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Over the last twelve years, the federal minimum wage has been constant. Over that same time period, the cost of a Big Mac has gone up by about 25%. Since 1997,

Over the last twelve years, the federal minimum wage has been constant. Over that same time period, the cost of a Big Mac has gone up by about 25%. Since 1997, the federal minimum wage has gone up by 40%. Over that same time period the cost of a Big Mac has gone up by 100%. Perhaps the relationship between minimum wage and fast food prices isn’t linear. In addition, the federal nature of the US means that we’ve had lots of different trials, and the results are that your expected result doesn’t happen in states with higher minimum wages, but only by a small amount. In addition, a whole body of scientific research has found that your expected effect doesn’t happen. Minimum wage history from https://www.dol.gov/agencies/whd/minimum-wage/history/chart https://www.dol.gov/agencies/whd/minimum-wage/history/chart. Big Mac prices from https://www.eatthis.com/big-mac-cost/ https://www.eatthis.com/big-mac-cost/ with some interpolation to match the years that the minimum wage changed.

bombcar 5y ago
The federal minimum wage is a distraction since so many states have higher ones.
- gbear605 5y ago
  The prices are similarly high across the country. They’re definitely a bit higher in NYC compared to Alabama, but not at all proportional to the minimum wage. In addition, NYC has much higher costs for properties so there’s an expected difference in price.
dv_dt 5y ago
The big mac index was created to compare relative currency strengths, but if you can use it to get a view into the price of big macs internationally. A big mac costs €4.25 in the euro area and US$5.66 as of Dec 2020. So in nations that have better minimum wages, and much more complete safety nets (and more taxes), the big mac is actually cheaper. (maybe that reflects the lower cost of universal healthcare) https://www.economist.com/big-mac-index https://www.economist.com/big-mac-index Note there are high safety net nations both above and below the US cost of Big mac, which signals that maybe something else is afoot there. But certainly there is enough variation to dispel that unemployment benefits are correlated the cost of the big mac.

bombcar 5y ago

The federal minimum wage is a distraction since so many states have higher ones.

gbear605 5y ago
The prices are similarly high across the country. They’re definitely a bit higher in NYC compared to Alabama, but not at all proportional to the minimum wage. In addition, NYC has much higher costs for properties so there’s an expected difference in price.

dv_dt 5y ago

The big mac index was created to compare relative currency strengths, but if you can use it to get a view into the price of big macs internationally. A big mac costs €4.25 in the euro area and US$5.66 as of Dec 2020. So in nations that have better minimum wages, and much more complete safety nets (and more taxes), the big mac is actually cheaper. (maybe that reflects the lower cost of universal healthcare) https://www.economist.com/big-mac-index https://www.economist.com/big-mac-index Note there are high safety net nations both above and below the US cost of Big mac, which signals that maybe something else is afoot there. But certainly there is enough variation to dispel that unemployment benefits are correlated the cost of the big mac.