Economics WI: Minimum Wage Pegged To Inflation

Every so often there's a debate in the USA on raising the minimum wage. What if it had been pegged to inflation from the beginning, so that it rose automatically as needed rather than needing Congressional approval each and every time?

Given how controversial the minimum wage is among economists, this could be interesting to watch...
 
For reference, here's the minimum wage in real (adjusting for inflation) and nominal terms IOTL.

minimumwagetofebruary2013.png


We'd probably have a considerably higher minimum wage today, and throughout the 1980s-200s. This might decrease the national Gini index a bit.
 
Australia had "Basic Wage" ("minimum wage" for Adult men) indexation for long periods of time. What the state did was doctor the indexes brutally, changing them significantly 4 times as a result of political crises in capitalism.

On a more day to day basis Basic Wages were sought to be deindexed constantly by employers, for negative indexation ("capacity to pay") arguments by employers, and Margins ("skilled" wage components) were deindexed, then basic deindexed, then a total wage indexed, then deindexed.

Indexation was the year to year bread and butter of Australian class struggle up until the late 1960s.

Now show me the class struggle forces that will force the US state / states / employers into indexation as a retreat from something even (to capitalist's minds) more monstrous?

And will keep that fixed in place?

Remember, indexation doesn't just affect the Fordist assembly plants, it affects every Jim Crow hot dog stand.

Given the balance of class forces in the US, I'd suggest that a POD in the mid 1930s in the CIO (more IWW, or IWW beat down the CPUSA) that the 1946 Rail and Coal strikes are one good place to start, but this would so totally change the composition of the United States that it would be difficult for most posters to comprehend it. For one, it'd involve a split democrats on progressive / unprogressive lines and a reconfiguration of the party system. For another, it would mean that a red scare had been defeated and the right wing unions had been forced to line up behind left wing unions.

yours,
Sam R.
 
It will have both positive and negative effects.

I would expect marginally higher unemployment as people who are marginally profitable to keep are now unprofitable and marginally higher inflation rate as the cost of higher wages are passed on as higher prices.

On the other hand I would expect marginally higher taxes due to that inflation, marginally lower spending as government spending on food stamps and other poverty programs are less and marginally lower deficit as a result.
 
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