Minimum Wage and Food Prices: An Analysis of Price Pass-Through Effects

Chinkook Lee, Gerald Schluter, and Brian O'Roark

Elsewhere No. (0109), October 2001

This article explores the possibility that because lower income households spend a proportionately larger share of their income on food, the higher income from an increase in the minimum wage may be offset by resulting higher food costs and finds that under normal economic conditions it is unlikely that higher food costs would fully offset the wage gains of minimum wage workers.

Keywords: Minimum wage, food costs, food prices, food system costs, wages and food costs, fiscal policy, income redistribution policies, low income households, incidence of income policy, indirect impacts of policies

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Updated date: October 2001