Sen. Mrvan introduced SB 121 which would raise the minimum wage in Indiana. This legislation will presumably not go anywhere. Indiana’s minimum wage is currently pinned to the federal minimum wage of $7.25 per hour. This legislation would increase the rate to $10 per hour from July 1, 2019 through June 30, 2020. Between July 1, 2020 and June 30, 2021, it would increase to $13 per hour. And, after July 1, 2021, it would increase to $15 per hour.
The federal minimum wage was last raised in 2007 and set at $7.25 per hour. According to the CPI inflation calculator, if that had kept up with inflation, we’d be at $8.59 per hour. So, this proposal would be a boost from the 2007 floor. On the other hand, the first jump would not quite be on par with the minimum wage as set in 1968. When it was raised to $1.60, that would be equivalent to about $11.31 in today’s dollars.
There is always a debate about how much good minimum wages are. Opponents will contend that it’s unjust for the government to dictate business practices, that they will price low skilled workers out of the market and employers will shift to automation, they make it harder for teens to get jobs, and it will just result in higher prices so purchasing power will not be any better.
I wonder if a Universal Basic Income would allow us to do away with minimum wage laws. In our current system, it seems that the market price of labor is distorted by a laborer’s non-discretionary need for necessities such as food and shelter. It’s not exactly an arm’s length transaction. The laborer generally doesn’t have the same sort of discretion to sit on the sidelines until the market for his services improve (or while he learns a new skill set) in the way capital can wait for investment opportunities to improve. At least that’s the way it looks to me. Maybe you could argue the existence of food stamps and homeless shelters negate this argument.
In any case, I predict that Indiana will stick with the federal minimum wage.