Comment Re:I don't think it's AI (Score 1) 139
What's most critical is ensuring that it is pinned to *some* inflationary indicator.
Not really. It should be tied to our goal for wages.
No. That will cause it to remain a political football just like it is right now, with the political parties fighting over what the "goal for wages" should be. Nobody wants that. That solves nothing.
So if we want peoples' wages to double every 9 years then we increase the minimum wage at 8% per year.
And now you've just reduced worker effectiveness. You don't want the minimum wage to be too high, because having the minimum wage be just a living wage and not arbitrarily more gives people motivation to work harder to earn more money.
You also don't want the minimum wage to grow significantly faster than inflation, because most of the folks at the bottom end of the wage spectrum will spend every penny they have, and if they spend more, that overconsumption is likely to cause shortages of goods that will drive prices up in strange and irrationally market-distorting ways.
Also, increasing pay faster than the cost of living increases will cause a greater than necessary impact on the price of goods and services by making them more expensive to produce, which will reduce the desirability of goods with lower margins or higher labor cost as a percentage of their total price, which will result in increased pressure to automate and reduce the number of workers to avoid hyperinflation. So now you have fewer people making slightly more money each. Increasing unemployment is not a good thing.
And of course, if you're wrong in the other direction — if the minimum wage increases more slowly than inflation — you have the problems we have now.
No. You tie it to inflation, period. Anything else WILL cause problems. By tying it to a specific inflation metric, once you pass the law, the minimum wage becomes a self-adjusting system that is largely insulated from politics, and nobody ever has to touch it again.
Businesses will take that into account and organize their operations to make money with those kinds of wage increases.
Businesses can do that anyway. It's not like they can't predict ahead of time roughly what the CPI is going to be from year to year and plan for it. The prediction won't be exact, but neither is anything else in this world.
There is no good reason why the minimum wage should only keep up with inflation.
See above. There are very good reasons why the minimum wage should not run out ahead of inflation, not the least of which is that government cannot be trusted to set sound fiscal policy from year to year, because our federal government is mostly run by people who think that it's a good idea to spend money on the people's credit card when they're only earning enough money to pay the interest and not pay down the principal, who repeatedly give gifts far more expensive than they can afford (tax reductions, for example) just so that they will be seen as the good parent (and get reelected) despite the negative impact on fiscal solvency, and who have basically zero fiscal self control. If you think either party is going to set good minimum wage policy, I have a bridge to sell you.