Deflationary forces might take their toll in a very tangible way for Colorado’s minimum wage earners.
The state could be the first ever to adjust down minimum wage due to a falling consumer price index. While the minimum wage will only fall four cents per hour, if passed it will clearly be an extraordinary example of discipline.
USA Today: Other states with adjustable minimum wages have seen their consumer price indexes fall, such as Ohio. But Colorado is one of the few states where the law is interpreted to mean the wage can fall. Other states are planning to keep wages flat.
In Florida, deflation would reduce the minimum wage to $7.21, but the state’s minimum wage already matches the federal wage, so Florida workers’ paychecks won’t change.
The change will be subject to a public hearing. If in the end Colorado’s wage adjustment gets shot down, then we’ll be reminded once again why it’s so much easier for governments to err on the side of inflation.
And though this will be controversial, this is a good move on Colorado’s part. One reason, many economic historians believe, that the Great Depression was so damaging, and caused so much unemployment, is that while prices fell, labour costs could not adjust.
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