Nothing says summer like an ice cream cone, but depending on where you live, that scoop may cost a lot more than you expect.
A review of single-scoop ice cream prices from a national ice cream chain reveals a not-so-sweet trend. Many of the most expensive scoops are found in states and cities with some of the nation’s highest minimum wages.
Washington State tops the list, with a single scoop costing more than $5. The state’s minimum wage recently surpassed $17 an hour, and some localities now require employers to pay more than $20 an hour. California follows a similar pattern, with scoop prices approaching $5 in locations across the state, where employers face a $16.90 statewide minimum wage alongside a $20 minimum wage for many fast food workers. In contrast, the least expensive scoops are concentrated in states like Texas, Kansas, and Iowa, where the minimum wage remains at the federal level of $7.25 an hour.
The price difference is substantial. At the top of the list, a single scoop in Washington costs 58% more than in the lowest-priced location in Texas. While minimum wages are not the only factor that determine what consumers pay, labor is one of the largest operating costs for many businesses, which gives high minimum wages outsized influence on what consumers ultimately pay.
Economists have studied the impacts of minimum wage hikes on price increases for decades. Research shows that a $1 increase in the minimum wage can cause prices to rise up to 5.5%. California offers a recent example. After the state raised the minimum wage for fast food workers to $20 an hour, prices increased by more than 14%. These price hikes can snowball for Americans. In a survey of 166 economists, EPI found a majority believe minimum wages above $15 make the cost of living worse.
Rising labor costs don’t only show up in the form of higher prices. Many businesses respond by cutting staff hours, reducing positions, or relying more on automation. For a seasonal industry that relies heavily on entry-level workers, like ice cream shops, that can mean fewer summer jobs even as menu prices climb. These impacts can be particularly harmful for teens looking for that first summer job.
That tradeoff has become increasingly important as affordability remains a top concern for many Americans. Rather than viewing higher minimum wages as a simple solution to rising costs, voters have begun to question whether higher minimum wage mandates ultimately make everyday goods and services more expensive. Most recently, Oklahoma voters rejected a ballot measure that would have raised the state’s minimum wage from $7.25 to $15 an hour, signaling that many believed the economic tradeoffs outweighed the promised benefits.
An ice cream cone may seem like a small purchase, but it serves as a familiar reminder that wage hikes don’t come without consequences. With another round of state and local minimum wage in effect as of July 1, policymakers should carefully consider whether higher wage mandates are easing affordability challenges or adding to them.