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.”