Laura Bliss is a staff writer at CityLab, covering transportation and technology. She also authors MapLab, a biweekly newsletter about maps (subscribe here). Her work has appeared in the New York Times, The Atlantic, Los Angeles magazine, and beyond.
Local costs of living complicate the conversation around a huge increase to the federal minimum wage.
Like some miraculously bipartisan presidential hopeful, the $15 minimum wage is on a hugely popular, non-stop tour of America.
Earlier this month, New York state announced a long-anticipated plan to phase in a $15 minimum wage for fast-food workers, whose 2012 protests sparked a national movement. That move is hot on the heels of Los Angeles County’s recent decision to raise county wages to $15 by 2020, matching L.A. City Council’s decision in June. Seattle and San Francisco have adopted $15 plans. Plenty of other major cities in the U.S. are talking about it. Both $12 and $15 minimums have been proposed by members of Congress, too.
By traditional standards, however, these new figures represent very big wage hikes, and economists don’t agree on how positive their outcomes would be. A $15 minimum wage might help some families escape poverty. It could also increase the likelihood that others actually fall into poverty, as a result of job cuts.
Certainly, the real value of a ramped-up minimum wage would look very different around the country, due to wide discrepancies in local living costs. As a new map from Pew reminds us, wages tend to stretch further in metro areas in the Midwest and South, and to contract on the coasts. That $15-per-hour paycheck won>’t get fast-food workers in New York City nearly as far as it would get them in Macon, Georgia.
To calculate the relative purchasing power of a $15 federal minimum wage, Pew used data on “regional price parities,” or RPPs, for 381 metropolitan statistical areas. RPPs “measure the difference in local price levels of goods and services across the country, relative to the overall national price level (set equal to 100),” according to Pew.
New York metro area’s RPP is 122.3 (22.3 percent higher than the national average), and Macon’s is 87.8 (12.2 percent below average). So $15 is worth a mighty $17.08 in Macon, but a scant $12.26 in New York City. In Honolulu, which has the the highest cost-of-living in the country, $15 really pays $12.24. Only in the metro area of Allentown, Pennsylvania, with an RPP of exactly 100, will $15 buy you $15 worth of stuff.
All of this begs us to think a little harder about what a minimum wage is supposed to do. Pew writes:
If the goal were to guarantee low-paid workers everywhere in the country the same real purchasing power, that would require hundreds of different minimum wages, scaled to each locality’s cost of living. For example, giving everyone the same purchasing power that $15 has in New York City would cost $13.07 in Chicago; $12 in Fresno, California; $11.10 in Cincinnati; and just $10.43 in Anniston, Alabama.
Of course, 29 states, the District of Columbia, and lots of cities have set wages above the federal bar. But as that $15 number mobilizes voters from Seattle to New York, scholars have suggested that other metros wait and see how these large hikes actually impact minimum-wage workers before adopting it themselves. Meanwhile, as Brandon Fuller pointed out on CityLab in June, the nation’s priciest cities (ahem, New York and Los Angeles) can do more to improve the lives of low-income residents, such as increasing housing stock and advocating for tax policies that reward work.
There’s no question that the current federal minimum wage—the value of which, at $7.25, has been eroded everywhere by inflation—is overdue for an increase. But whether $15 is the magic number remains to be seen.