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Automatic Adjustment of the Minimum Wage, Linking the Minimum Wage to Productivity

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  • Oren M. Levin-Waldman

Abstract

The fact that every change in the minimum wage requires an act of Congress means that debate over the wisdom of having a minimum is repeatedly returned to the political arena. As inflation continues to erode the value of the minimum wage, each legislative delay means that a larger increase is required. The larger the increase the more resistance to its passage, so that by the time Congress acts, the political compromise is an increase that is too little and too late to be of much help in lifting workers out of poverty. Automatic adjustment of the wage, with increases keyed to measures of private-sector productivity, would eliminate this problem. With the institution of a mechanism that provides regular and incremental increases, Congress will no longer be forced to revisit the issue, employers will not be confronted by sudden and large increases, and the value of the wage will be maintained.

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  • Oren M. Levin-Waldman, "undated". "Automatic Adjustment of the Minimum Wage, Linking the Minimum Wage to Productivity," Economics Public Policy Brief Archive ppb_42, Levy Economics Institute.
    • Handle: RePEc:lev:levppb:ppb_42
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    References listed on IDEAS

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    Cited by:

    1. Andalón, Mabel & Pagés, Carmen, 2008. "Minimum Wages in Kenya," IZA Discussion Papers 3390, Institute of Labor Economics (IZA).
    2. Oren M. Levin-Waldman & George W. McCarthy, "undated". "Small Business and the Minimum Wage," Economics Policy Note Archive 98-3, Levy Economics Institute.
    3. Oren M. Levin-Waldman, "undated". "The Minimum Wage Can Be Raised: Lessons from the 1999 Levy Institute Survey of Small Business," Economics Policy Note Archive 99-6, Levy Economics Institute.

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