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Maine's Minimum Wage Bill Ties Increase to Inflation


An Act To Adjust Maine's Minimum Wage Annually Based on Cost-of-living ChangesBe it enacted by the People of the State of Maine as follows:
Sec. 1. 26 MRSA §664, sub-§1,  as amended by PL 2007, c. 640, §4, is further amended to read:1. Minimum wage.   The minimum hourly wage is $6.50 per hour. Starting October 1, 2006, the minimum hourly wage is $6.75 per hour. Starting October 1, 2007, the minimum hourly wage is $7.00 per hour. Starting October 1, 2008, the minimum hourly wage is $7.25 per hour. Starting October 1, 2009, the minimum hourly wage is $7.50 per hour. Starting October 1, 2013, the minimum hourly wage is $8.50 per hour. Starting October 1, 2014 and each October 1st thereafter, if there is an increase in the Consumer Price Index on June 30th of that year from the Consumer Price Index on June 30th of the preceding year, the minimum hourly wage in effect at that time must be increased by the same percentage as the Consumer Price Index increase. For purposes of this subsection, "Consumer Price Index" means the Consumer Price Index for Urban Wage Earners and Clerical Workers, CPI-W, for the Northeast Region, or successor index, as published by the United States Department of Labor, Bureau of Labor Statistics. If the highest federal minimum wage is increased in excess of the minimum wage in effect under this section, the minimum wage under this section is increased to the same amount, effective on the same date as the increase in the federal minimum wage , but in no case may the minimum wage exceed the minimum wage otherwise in effect under this section by more than $1 per hour.SUMMARYThis bill raises the minimum wage to $8.50 per hour beginning October 1, 2013, and it requires the minimum hourly wage to be adjusted for inflation on October 1st of each year, beginning October 1, 2014.

 The Maine Legislator now wants to tie a raise in minimum wage into a raise in inflation which will only cause an increase in inflation and in turn an increase in minimum wage and in turn another increase in inflation and perpetually so on and on and on.

The only justification for a raise in wages is when it is tied to an increase in productivity by the individual worker resulting in an increase in profit to the business which allows the busines to increase the wage of the worker without raising the prices of the business product to the consumer, whether this product be a material product or a service product. The increase in worth of the employee to the business can only be determined from the perspective of the business and/or the employee - not by a collective determination of the state mandated upon all business and employees without differentiation. If the costs of a business increases without relationship to the productivity of a business, the increase in cost will be passed on to the consumer as inflation.

Wealth is created only through productivity. Money manipulators manipulate the distribution of wealth but do not create wealth. There are indeed injustices in the system but tying minimum wage to inflation will have no effect on schemes devised by finacial markets and governments entangled in "public-private relationships" to redistribute wealth  without a genuine and ethical relationship to productivity. As the age old saying goes "two wrongs do not make a right" but only compounds the wrong. The solution has to be in the form of an increase in wage tied to an increase in productivity. Otherwise the purchasing power of the dollar will go down as wages go up. Such laws suggest that the private sector is not to be trusted but the government is ?!!

I have not yet figured out how this relates to the Chained Consumer Price Index that the Maine Legisature was proposing to adopt in 2013-or if it was actually adopted. The effect of the Chained Consumer Price Index, to my own analyis is to say that inflation has not increased if consumers sustitute a lesser priced item for a more expensive one- Lets say that they substitute frozen vegetables for fresh vegetables because they can no longer afford the latter. The Chained Consumer Price Index would report that as inflation remaining steady.  This is a blog post I wrote on the Chained Consumer Price Index

I may add more to this post on that subject as I find the time.

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