CPI, The Cost Of A Banana, And The Minimum Wage

banana cost

For some reason last week, there were a number of pieces about opposition to minimum wage increases, partly due to the data that shows in Seattle, despite predictions of economic collapse, lower end jobs are have picked up along with incomes. We also note that the NY Times’ Steven Greenhouse, not exactly a fiery radical, is at a loss to understand why some people are vehemently opposed to minimum wage increases; he bemoaned a lack of solidarity. Atrios also noted that there’s a distinct lack of empathy involved:

…our discourse often shifts seamlessly between “wow it’s so hard to live on $400,000 per year” and “ungrateful moochers on disability, living the good life on $800 bucks a month” or “$15/hour is an ABSURDLY high hourly wage!” I’d think the semi-richie riches (I don’t mean the billionaires, just the upper upper upper middle class types) should have some logic circuit in their brain which spits out a readout saying, “If I can’t live on $400,000 per year, it must be hard to live on $30,000!” but they never seem to get to that point.

I think there’s something at work, especially among the olds: an inability to ’emotionally’ account for inflation. A reasonably fifty-year old who hears $15/hour–$30,000/year–will subconsciously remember when they made $30,000, and not realize how little that is. Or to flip this around, how well they did in 2018 dollars. $30,000 in 1993 would be worth $53,000 today*, while $30,000 in today’s dollars is worth only $17,000 in 1993 dollars. Which is to say, that $15/hour is only $8.50 when someone who is middle-aged (or older) and has done alright was likely making in the neighborhood of $30,000 per year.

In other words, that $6 avocado toast is really only $3.39 in 1993.

*Given that the CPI typically underweights the cost of housing, this is likely an underestimate.

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2 Responses to CPI, The Cost Of A Banana, And The Minimum Wage

  1. beb says:

    I’m one of those “olds” who has trouble wrapping his mind around a $15/hr minimum wage because I remember when $15 was real money. I can intellectually understand that in today’s money it’s not much but seeing “$15/hr” brings out the old lizard brain.

  2. Mark says:

    Rep. Virginia Foxx of North Carolina said how she was quite happy to receive about $2.15/hour for her first job. But lady, you could buy a brand new Model T with your wages then!

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