Economics 101: The beans-and-rice theory

Not long ago, we had a cost-of-living wage increase at work. Wasn't much of a bump; the company cited a really bad economy and the best we could eke out was 2.5 percent. I'll take it.

Cost of living increases are across the board. There is no merit involved, and the company I work for does not reward merit anyway -- making it a pretty representative company. The only real qualification for this increase is to suck air.

No problem. Like I mentioned, I'll take that increase. I'll stick it in the bank and wait for the other shoe to drop. You know there's a punch line in there somewhere.

Sure enough, within a week said shoe did drop. The price of lunch -- in our case the stuff out of the vending machines at work -- also increased. Sweet rolls went from 90 cents to $1, and soft drinks from 55 cents to 65 cents per can.

Again, no problem. That's life in the real world. But since I never met a conspiracy I didn't like, this got me to thinking about a few things.

I don't have any figures to back me up, and to my knowledge the economists with Freakonomics have not explored this matter, but y'all might have noticed how prices seem to move in lockstep with wage increases. They just sort of go together.

Yes, I have noticed this, and I don't think it's my imagination this time.

Again, I can't prove anything. But watch what happens whenever the federal minimum wage goes up. There are a few things from the grocery store that you can take as bellwether items to see how this works:

• Kraft Macaroni and Cheese.
• Dried beans.
• Dried rice.
• Little Debbie snack cakes.
• Folger's coffee, one-pound can.

I almost included a gallon of regular gas in this list, but forget it. Gas sort of creates its own rules of economics. It doesn't take much to alter the price of oil -- all it takes is some random terrorist getting capped in Pakistan, a hurricane blowing off the Gulf Coast, a sheikh waking up grouchy in Saudi Arabia, or a butterfly flapping its wings in India. Either one of these is enough to make or break your budget at the pump. But these five items I listed here are pretty predictable.

Now, understand, the minimum wage is not likely to increase any time soon. There is some scuttlebutt about it in Congress, but there always is. It's a favorite political trading chip. Toss the lower-wage voters a bone like that, and you've got their hearts and minds. It's a cynical practice, really.

For years I've gone on record as opposing minimum-wage increases for a variety of reasons. Some folks may not be deemed worth the new wage and would likely be thrown out on their keisters. The marginal worker who makes a little more than the minimum will likely not see a like increase so he'll actually come out behind. And it's not the government's role to determine how much the businessman should pay his workers; let the market and the worker's own ability dictate that.

But my biggest objection is that minimum-wage increases are inflationary. Guaranteed, an increase will trigger another increase in goods and services all around -- partly because the cost of labor has gone up, and partly because there is a little more disposable income floating around.

What I saw in the vending machines at work -- besides the usual run of sweet rolls, potato chips and Mountain Dew -- was, to me, proof positive of my theory.

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