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Shouldn't minimum wage just increase proportionately to inflation? (lemmy.ml)

submitted 11 months ago by Anticorp@lemmy.ml to c/general@lemmy.world

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Most jobs will give you a performance review and a raise every year to account for inflation and any increased duties you've taken on. We increase minimum wage by massive amounts after far too many years which causes all sorts of economic concerns, business complaints, and just a bunch of arguments everywhere. Shouldn't they just increase minimum wage 3.5% or whatever, every single year?

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[-] singron@lemmy.world 9 points 11 months ago

Economists think that directly tying wages or prices to inflation can cause inflationary spirals. CPI is based on prices, and raising wages will eventually raise prices and CPI, so if you raise wages based on CPI, it can enter a positive feedback loop.

It might be ok if the feedback is slow enough or if the minimum wage influences a macroeconomically insignificant proportion of wages.

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this post was submitted on 15 Nov 2023

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