BofA Merrill Lynch Global Research, Bureau of Labor Statistics
Economists at BofA Merrill Lynch say one of the questions clients have been asking recently is whether proposals to raise the minimum wage in the United States - like the one highlighted by President Obama during his State of the Union Address in January - would have an inflationary impact.
The answer, they say, is no, given the the tiny slice of the workforce such a policy would affect.
"For the sake of argument, let's assume that the minimum wage does increase from the current $7.25/hour to the proposed $10.10/hour," write the economists in a note to clients.
"That is a $2.85/hour increase, or 39%! Surely that has to be inflationary? Not necessarily. As a rough approximation, $2.85 on a $24 average hourly wage is nearly a 12% gain. But with just 2.8% of wages subject to the minimum, the overall impact is a 0.33% increase in average hourly earnings. This is very unlikely to be noticeable at all in the wage, let alone the inflation, data."
So while the minimum wage debate may be a hot-button political issue, it is somewhat irrelevant from an economic perspective.