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Comment by fortran77 | Hacker News Reader

Perhaps part of the reason for inflation is the rising minimum wages.

Maybe a part, at historical levels. Right now it seems to be driven moslty by monetary policy, supply issues (reduction in competition, increased demand), and labor supply issues (plays into minimum wage in so far that more employers are paying above it).

And yet the inflation outdates and outpaces the rise of the minimum wage, even prior to covid [1]

If it was to match inflation it would be more than $15 [2] And if it was to match productivity, it would be even more [2][3]

[1]https://www.epi.org/publication/labor-day-2019-minimum-wage/

[2]https://edition.cnn.com/2021/02/21/politics/minimum-wage-inf...

[3]https://cepr.net/this-is-what-minimum-wage-would-be-if-it-ke...

> If it was to match inflation it would be more than $15

Neither of your sources support that claim:

> Even worse is that federal-minimum-wage-earning workers today are paid 31% less than the $10.54 an hour they would have been paid in 1968, when the minimum wage reached its highest (inflation-adjusted) value. [1]

> The wage hit its peak in inflation-adjusted terms in 1968 at just over $12 [2]

The productivity argument is silly, and your third source says as much. Minimum wage has not kept pace with average productivity because minimum wage jobs themselves have not kept up with average productivity. CEPR makes the argument that doctors and software engineers just make too much money, and this somehow hurts the minimum wage earners. Which is a wild bit of mental gymnastics to claim that minimum wage earners should profit from high-skilled productivity, but the high-skilled workers should not.

Tying minimum wage to productivity never made sense to me. Obviously as technology progresses, productivity would increase. There wouldn't be an incentive to invest in productivity-increasing tech if it was directly offset by wage increases.

Tying it to inflation though is a no-brainer. We do it for social security payments, congress salaries, etc. There's no justifiable reason for not doing this.

That's why you also need to take money out of the top to counteract this.

A wage crush is ideal, not a wage raise.

What do you mean by wage crush? I can't find any definition.

It's a term I use myself. It's pushing down on higher wages while pushing up on lower wages in effort to concentrate people into middle class.

This would also mean that many people who are not even remotely close to "the billionaire class" would get pushed down, so it's not really popular with high-earning coastal liberals, and probably many people here.

But what mechanism would that use? Things like taxes would likely make a limited impact due to raising wages to offset the tax until the point that off-shore is more competitive. Legislative restrictions have been struck down in the past (the $1M CEO restriction of the 80s?).

I honestly don't know. I tend to be in favor of using gentle nudges to leverage natural market forces to institute change. Fortunately/unfortunately capitalism is designed to be self reinforcing. Catching more fish enables you to build bigger nets and protect fishing methods. But there isn't really any natural mechanism for incentivizing a reversing of that.

Someone smarter than me will have to come up with something. Right now though it's a runaway feedback loop that's going to eventually destroy itself by "doing everything right".

Raising lower end wages coupled with inflation would have the same effect, wouldn't it?

At least in my experience, the higher end people understand inflation and would demand higher pay to match or beat inflation. Especially at the executive level.

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