Basic Costs Have Increased Dramatically In The Last Decade

The Center for American Progress has a article explaining how costs have risen since the last minimum wage increase. According to their numbers, “dinner” has gone up 39.72%, electricity is up 25.02%, and gasoline up 135.20%.

The article may concentrate on those making minimum wage, but these costs have risen for all of us. Yuck!

Life at Minimum Wage [Center For American Progress]

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  1. SaveMeJeebus says:

    I’d hate to see what that family looks like drinking 7 gallons of whole milk per week.

  2. sandwich_pants says:

    With cheeseburgers every night of the week, we may need to transition this into a health care cost discussion (or not, since I’m kinda joking).

  3. medic78 says:

    I’m sure not surprised. Everyone raves when minimum wage goes up, but no one stops to think about what will happen when it does. Helping low wage workers is much more difficult than simply raising a wage, because as soon as the wage goes up, the business’ cost goes up as well, so they pass the cost on to the consumer.

    I don’t claim to know the answer, but just raising the minimum sure isn’t it

  4. urban_ninjya says:

    I’m thinking.. This could releave the minimum wage workers.. or it would mean the diary and meat industry will have a opportunity to increase their prices. I guess I’m going to invest in some company that makes burgers.

  5. ShadowFalls says:

    Unfortunately, gas is the biggest influence on all the rise of prices. Things have to be moved, and everything they move them in has to be fueled with something, more typically, gas.

  6. Cowboys_fan says:

    So obviously minimum wage needs to be higher. To all those people who argue, I’d like to see you live off that little amount and be content with life. Any good business pays over the minimum anyways, so it only hurts people like mcdonalds. I know they cant afford and will go out of business because of $0.75/hr raise, but the benefits outweigh the drawbacks :p. All this extra money goes back into the economy, back to the companies, and in the end, does little to the economy, positively or negatively.

  7. eightfifteen says:

    @medic78:

    Every time in the last 20 years the minimum wage went up, was followed quickly by a jump start in the economy. The people that are making the minimum wage, the ones most likely to spend all the money they make, suddenly have more income to spend.

    Incidentally, the article was not about how minimum wages increase the cost of things, it was to demonstrate that over the past decade since the last minimum wage hike, things have gotten more expensive, making it even more difficult to survive on such a small amount of money.

  8. zeroraveson says:

    The article isn’t saying that the inflation is due to the 1996 minimum wage increase, but rather that people who are paid the minimum wage are poorer than they have been since the 40s (inflation adjusted). The rises in fuel cost likely contributed to a huge chunk of this inflation.

  9. TechnoDestructo says:

    Gee, and I thought Chinese imports were supposed to be helping control costs?

  10. ShadowFalls says:

    @Cowboys_fan:

    The idea of minimum wage being higher sounds simple enough to help. Problem is, it just further increases inflation. This then makes it so it will need to be increased again. It is an continuous loop with no end in sight. Every business thrives on various other products. The costs of these products goes up based upon the increase of wages to the labor force.

    The only solutions are what we are seeing more of, outsourcing more and more jobs out of the country. This brings cheap labor and cheap and not so well-made products.

  11. Xerloq says:

    Subsidies kill any cost-benefit imports create.
    @SAVEMEJEEBUS,

    It’s not just 7 gallons a week, but 7 gallons a week for 10 years! That’s 25,564 gallons of milk!

  12. timmus says:

    Gasoline went up ONLY 135.20%? What, was it $2.25 a gallon in 1997? I don’t think so.

  13. Xerloq says:

    Math check, that’s 3,652 gallons of milk, but still a butt-load of milk.

  14. timmus says:

    Oh wait, I’m doing math wrong… that’s doubling plus change. That’s viable. I hate getting confused by the percentage things.

  15. timmus says:

    OK, I tried to post a retraction but it DID NOT POST. What is wrong with this commenting system? Anyway I recant what I said about the 135% change… I realize that’s a doubling plus more, not a 35% increase. Bad math.

  16. Xerloq says:

    @Xerloq: Check that, it’s 3,652 gallons of milk.

  17. Xerloq says:

    @timmus: I’m with you on the math thing, brother. And the comment system thing, too. See above.

