Friday, October 10, 2014

Raising the floor: A brief history

A brief history of the minimum wage

Some arguments about the minimum wage tend to focus on the idea that the minimum wage was never intended to be a living wage.  It was always intended to be a wage that was for those looking to supplement their income.  Of course, this is incorrect.

The minimum wage was established by the Fair Labor Standards Act (FLSA) at $0.25/hour.  This bill was signed by President Franklin Delano Roosevelt.  The bill created overtime pay, a minimum wage, banning most child labor and established a 44 hour work week.  President Roosevelt, speaking to Congress prior to the bill being created said, “a self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling worker’s wages or stretching workers’ hours.”  President Roosevelt tried to convince Congress that the bill was a pro-business bill.  Labor historian Erik Loomis notes in his “This Day in Labor History” post linked above, that the “Commissioner of Labor Statistic Isador Lubin told Congress that the businesses surviving the Depression were not the most efficient, but the ones who most ruthlessly exploited labor into longer hours and lower wages.”  The establishment of these standards would attempt to halt these practices and allow businesses to compete on a somewhat more even playing field.

The minimum wage was supported by some leaders in the labor movement.  Others “supported it only for the lowest wage workers, fearing a minimum wage would become a maximum wage for better paid labor.”  This fear has been somewhat realized as commentators and business leaders often compare the wages of workers to the minimum wage when negotiating wages. The fear of resorting to the minimum wage for their labor has hindered some employees from exploring new jobs and limited their bargaining power with their employers.  That’s a subject for a different time, though.

Predictably, executives and business owners were livid about the minimum wage.  They predicted that they would not be able to afford employees, which coming at the heels of the Great Depression was fairly scary and reminiscent of what many critics of raising the minimum wage, now.  Roosevelt addressed these concerns in a fireside chat, saying “do not let any calamity-howling executive with an income of $1,000 a day…tell you…that a wage of $11 a week is going to have a disastrous effect on all American industry.”  As Loomis points out the FLSA has greatly expanded over the years.  He points out that Harry Truman expanded the FLSA to cannery and airline workers and John F. Kennedy expanded the protections to retail and service employees.  The 1963 Equal Pay Act, as Loomis, notes expanded the FLSA to “require equal pay for equal work for women and men.”

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