Tying Wisconsin’s Minimum Wage to Inflation Will Jeopardize Low-Skilled Jobs

The misguided indexing legislation is being considered before the WI Senate today
  • Publication Date: January 2008

  • Topics: Minimum Wage

WASHINGTON DC— The Wisconsin Senate will begin debate today on SB 130, legislation sponsored by Senate Majority Leader Russ Decker, which would increase the minimum wage to $7.25 and index it to inflation.

Automatically increasing the minimum wage at the rate of inflation prevents lawmakers from making future adjustments in the entry-level wage in response to changes in the state’s economic climate.

Already, two-thirds of minimum wage earners receive a raise within their first year of employment. However, there are some people who lack the skills necessary to advance in the workplace. It is this vulnerable subsection of employees that will be the first to lose their jobs when the mandated wage exceeds their productivity level.

A recent University of California at Irvine study found that high school dropouts and African-American teens suffer four times more employment loss from minimum wage increases than their more educated counterparts. For these vulnerable individuals, a 10 percent increase in the minimum wage leads to an 8 percent decrease in employment.

“Indexing minimum wages does little more than put a cycle of rising labor costs on auto-pilot; the result will be reduced job growth and annually increasing harm to the job opportunities for the least skilled, all without any measurable reduction in poverty,” said Jill Jenkins, senior economist at the Employment Policies Institute. “In the current economic climate marked by shrinking consumer demand and sales- automatically increasing labor costs creates the recipe for job loss among the least employable workers.”

The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding entry-level employment. For additional information or to schedule an interview with a spokesperson call Tim Miller at 202.463.7650.