Long Term Solution for Wisconsins Minimum Wage Policy

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This Wednesday morning, February 27th, The Assembly Committee on Jobs & the Economy will hold a hearing on Wisconsin’€™s minimum wage. The Committee’€™s hearing starts at 10:00am in room 400NE, and it will consider Assembly Bill 274, which would raise the minimum wage and index it for inflation.

Although federal increases in the minimum wage passed the U.S. Congress last summer, bringing the federal minimum wage up to $7.25 by July 2009, AB274 is important because of its long term implications. Without indexing for inflation, some obvious problems remain constant even after a boost to the minimum wage is given. As explained by Goldman Sachs Vice President Andrew Tilton in a 2006 issue of US Economics Analyst,

‘€œthe periodic debates about raising the wage consume politicians’€™ (and economists’€™) time and energy, and the unpredictability of the law ‘€“ irregular large hikes followed by gradual erosion through inflation ‘€“ makes business planning more difficult. If a minimum wage is desired, indexing it to inflation would avoid these problems.’€ (WCCF)

With the passage of AB274, Wisconsin would move a step further toward joining ten other states who currently index the minimum wage for inflation. This policy would enable businesses to plan ahead for increased costs, prevent the erosion of minimum wage workers’€™ purchasing power, and help us avoid the bitter partisan debates that inevitably arise.

John Keckhaver from the Wisconsin Council on Children & Families will be at Wednesday’€™s hearing to testify in support of AB274. For more information, check out the following reports from the WCCF: “Indexing the Minimum Wage to Inflation,” and “Q & A on the Minimum Wage”

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