  18. aparsons says:

    @sandwich_pants: Believe it or not, you are pretty argument of transitioning this to a healthcare discussion is pretty accurate. As prices are rising, it is more difficult for less privileged families (lower and now, middle class) to eat **somewhat** healthy. Burgers are fairly cheap, yes. But it will eventually get to the point where it is cheaper to buy a bag of chips and a 2L bottle of soda for their kids’ dinner than to buy hamburger meat and milk at the local overpriced Gristedes. In fact, it’s happening now. Except rather than buying hamburger meat at a grocery store, it is more economical to buy it at McDonalds. Five years down the road, these kids have serious health problems related to obesity.

    Sure, people will say “It’s the parent’s fault.” But if you are making minimum wage with 2 kids and paying $2k for rent in NYC you are going to do what it takes to a) put a roof over your head and b) put food – no matter what it is – on the table.

  19. tedyc03 says:

    It is a mistake to assume that a minimum wage increase will automatically lead to higher prices.

    There are a whole host of economic factors that determine inflation rates. For example, if the minimum wage increase sets the price floor below the equilibrium point for the labor market, then you’ll see limited impact. Additionally, a price increase simply based on the increase in wages might be unrealistic for a restaurant or other business, because they have existing contracts and the cost of changing menus to reflect higher prices.

    While it’s easy (and often convenient) for politicians and others to cite higher prices as a result of increases in the minimum wage, we must remember that there are entire hosts of economic factors that go into inflation. We had inflation before the minimum wage; we’ll have it after the minimum wage.

    And before you tell me that it’s only logical, remember this: in the 1880′s, the leading economists and politicians of the day blamed the falling cost of food (and subsequent ruin of many rural American farmers) on high transportation prices by the railroads. Turns out that the food price problems were actually due to the fact that farmers were producing too much.

    Nothing is ever cut and dry in economics. Anyone who tells you otherwise is a fool.

  20. beyond says:

    APARSONS, I disagree. A pound of beef in a McDonalds hamburger would be pretty expensive. A cheeseburger costs less made at home. Say I want to make a quarter pound burger. I need 1/4 uncooked beef, 1 hamburger bun, and cheese.

    1/4 lb beef, $.58 (1/4 of price of 1 lb)
    1 bun, $.15 (1.19 for a pack, 8 in a pack)
    cheese, $.20

    That’s block cheese with 1/20lb shredded off of it. Total cost for your 1/4 burger is $.93, less than a buck. And grocery food usually isn’t taxed, while McDonalds food is so add 6-8% on top of whatever McD’s is charging.

    Now add transportation costs. You have to go to McDonalds each meal to get that burger, where as from home you make 1 trip to make 4 burgers. How is this costing less to eat fast food?

    Further, if you are poor, you shouldn’t be making cheeseburgers every day. Take that same pound of beef and mix it with cooked white or brown rice (a buck buys you a dozen or so cups of rice) with seasoning. Stuff it in an eggplant or season it with a side of fresh vegetables.

    It isn’t more expensive to cook at home. People are just clueless.

  21. aparsons says:

    @beyond: I didn’t do the math before I posted and I stand corrected.

  22. JayThree says:

    @Cowboys_fan: Anyone who is trying to live off the minimum wage has bigger problems in their life. And to assume that the minimum wage should be set to an amount that someone could live off of is foolish. It is the MINIMUM wage for a reason. A college student working at Taco Bell spending more time on his cell phone than helping customers (an example I got to experience yesterday) does not need to be paid $10 an hour as some want to raise it to.

    I’m with you if you want to help defeat poverty – but raising the minimum wage will do nothing to help.

  23. TechnoDestructo says:

    @beyond:

    What? Where are groceries not taxed?

    No place I’ve ever been, that’s where.

  24. dbeahn says:

    href=”#c2005971″>medic78: My first experience with minimum wage going up came when the minimum went from $3.35/hour to whatever it went to. I was a teenager working at McDonalds (yes, my first job was a McJob, literally!). I remember that we raised our prices as soon as the change was announced, even tho it was 9 months before the change would go into effect. Then, 9 months later, we raised prices *again* “because of the wage hike”.

    That’s right, because the public forgets so fast, they got to raise prices TWICE using the wage hike as the reason both times.

    Ever since then whenever I hear a hike in the minimum is coming, I know that I’m getting a pay drop, because *I* will not see that same percentage increase in my pay, yet I will see that same percentage increase in the prices I pay for things.

    Mind you, it’s not like I make a huge stack of cash – I’m only “raking in” roughly double the current minimum wage. If they raise the minimum again, then I’ll be down to well under double the minimum, and paying higher prices all around.

    WooHoo Government. Bastards.

