Tags: Minimum | wage | gas | 15

Gas Prices Say Minimum Wage Is Exactly Where It Should Be

By    |   Friday, 24 April 2015 08:31 AM

"Fifteen for '15" is a wonderful slogan that implies minimum-wage workers are being underpaid in 2015. Raising the minimum wage to $15 an hour would supposedly provide a "living wage" or meet some other catchphrase-worthy goal.

I prefer to look at data rather than slogans when thinking about economic issues. To define the right level for the minimum wage, based on data, we simply need to find the price of something that is the same quality today as it was many years ago and divide that price by the current minimum wage. This gives us the number of hours of work required to buy something.

Gasoline is arguably the same quality now as it was many years ago. There have been improvements in miles per gallon, which means consumers need less gas than they once did. There have also been changes made to the gasoline to meet new environmental standards. But, basically a gallon of gas is still a gallon of gas.

Since the minimum wage was established in 1938, a gallon of gas has been equal to an average of 0.36 hours of work at the minimum wage. Right now, a gallon of gas is equal to 0.34 hours of work, so at $7.25 an hour, the minimum wage is right where it should be based on history.

There are certainly other ways to calculate what the minimum wage should be, but the price of gas provides a real-time measurement of the cost of living.

It would be nice if minimum-wage advocates provided historical data to justify their position. But it seems like slogans will have to do while they search for a reason to explain why "Fifteen for '15" is a good idea.

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MichaelCarr
"Fifteen for '15" is a wonderful slogan that implies minimum-wage workers are being underpaid in 2015. Raising the minimum wage to $15 an hour would supposedly provide a "living wage" or meet some other catchphrase-worthy goal.
Minimum, wage, gas, 15
285
2015-31-24
Friday, 24 April 2015 08:31 AM
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