-minimum-wage-on-teenagers-when-it-increased-41-between-2007-and-2009/

    ReplyDelete
    Replies
    1. See second most recent post. I don't think it says all that much at all.

      Delete
  2. This post tells me that a nationwide nominal $9 min-wage law makes even less sense. Local costs of living vary quite a bit, so why should the min wage be the same everywhere?

    ReplyDelete
    Replies
    1. It's worse than that, why should we rely on data that homogenizes labor, or further one that homogenizes the price of labor?

      Delete
    2. Yes, definitely! See most recent post.

      Delete

All anonymous comments will be deleted. Consistent pseudonyms are fine.