Tweaking the minimum

The other day, Simon and I were wondering about this minimum-wage proposal: how did they arrive at precisely ten dollars and ten cents? Admittedly, it’s 11 cents more than $9.99, but some of the same psychology might be at work:

A lot of supporters of a higher minimum wage will want to raise it again before too long and some states will want to raise it immediately. $10.00 is such an even number that there might be more psychological comfort with that number. It’s not unlike how some states are finding 10% to be the cap for sales taxes. There’s no particular reason why raising it from 9.5% to 10% should be different from 10% to 10.5%, but there is.

$10.10 isn’t as comfortable a stopping point as $10, and that’s a feature.

Hmmm. Would $9.95 be an easier sell to state legislatures? (Nothing prevents a state from imposing a higher minimum wage than the Federal standard.) And if it’s adjusted for inflation, it will break $10 soon enough, which is to say “almost immediately.”







2 comments

  1. McGehee »

    16 May 2014 · 9:54 pm

    There’s no particular reason why raising it from 9.5% to 10% should be different from 10% to 10.5%, but there is.

    Aside, I suppose, from the fact that the former increase is a slightly larger proportional increase over the previous rate, than the latter would be?

    Or perhaps the fact that 10.5% is more than 10%, which would be my objection, as it would have been to the increase from 9.5% to 10%?

    Personally, I think the cap for sales taxes should have been 5%, but that’s because when I was a kid that’s what it was in California. I don’t know what it is now, but 50% wouldn’t surprise me.

  2. CGHill »

    16 May 2014 · 10:40 pm

    Oklahoma sales tax is 4.5%, as it has been since 1990. However, most cities and counties tack on levies of their own: Oklahoma City charges 3.875%, for a total of 8.375%. Bristow has the highest city tax at this writing: 5%. County sales taxes do not exceed 2%.

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