Indexing to Inflation

When the minimum wage stays the same, year after year, it loses value because of the rising cost of inflation. $8 today buys less than it did 5 years ago, and will buy even less 5 years from now.

Massachusetts does NOT index our minimum wage to inflation, unlike 11 other states. That’s why every few years we have to hike the minimum wage-- because its value, fixed at a certain dollar number, is not worth as much as it formerly did:

When the minimum wage does not increase from year to year, but prices and the cost of living do increase, minimum wage workers have less and less ability to purchase the same goods and services as in previous years. On paper the wage they earn may look the same, but its real value has declined. (Mass Budget)

When the minimum wage is “indexed to inflation," it means that the dollar amount will rise with the rising cost of living -- keeping its purchasing power intact. Indexing  “would help to prevent further erosion of the purchasing power of minimum wage workers. Raising the minimum wage and indexing it to inflation would both restore some amount of value and prevent further decline in value” (Mass Budget).

Tying the wage to the cost of living makes sense for employers too, creating predictability about future costs, which come in small, routine increases, versus erratic large jumps every several years. Even pro-business Republican Mitt Romney agrees that we should index the minimum wage to inflation. 

STATUS REPORT: WHERE DOES 'INDEXING' STAND?

[last update 6/4/2014]

6/4/2014: The minimum wage bill is currently in Conference Committee, where the Senate and House minimum wage bills are to be reconciled. The House bill did not have indexing; the Senate bill does. Indexing is one of the elements that could be negotiated away by the conference committee. We know that there is strong opposition to it, especially in the House, driven by the business lobby. 

We are not content to simply wait, and so we are going forward with the second phase of signature gathering to get an increased and indexed minimum wage on the November ballot. 

 


Find out more and get involved in the fight to pass meaningful minimum wage reform--including indexing: ProgressiveMass.com/raiseup

 


 

Prior Updates

3/28/2014:

Today (3/28/2014) is an important inflection point in the battle to get MEANINGFUL minimum wage reform out of the Massachusetts Legislature. 

Read more here: progressivemass.com/raiseupcall 

In brief: today at 5PM, members of the Massachusetts House must choose whether or not to sponsor Amendments to the main minimum wage bill -- which does NOT include indexing.

Without indexing, even when the wage is raised, it will immediately start losing value. And this is why it's so important that legislators hear from all of us TODAY, asking them to do the right thing. Sign on to Amendments to index the minimum wage to the cost of living. 

More info and calling script/tools: progressivemass.com/raiseupcall 

 


 

Find out more and get involved in the fight to pass meaningful minimum wage reform--including indexing: ProgressiveMass.com/raiseup

 

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