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Gradual Phase-In Helps Employers Adapt to Minimum Wage Hike

April 30, 2014 at 10:00 AM

4-30-14mw.pngThe Senate will vote today on a proposal to raise the minimum wage to $10.10 by 2016, providing important, tangible benefits to low-wage workers. Seemingly unaware that the increase phases in over time — in three annual steps of $0.95 (see graph) — some argue that it would constitute a significant shock to low-wage employers.  While there's no question that a higher minimum wage raises their labor costs, the gradual phase-in is designed to help them adapt to the higher wage level.

As always when a minimum wage increase is proposed, opponents also claim that it would lead to large numbers of layoffs.  But, extensive research doesn’t support that conclusion, as our report explains.  Moderate increases like the one under consideration have been shown to help many more low-wage workers than they hurt.

Since the minimum wage isn’t adjusted for inflation, the longer Congress fails to act, the more its buying power erodes.