As the push for a $US15 minimum wage gains headway in different parts of America — specifically Los Angeles, Seattle, and New York — the fact remains that $US15 gets you a lot further in certain parts of the country than others.
RPPs were developed by the Federal Bureau of Economic Analysis to measure the difference in local price levels of goods and services around the country relative to the overall national price level.
RPPs are expressed as a percentage of the overall national price level for each year, which is equal to 100.
For example, the New York metro area has an RPP of 122.3, meaning that $US15 is actually worth only $US12.26, being that New York metro prices are 22.3% higher than the national average.
The two ends of the spectrum are Honolulu, where an RPP of 122.5 means $US15 is only worth $US12.24, and Beckley, West Virginia, where an RPP of $US15 is worth $US19.23.
The discrepancies are why many are opposed to a federal minimum wage of $US15, like the one proposed by US Senator and presidential candidate Bernie Sanders (D-Vermont).
As Bloomberg’s Noah Smith points out, a federal minimum wage of $US15 could either be unfair to workers in urban areas or threatening to workers in rural areas.
“If minimum wages don’t hurt employment, then a federal minimum wage is unfair to workers in big cities because their raises will be less than those of small-town workers,” Smith writes. “But if minimum wages do hurt employment, then small-town workers are going to be put out of a job — and that’s much worse.”
Pew and Smith both agree that if we wanted to make purchasing power equal among minimum wage workers workers, we would have to make hundreds of different minimum wages depending on the cost of living in that region.