Eighteen states and the District of Columbia have minimum wages above the federal level, and 10 states index their minimum wage to inflation to automatically rise with the cost of living.

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The increase for a coming year is based on inflation between the third quarter of the prior year and the third quarter of the current year, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. In the third quarter of 2008 energy prices and the CPI-W spiked, giving beneficiaries a hefty 5.8 % COLA for 2009.

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The union wants wage increases tied to the Consumer Price Index, a federal government measure of inflation.

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The employment cost index, another measure of wage pressure which is available only up to the end of September, shows annual growth of 3.7% in the year to the third quarter in the fully employed mid-west, up from 2.8% a year earlier.

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Contributing to the lower Gini index are lower unemployment, increasing minimum wage and Bolsa Familia (a government program that pays poor families to keep their children in school).

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The relationship is strong enough, Ms Van Rijckeghem and Ms Weder reckon, to suggest that raising average civil-service pay from 100% to 200% of the manufacturing wage reduces corruption by about one unit in the corruption index.

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Those in favor of a chained CPI argue that the current index, which considers the spending habits of urban wage earners and clerical workers, is outdated.

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Ten states have announced an increase in their minimum wage effective January 1, mostly because their legislation requires an adjustment to the Consumer Price Index inflation measure.

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