Let's say, hypothetically, that the national minimum wage were raised from its current $7.25 an hour to the Obama administration's proposed $10.10. How would that affect minimum-wage workers across the country?
A lot of the answer to that depends on exactly where in the country those workers live. $10.10 is going to go a lot further in small cities or rural areas than in big urban centers like New York or Chicago.
When we adjust a national minimum wage of $10.10 for regional differences, these are the amounts you’d need to have the same buying power: $11.94 in Washington, D.C., and $11.40 in California, but only $8.90 in Alabama and $9.08 in Kansas.And of course, prices vary within states as well. In the New York City area, it would take $12.34 to meet the national buying power of $10.10; upstate around Buffalo, you’d need only $9.47. In the Los Angeles area, it would take $11.94; go up north a bit to Bakersfield, where prices are closer to the national average, and it’s $9.83.
What if minimum wage rates could somehow be tied to specific locations?
That's the idea behind a recent paper by Arindrajit Dube at the University of Massachusetts, Amherst, which inspired Bernstein's essay.