Head-scratcher: When is inflation not an “economic circumstance”?

Apparently when it applies to increases in people’s wages – or so it would seem when reading this post on the Association of Washington Business blog. On the heels of a Department of Labor & Industries announcement that Washington’s minimum wage will rise 48 cents per hour (to $8.55) in 2009, the AWB’s Kris Tefft writes:

The minimum wage rate rises automatically every year based upon an inflationary index without regard to ambient wage and economic circumstances in the state.

That “inflationary index” is known more popularly as the “cost of living”, or by economists as the Consumer Price Index. For most working families trying to make ends meet – and if you’re working a minimum wage job, that’s what you’re doing – inflation is very definitely an “economic circumstance”, especially when it impacts the cost of buying groceries, filling the gas tank and heating your home.

Inflation seems to get different treatment from the AWB in other situations. But this time, Tefft writes that Washington’s minimum wage is going up:

…to the enormous and understandable consternation of agriculture, restaurant, retail, and many other small businesses.

Someone better inform Don Brunell, President of the AWB, who told the New York Times something different last January:

…the state’s major business lobby, the Association of Washington Business, is no longer fighting the minimum-wage law, which is adjusted every year in line with the consumer price index.

“You don’t see us screaming out loud about this,” said Don Brunell, president of the trade group, which represents 6,300 members.

“It’s almost a no-brainer,” Mr. Brunell said, that the federal minimum should go higher. Association officials say they would like to see some flexibility for rural and small-town businesses, however.

Washington’s robust economy, which added nearly 90,000 jobs last year, is proof that even with the country’s highest minimum wage, “this is a great place to do business,” Mr. Brunell said.

The same article quotes a couple of small business owners who seem to feel the same way, and their anecdotes are supported by a 2007 survey of small business owners (by a national payroll service) that found:

In terms of impact on small businesses, most small businesses (79.5 percent) say an increase in the minimum wage will have no impact on their businesses. 15.6 percent say the increase will have a negative impact, while 4.9 percent say the increase will have a positive impact.

Maybe that’s because, as has been mentioned here already, predictable changes in the minimum wage are not subject to partisan political wrangling and are therefore much easier to anticipate for employers.

Regardless, a strong minimum wage is good for our economy. When it goes up to account for increases in the cost of living, we ensure workers don’t lose ground in a changing economy – and guess where that money goes? Right back to local businesses who can still sell their products and services, because people can still afford to buy them.

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Posted in A Fair Deal at Work, Minimum Wage

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