Bluefield Daily Telegraph, Bluefield, WV

Slate

April 22, 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
Slate
  • baby-generic.jpg For millennials, out-of-wedlock childbirth is the norm

    This month brings us yet another reminder that, for young Americans, having children outside of marriage is very much "the new normal," as The New York Times once put it.

    June 24, 2014 1 Photo

  • May 2014 was the hottest may in recorded history

    According to new data released this week, May 2014 is officially the warmest May in recorded history.
    Both NASA and the Japan Meteorological Agency have tentatively ranked May at the top of historical measurements, though NASA's numbers are preliminary because crucial information is still missing from China.

    June 20, 2014

  • GM recalls soar past 20 million. Why don't consumers care?

    In case you thought there couldn't possibly be another General Motors recall so soon, you're just not thinking big enough. This week, GM said it was recalling 3.36 million more cars. The cause: an ignition switch defect that could result in keys carrying extra weight (read: a keychain) to slip out of position and shut the vehicle off abruptly during "some jarring event."

    June 18, 2014

  • No one is against devoted dads

    Father's Day is Sunday, which means that it's time for pundits and politicians to scold the American public - with special ire reserved for black members of the American public - for our supposed indifference to the wonder and awe of fatherhood.

    June 12, 2014

  • 74129880-graduates.jpg The fate of the overeducated and underemployed

    According to the Federal Reserve Bank of New York, about 44 percent of young bachelor's degree holders lucky enough to be working are employed in positions that technically don't require their degree. While that number isn't far off from the historical norm — 22-year-olds have always needed a little time to find their professional footing — the fraction stuck scraping bottom in truly low-paying jobs has grown quite a bit since the recession.

    June 4, 2014 1 Photo

  • Skype's real-time language translator

    This week at Re/Code's Code Conference, Microsoft announced a real-time, multilingual translation beta called Skype Translate. The service can mediate between two video chatterers who speak different languages by providing text and audio translation after each person finishes speaking. Currently the service works for English and German, but Microsoft says it will support other languages soon. The beta will be released later this year.

    May 29, 2014

  • New Orleans does away with traditional public schools

    The second-graders paraded to the Dumpster in the rear parking lot, where they chucked boxes of old work sheets, notebooks and other detritus into the trash, emptying their school for good.

    May 29, 2014

  • Amazon sells steroids and stimulants banned in sports

    I have by no means executed a comprehensive search of wares sold by Amazon directly or through its third-party sellers, but I found other prescription drugs for sale without a prescription, including the antibiotic norfloxacin and the muscle relaxant methocarbamol. Both compounds, like clindamycin, warrant careful oversight to avoid complications or endangering public health, such as by breeding antibiotic resistance.

    May 29, 2014

  • 2010-Winter-Olympic-Games-001.jpg Nobody wants to host the Winter Olympics

    If we end up watching slopestyle from the Central Asia steppes in 2022, it will likely be because it's becoming clear that nobody in Europe wants to host these Olympics anymore. Publics may finally be getting wise to the fact that the long-term economic benefits of hosting mega-events like the Olympics or the World Cup are usually negligible at best.

    May 27, 2014 1 Photo

  • Woman sues a New York Hospital for forcing a C-section. Can doctors do that?

    Though Dray's doctor claims he did not force her to have a C-section, her hospital record included a note signed by the hospital's director of maternal and fetal medicine that said, "I have decided to override her refusal to have a C-section."

    May 21, 2014