  25. bcostin says:

    Minimum wage aside, when did hamburgers become the gold standard of affordable dinners? Beef is expensive anyway, but you can make a lot more with a pound of ground beef and all that other stuff than just four hamburgers. I’ll also second that it’s much, much cheaper to cook at home than eat at any restaurant. People who eat fast food all the time have just made a decision, consciously or unconsciously, that their convenience is worth more than their money. That’s their decision, not the person who pays their wages.

  26. Nemesis_Enforcer says:

    @TechnoDestructo: Yeah here in the Wonderful state of Cali. groceries arent taxed…they make it up in other ways. Like SUnday I got 80$ worth of food for the next 2 weeks and paid I think a $1.35 in tax for some non food stuff I bought.

  27. nequam says:

    @TechnoDestructo: Where do you live? In Massachusetts, groceries are not taxed. I thought it was the same elsewhere.

  28. rbb says:

    Very sloppy work by a group with an obvious agenda…

    Look at the numbers. Nowhere does it say that the dollars are adjusted for the cost of inflation – a dollar in 1997 is not the same as a dollar in 2007.

    So, go to the official Department of Labor Bureau of Statistics website [www.bls.gov] and select the “inflation calculator.” Now using said calculator, a dollar in 1997 is worth $1.30 in 2007. 1.3 times the cost of dinner for one week ($50.18) is $65.34 in 2007 dollars Now, compared to the 2007 total of $70.12, the difference is only $4.84, a 7.3% difference, NOT 39.72%

    Another BIG mistake is the electricity example. In 1997, the cost for a week is $20.83 Adjust that for inflation by multiplying by 1.3 and you get $27.08 in 2007 dollars. That is $1.04 MORE than the $26.04 they list for 2007. So, that’s about a 4% drop in price, not a 25% increase.

    Now, the point they are trying to make about requiring more hours to afford the basics may be true. But if they can’t even get the basic math right, their credibility goes out the window.

  29. Canadian Impostor says:

    @Cowboys_fan: That’s the problem. If the minimum wage goes up, people making just over minimum wage need a raise because the market decided they’re more valuable. This trickles up the chain. Then, since everyone got a raise, they can spend more money on things. Upping minimum wage just drives up inflation.

    I’m not some crazy conservative. People earning minimum wage need our help, but I don’t know what we should do. Free vocational training so people can learn skills and get better jobs is probably the answer, but no matter what someone has to shovel garbage or flip hamburgers.

  30. Trai_Dep says:

    On the bright side, cocaine, adjusted for inflation, is much cheaper!

  31. beyond says:

    At the grocery store, that’s where. Maybe you are buying too much processed junk food to notice!

  32. rrapynot says:

    I want some of that $3.43 milk. Even the nasty generic stuff is $4.69 at Safeway here in Northern California.

  33. castlecraver says:

    @rbb: The minimum wage is not adjusted for inflation either. You need to think of it in terms of “buying power” rather than $X in ’97 equals $Y today. You could either adjust both the costs and the wage, or neither, and come up with the same comparison given in the article. They’ve chosen the later, presumably for simplicity’s sake.

    Prices may be rising, but wannabe economist neo-cons are still a dime-a-dozen. :-)

  34. kaikhor says:

    @TechnoDestructo: California, that’s where. I just bought groceries (literally) and I spent $58.61 total, $0.31 of which was tax (for the freezer bags, $4 before taxes). They do charge tax on things like soda here, though.

    I know in a lot of the midwest they charge tax on groceries. I’m from Ohio and they do there (but, if I remember right, not on take out fast food. So hit the drive through, no tax) and I know they do in Pennsylvania as well (lived near the border).

    As for living on minimum wage, it’s impossible, and as the graph shows more so as prices for everything go up. We need to raise the minimum wage because everything else has gone up and the people trying to live off it can’t (and yes, there are people trying to live off of minimum wage, as scary as that is…)

  35. Cowboys_fan says:

    @Jason:
    Nice avatar

  36. aka Cat says:

    @rbb: the ‘cost of inflation’ is 1.30. But prior to what, last week? the US minimum wage hadn’t gone up at all between ’97 and ’07. The cost of inflation doesn’t help someone who’s on minimum wage buy the groceries.

  37. Squeezer99 says:

    yeah its called inflation

  38. Squeezer99 says:

    @catmoran

    the minimum wage isn’t a wage meant to survive on. its a minimum wage for menial tasks. the majority of people that are on minimum wage are either high school/college kids, retirees, or adults at a 2nd job. a mom/dad trying to raise his/her family on minimum wage just isn’t happening often, and in the very rare cases that it does, its because the mom/dad sucks at life and either has no education or had kids at a very young age. in other words they made poor choices and life, and so why am I being punished by having to have my tax dollars taken from me to suppliment their income and buy them health insurance?

