Our friend Mike Munger, writing at DivisionofLabour,
wonders why the pro-minimum wage crowd doesn’t come out in favor of
indexing it … and then provides a pretty compelling answer:
The question: why not index the minimum wage, maybe with some
lag or going up by regular amounts every two years, based on the CPI?
The answer: Politicians wouldn’t be able to claim credit for an
index, a one-time solution that actually fixes the minimum wage in real
terms. This way, without indexation, they (the supporters) get to look
like big heroes.
And, the more the increases get dragged out, and the bigger the
consequent increase (which really only restores the minimum wage to its
previous real value), the bigger the heroism.
The challenge: if liberals really want to solve the minimum
wage problem, they should be explicitly advocating indexation. Instead,
these periodic increases simply ensure that the minimum wage will
always be a good campaign issue, and fund-raising device.
In short, the minimum wage combined with secular inflation is a
nearly perfect job security device for liberal members of Congress: we
will fight for a wage increase, for YOU! But we will not fight for
indexation, which would make you outgrow your need for us. We need to
be needed.
Excellent public choice analysis, Mike. Even when pols want us to
think they are looking out for the interests of “the little guy,”
they’re actually looking out for themselves.
