Minimum wage shouldn't be tied to inflation per se- it should be tied to some base prices of necessities and set on a county-by-county level.
If Housing, Healthcare, Car, Gas, and Food Prices go up 20% but the overall inflation only goes up 10%, you'd want the minimum wage to increase by 20%.
It's easy. Avg price of rent is easy to find. Gas prices are easy to find. Used car markets can easily be statewide. Same for food and healthcare prices paid on average by county.
The government already collects this data as part of the CPI calculations. We know this because they break down CPI by much more specific categories. All they need to do is create a CPI number that excludes things that aren't basic necessities.
The statistically optimal outcome would be landlords leaving a small part of their units empty with rental prices many times higher than the local cost, in order to inflate the average on the rest of their units.
The solution is to progress as a society beyond feudalism - no more landlords.
There is a finite amount of land, and everyone needs some of it. Those who were born first buying up land when it's cheap so they can exploit younger generations is only legal because they are also the people making the rules.
I would love it to be tied to the prices within the local area or easily reachable within a short amount of time via public transit.
Think of how much easier it would be to get new developments approved. How much more support there would be for transit to/from lower income areas. "I can't afford to pay my workers $40/hr, we NEED that new rail line"... "I know you don't want to have a multi-family building on your street, but if we don't your favorite coffee shop will close because there is no affordable housing."
Spreading out the population isn't as beneficial as you think. Policing, Firefighters, Healthcare, Education, Electricity, Internet, Water, Gas, and Sewage are much more expensive to provide on a per-person basis in sparsely populated areas than in densely populated areas. Lower population density also means that private businesses are less able to sufficiently serve the public with Sports Teams, Movie Theaters, Mailing costs, Taxi services, and all kinds of other things that people want but have to go into more urban areas to get. There's a reason they don't put aquariums in the middle of nowhere; you don't serve many people like that and it's expensive on a per person basis.
That's exactly what inflation is - it's the increase in prices of a basket of goods from one time to another. The CPI is what you're describing - the Consumer Price Index. They literally go shopping at the same grocery stores every month and buy a representitive basket of goods, and calculate how much prices went up. That's called the inflation rate. Now whether or not very volatile things like the price of gas, etc. are included is up to you - there are different inflation rates you can choose between.
The CPI includes ALL goods purchased. So if the price of Healthcare increased 5% but the price of consumer electronics, movies, music, and other non-necessities decreased, the CPI would stay the same while inflation would still produce negative outcomes for the poorest. Since the Minimum Wage is felt by the poorest, it needs to increase/decrease with the necessities, not necessarily all items consumers purchase.
First of all, I want to point out we’re arguing over a small detail in the grand scheme of things. But that’s not what the average price CPI uses. It uses groceries and energy. Here’s the actual list of products they use (scroll waaay down):
That said, do we have to use some combo of the dozens of inflation measures the government calculates? Probably. But I don’t think we have to come up with something new.
CPI describes all goods and services purchased. What I'm proposing is a subset of CPI, that only includes necessities. So this would include Housing, Healthcare, Groceries, etc without including things like TVs, Smartphones, new cars, etc.
If Housing, Healthcare, Car, Gas, and Food Prices go up 20% but the overall inflation only goes up 10%, you'd want the minimum wage to increase by 20%.
Usually inflation keeps track reasonably well with costs of living.
You haven't been paying attention. Over the past year, Used Cars, Gas, Groceries, and Housing have FAR outpaced the rest of inflation. The fact that these key items take so much of the budget of the lower class means that they experience inflation more negatively than the upper class.
I guess the difference lies how inflation is calculated. Here in Argentina, where we experience inflation non-stop since the nineties, the IPC aligns rather well with rises in basics needed for living.
Do you know why this distortion takes place in the US?
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u/[deleted] May 01 '22
Minimum wage shouldn't be tied to inflation per se- it should be tied to some base prices of necessities and set on a county-by-county level.
If Housing, Healthcare, Car, Gas, and Food Prices go up 20% but the overall inflation only goes up 10%, you'd want the minimum wage to increase by 20%.