Lawmakers Have Two Choices: Index the Minimum Wage or Leave Workers Behind

As lawmakers consider Gov. Moore’s Fair Wage Act, inflation indexing has emerged as the central point of contention. Indexing would mean that the minimum wage automatically adjusts once a year to maintain its true purchasing power. While powerful interests have lined up against indexing, the right path remains clear: Inflation indexing is critical to avoid leaving workers behind.

Inflation indexing is a tool to maintain the status quo after the full $15 minimum wage phases in. Without indexing, while the dollar value of the minimum wage stays constant over time, its purchasing power continuously declines due to inflation. In other words, without indexing, workers must constantly watch their standard of living erode, day by day.

Failing to index also further tilts an already lopsided balance of power. Without indexing, low-road employers that seek to maximize profits through low wages get an automatic, continuous reduction to their responsibilities in real terms.

The past three years have made clear that public health crises, supply chain disruptions, and international conflict – plus opportunistic price hikes – can drive prices upward with little warning. Even without more surprises, the purchasing power of Maryland’s minimum wage is on track to fall below its current value ($13.25 per hour) by 2029. Some commentators have compared indexing to putting the minimum wage “on autopilot.” Without indexing, it’s in freefall.

Inflation indexing is also a common-sense, well-established policy. Today, 18 states and the District of Columbia index for inflation or have adopted indexing policies that will go into effect soon, more than half of all states that set a wage floor above the federal standard. It is also a compromise. More ambitious proposals would index the minimum wage to median earnings, enabling low-wage workers to keep up with rising living standards. Indexing to inflation simply ensures that they are not left behind. Moreover, high-quality research has shown definitively that the minimum wage does not meaningfully affect the number of jobs available.

What wouldn’t indexing do? It would not diminish the General Assembly’s power to set the minimum wage. It’s not a constitutional amendment. Lawmakers would retain their ability to raise, lower, or restructure the minimum wage, through ordinary legislation, at the time of their choosing. Indexing simply ensures that when lawmakers do nothing, workers don’t automatically lose.

Inflation indexing is also the only provision of the Fair Wage Act that would have any effect beyond 2026. Gov. Moore made one specific policy promise in his winning gubernatorial campaign: to strengthen the minimum wage. Without indexing, the impacts of the Fair Wage Act will disappear before the end of Gov. Moore’s current term.

Lawmakers have an opportunity to give Maryland workers lasting confidence that rising prices will not eat away at their standard of living. They should not let this opportunity slip away.