Minimum wage.JPG

A protestor is detained during a demonstration to push fast-food chains to pay their employees at least $15 an hour, outside a McDonald's restaurant Thursday, Sept. 4, 2014, in Philadelphia. Government data measuring cost of living suggest that the minimum wage goes further in some places than others. (AP Photo/Matt Rourke)

Alabama is not one of the 20 states where the minimum wage rose this week or the handful of states where it will go up later in the year.

But the minimum wage will remain a better deal in Alabama than it is in most states.

Why?

Cost of living.

A dollar goes much further in low-cost Alabama than it does in almost every other state. One way of measuring this is the "regional price parities" data published by Bureau of Economic Analysis, which uses Census information and economic data to calculate the relative value of earnings in each state.

The federal data examines the cost of various goods and services, including rents. Those costs are lower in only two states, Mississippi and Arkansas.

After adjusting for cost of living, the $7.25 hourly minimum wage mandated by the federal government is worth more in Alabama than the $9 minimum wage in effect in California. The $7.25 in Alabama is worth the equivalent of $8.23, while California's higher rate is worth just $7.97 in adjusted dollars.

By the end of the year, New York's minimum wage will rise to $9. That is an even worse deal than California. The Empire State's equivalent value is $7.80 in adjusted dollars.

"The minimum wage in Alabama is going to go a lot farther than other places," said David Cooper, an analyst with the left-leaning Economic Policy Institute.

Alan Cole, an economist with Tax Foundation, agreed. "I certainly do believe that the minimum wage would have greater purchasing power in Alabama than in other places," he wrote in an email. "I certainly think that $9/hour would not go very far in many areas of New York and California."

Cole cautioned that the Bureau of Economic Analysis statistics are not perfect. They are designed to measure the spending habits of the average consumer, and minimum wage earners are not average. But he wrote that he believes the estimates are the best available.

An increase in June will bring the District of Columbia's minimum wage to $10.50 an hour, the highest in the country. But the equivalent based on cost of living is only $8.88, lower than the adjusted rates of eight states.

The place where minimum wage earners in 2015 will have the best deal is West Virginia, a low-cost-of-living state that mandates a higher floor than the federal government. The $8.75 per hour is worth $9.88 in adjusted dollars.

Hawaii minimum wage earners have the worst deal. The state's rate is above the federal minimum at $7.75, but that is worth the equivalent of $6.61 because of high costs. It is one of three states - New Hampshire and Virginia are the others - where the adjusted rate is actually less than the $7.25 federal minimum.

There is a strong correlation between states with high costs of living and those that have mandated minimum wages above the federal rate. Of the 21 states that have not raised the minimum wage above the federal level, only in Virginia and New Hampshire do the costs of living make a buck less valuable than a dollar.

The adjusted value of a dollar is more than a buck in only three of the 10 states with the highest minimum wages.

Given that, does raising the minimum wage drive prices up or does a high cost of living help create the political support necessary to increase support for the minimum wage?

"On causation: It runs in many different directions, and it's virtually impossible to separate that into individual components," Cole wrote. "A higher minimum wage certainly increases the costs of goods or services supplied by minimum-wage workers. But higher cost of living also probably creates support for higher minimum wages."

Cooper agreed that it is easier to build political support for a minimum wage increase in states were $7.25 an hour does not go very far. But he said there are political considerations, as well. Every one of the states with the 10 highest minimum wages have voted for the Democratic presidential candidate for at least six straight elections. All are places more likely to elect Democrats who support a higher minimum wage.

Of the states with a $7.25 minimum wage, only Iowa, Pennsylvania, Wisconsin and New Hampshire regularly vote Democrat in presidential elections.

And what about the impact on prices? Cooper said most of the differences in cost of living from one place to another are driven by housing costs. The minimum wage has little or no effect on those costs, he said.

In fact, he added, studies have indicated that modest increases in the minimum wage have very little impact on the prices of any commodities. He said it could impact the prices charged by companies in industries with large numbers of low-wage workers, like fast food. But the differences would be quite small, he said.

One way of looking at the data is that the need for an increase in the minimum wage is not as great in Alabama because the money goes further. Another way of looking at it is that an increase would have a greater impact on recipients.

And statistics gathered by the Economic Policy Institute indicate that minimum wage earners mean more to their families in Alabama than most other states. If the federal minimum wage rose to $10.10 an hour, the average affected worker in Alabama would account for 55.2 percent of his or her family's income. That percentage is higher in only nine states.

Cooper noted that if the federal minimum wage had kept pace with inflation since the 1960s, it would be about $10 an hour today.

"There's really no reason 40 years later that anyone in any state should be still making $7.25," he said. "I think we need to have a solid national floor and let states adjust if they need to."