  39. rbb says:

    @castlecraver:

    And simplistic progressive libs are cheaper yet ;^)

    In this case they chose simplicity (or is it carelessness) over a proper representation of the the numbers. And that detracts from the point they are trying to make. If they had used constant $$$, either 1997 or 2007 they could have avoided this mess.

    But, that is not to say the article had other problems. Most states were not impacted by the minimum wage increase because they already had a higher minimum wage. And in a lot of states, the going rate is higher than the minimum because workers are in short supply so the going rate is higher. Want to get business to raise their wages above the minimum? Sanction them for hiring illegal aliens and dry up the cheap labor sources…

  40. rbb says:

    @castlecraver:

    And simplistic “progressive” libs are even cheaper ;^)

    The problem with taking the “simplistic” (or careless) approach is that the numbers get distorted. Unless you use constant dollars from 1997 or 2007, the numbers cannot be compared.

    Sure, the minimum wage has not, on the national level, kept up with inflation. Otherwise, it would be around $6.70

    But what the story is not telling you either is that most states already have a higher minimum wage rate and quite a few pay more than that because of more job opportunities for workers. And what about other forms of assistance given to those earning the minimum wage or less? Did they count the $$$ cost of that? Want a quick way to raise wages for those at the minimum wage level? Heavily sanction employers who use illegal aliens…

  41. rbb says:

    oops I apologize for the double post. The site was apparently quite slow in posting the first (3 or 4 minutes). So, I thought I had lost it.

  42. notallcompaniesarebad says:

    3.4% a year? Reasonable, I suppose.

  43. Timewalker says:

    @rbb:
    Exactly, RBB! No need ot use constant dollars in this equation, because the minimum wage has remained constant! So it’s the same amount of money used to buy the same amount of food in 1997 and in 2007, but the prices have gone up. That is the entire point. If you use constant dollars, you are missing the point that the min wage hasn’t gone up.
    Yes, the Consumerist point that “costs have risen for all of us” doesn’t hold water as that argument should be made with constant dollars, but the entire point of the original article is how the same amount of money has less buying power 10 years later.
    And yes, there are families trying to make it on minimum wage – single parents who have either made a bad decision and have a someone who won’t support the kid, or have lost the other parent; people badly effected by the recession of a few years ago and forced to take whatever job they could to keep from being homeless, and yeah, single people who don’t have the money for college since costs have been rising exponentially since I graduated.
    But yeah, screw them, they don’t deserve any sort of consideration or decent treatment from their companies/governments/fellow citizens.

    (As stated, most states already have raised their min wages, and none have reported horrible ramifications in their economies.)

  44. JayXJ says:

    @SaveMeJeebus:

    Have you ever seen how fast small children go through milk?

  45. asherchang says:

    @Xerloq: Strange, I thought the chart was labeled “A Week for a Family of Four”, and one of the items listed was 1 gallon of milk, meaning a gallon of milk/week. Or maybe I learned how to read a chart incorrectly in 5th grade…

  46. asherchang says:

    @aparsons: Coherency please?

  47. andrewsmash says:

    What this country really needs is more medium-wage jobs. I know I defended a higher minimum wage, but it would work even better to have a reasonable minimum wage with actual living wage jobs available for people to move into. I wonder how many of those jobs (mechanic, construction) have since become minimum wage in order to appease the great corporate god “Efficiency”?

  48. jbalsle says:

    Yes, I was wondering if someone would catch the minimum wage idgits.

    And it’s not just the cost of food.

    1997, a gallon of gasoline went for less than $1.30 in my neck of the woods. Now, my friends down there are all saying $2.99 or more for gas. In that neck of the woods, you can’t just hop a bus and ride to work. You drove or you walked (through 90degF heat at 70% humidity). That’s certianly a basic cost.

    I used to remember a time when I charmed my at-the-time girlfriend with a Balsley Family favorite Macaroni and Cheese dinner, where the Macaroni was about a buck, the cheese was 67 cents, and we could throw in corn and ground beef, making a decent dinner for less than $5.00, which would last us for four meals.

    Now? The cheese is almost two dollars. The Macaroni may not be healthy for me. And I don’t even know how much corn and ground beef costs.

