Web Note 5.1: Fair Trade Coffee

Tastes, as a shift factor of demand, has a broad meaning. Our tastes might include a concern with the labor or environmental conditions under which a product was made.

Using the slogan "Put your money where your mouth is," Global Exchange asks consumers to buy coffee, tea and chocolate from importers who who do not exploit the workers and small farmers in the lesser developed countries that produce these products.

Some coffee growers, including Várzea da Onça, are careful to preserve the environment on their farms. The Rainforest Alliance inspects and certifies coffee farms that use environmentally sustainable practices and provide habitat for wildlife.

Web Note 5.2: Rent Control

Price ceilings such as rent control keep a market in perpetual disequilibrium. When the price ceiling is below the equilibrium price, quantity demanded exceeds quantity supplied at that price.

A disequilibrium of this sort in a rental housing market means that potential renters would be willing to pay more than the ceiling rental amounts. Landlords may demand various types of under-the-table payments. Thus any city government which wishes to establish rent control must be prepared for the difficulty of administering rent laws.

The Rent Stabilization Board of Berkeley, California, provides a good introduction to the complexity of administering rent control programs.

Web Note 5.3: Minimum Wage

Superseding the Market
The minimum wage is another example of how a society adjusts for undesired market results. When we regard the market-set wage rate for unskilled labor to be too low, we legislate higher wage rates. In the United States, the Federal minimum wage sets an hourly wage floor for covered workers. States might expand on the Federal minimum by covering workers that are left out of the the Federal legislation and/or by legislating a minimum wage higher than the Federal standard.

A Minimum Wage Map
"Minimum Wage Laws in the States" looks at minimum wage rates state by state.

Inflation and the Minimum Wage
Changes in the Federal minimum wage must be voted on by Congress and are subject to veto by the President. Unlike Social Security payments, there is no automatic adjustment of the minimum wage rate to inflation. This chart tracks the changes in the purchasing power of the federal minimum wage. Two states, Alaska and Washington, automatically increase their minimum wages with inflation.