Correlation of Minimum Wage and Food Price

Some time ago I proposed a little thesis inside my head: what if the minimum wage of a country is calibrated against their food prices? Let’s say an hourly rate for human work is equal to a plate of lunch. We may constrain that a little more, a plate of dish in a shopping center, hawker center, or something along these lines.

For example, in Indonesia, we might say the food price range would be around 30k to 60k Rupiah. Take the average from that number, and to make it simpler, the proposed rate would be 50,000.00 Rupiah. That means 50k would buy your time for an hour. For Indonesians out there, the calculation would be 40 hours a week (normal work time) times 50k Rupiah. 2 million times 4 weeks, 8 million Rupiah a month, should be the minimum wage (UMR). Of course you can adjust according to your region. You’re welcome to test this thesis against your own country. Is it above or below the proposed rate.

With that example above, we know that the Indonesian minimum wage is less than our proposed value. This might also mean that most Indonesian are underpaid.

Applying to Economics#

To reach this ideal, proposed value, there are two options we can take. First, just make the pay higher, like most capitalist countries. Higher goods prices are equal to higher pay. Second, make the goods cheaper so the buying power increases without any wage increase. This sounds more like socialist play.

The most ideal would be increasing wages and reducing food prices. That might be one of the most impossible things to do. The other extreme would be reducing labor pay and increasing food prices. What country would that be?