    What about Electricity? Minimum wage influences how much *that* costs? Riiight. Let’s start with my bill in 1997. My buddy and I lived in an efficiency apartment. To keep it lit, our computers running, and the climate livable, we paid $25 in the winter and $75 in the summer. When I moved to a large one-bedroom apartment, with incandescent lightbulbs, two computers, a TV set, and the AC running at 68DegF cooling the whole apartment, I averaged double those figures. Now adays, after isolating our top floor and only heating and cooling the bottom floor, it costs us $150 a month in the summer and $300 a month (!!!) in the winter to cool our house.

    Buying power has eroded. Minimum wage has demonstratively not kept up. To the guy arguing that we should use 1997 or 2007 dollars in the chart, let me point out the basics for you. Not everyone’s wages increase. And Minimum wage has NOT increased. So, a college freshman, entering university for the first time today, can’t just go to find himself a minimum wage job to make that extra spending money that can be healthy home-cooked food or unhealthy fast food, lights and heating/cooling, or even gas for his car to go to visit his friends. A college freshman in 1997 could. And all those IT guys whose jobs are being taken by people from India who will work for a quarter to a half what the American workers were making? They’re out in the low-wage sector too.

    Rosy glasses, much?

  49. swalve says:

    Indeed, we need to define what the minumum wage is supposed to be for. I believe it’s meant to make sure the lowest paid workers won’t starve to death, like what used to happen 100-125 years ago when people worked for a quarter a week. I do not believe the minimum wage was intended to be family-raising money. One person, renting a room at the YMCA, can survive just fine on minimum wage. Want more out of life? Do like the rest of us did and find ways to improve your station. I’m pretty much a moron, but I managed to work myself up from $5.15 an hour to making $26,000 a year in under five years at McDonald’s, and then transitioned to a different field and now make significantly more. Not bragging, just saying it’s plenty possible.

  50. rbb says:

    @asherchang:

    You misread the chart. That is the DAILY amount. Notice the line that says Subtotal $7.17 and then the next line that says Total for one week: $50.18? The total of$50.18 is 7 (the numbers of days in the week, just in case you did not learn that by the fifth grade…) times the sub-total (it’s off by a penny, I assume dues to them rounding somewhere). Therefore, the quantity of each item in the dinner is also multiplied by 7, meaning 7 gallons of milk per week (a bit excessive I think).

    Don’t go auditioning for that gameshow anytime soon…

  51. TehRev says:

    @ SWALVE

    EXACTLY!!!!

    Minimum Wage just like Foods Stamps aren’t designed to give you everything you need. Not to give you enough money for tons if food and other stuff you want to buy too. Its enough to keep you from starving to death, buy second hand clothes and afford a 0 or 1 bedroom apt. If you want more than that do like everyone else who has more and earn it.

    Yes there are some charity cases. Those aren’t the majority. For people complaining about a single young adult. HAH if they aren’t mentally retarded or crippled then they deserve to make that much.

    This isn’t meant to raise a family or buy a house or anything like that. Its to keep people from starving. Thats what it does.

    Welfare state is BS. If you want more money earn it don’t think you “deserve” it because you have a minimum wage job. You don’t have it rough, you have it lazy.

  52. krakbuste says:

    This is laughable. When did it become a political blog? I thought this was supposed to be about consumers fighting back and having a voice, not supporting John Podesta and CAP.

    Meg please do your homework and look who you’re quoting before posting.

    Check that, Ben you go look. This is ridiculous.

  53. zolielo says:

    Bad econ, all over! :(

  54. jbohanon says:

    What I want to know is how many people who made minimum wage in 1997 were still making it in 2007?

  55. vladthepaler says:

    Gas? If you have a car, you’re not poor. Sell the car, use public transit.

    Hamburger buns are sold in packages of 8 not 4. So are these people, who drink a gallon of milk a day, also double-bunning their burgers?

  56. TechnoDestructo says:

    @nequam:

    Arizona.

    Also, in Alaska, most places have no sales tax, but North Pole, which does, taxes groceries.

    I may have just not noticed in California, since I rarely bought groceries (military, on base, no BAS). Or do local sales taxes vary?

  57. detraya says:

    @JayThree: i take offense at that. i work for minimum wage. i am a college student, but to say we all spend more time on our cell phones (i don’t even own a cell phone, to poor paying rent, car insurance ($300 a month for a piece of crap 20 year old car, with a perfect driving record), and electricity to affoard it. i may not work at a fast food place, but minimum wage is minimum wage.