Automatic adjustment of the minimum wage has been considered by
Congress in the past (Levin-Waldman 1998). The 1997 bill that called
for an increase to $7.25 also called for indexing the minimum wage to
the consumer price index (CPI). The minimum wage, once set, would
rise each year along with the increase in the CPI, so that it would keep
up with inflation. The principal problem with linking the minimum
wage to the CPI is that the CPI overstates the rate of inflation and may
not accurately reflect market-caused price increases. A better mechanism
would be one that links increases in the minimum wage to
increases in productivity