Political  Calculations

Now that we've established what the relative purchasing power of a dollar is in each of the United States, we're going to apply that information today to solve one of the great problems of our time: how to set the minimum wage in each state in order to achieve purchasing power equality.

After all, it goes against the ultimate liberal ideals of fairness and equality of outcomes if, thanks to nothing other than the relative cost of living in each state, that a minimum wage earner in Mississippi is able to buy more things with their earnings than can a person earning the identical wage in a high cost of living state like New York.

Clearly, in the interest of fairness and of achieving purchasing power equality, the minimum wage in each state needs to be adjusted in such a way that a person who earns the minimum wage in each state can buy no more and no less than the same amount of real goods and services. That's the great problem for society that we'll be solving today.

Let's start by examining the applicable minimum wage that applies to each state in 2012, the year for which we have the relative purchasing power data, which is the greater of either the state's own minimum wage or the federal minimum wage of $7.25 per hour. That data is directly encoded in the interactive map below:

Next, let's calculate what each state's minimum wage would have to be so that the individual's who earn it will have an equal amount of purchasing power, regardless of the state in which they might live. Here, we've used the federal minimum wage of $7.25 per hour as the benchmark for calculating the minimum wage levels in each state that would achieve purchasing power equality across the entire nation.


Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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