An Overview of Minimum Wage Policy and Worker’s Rights in America
The fight for $15 has sparked debates across the country, with some arguing that such a dramatic increase will kill jobs while others argue that $15 is, in fact, still lower than what it should be. To better understand the debate, let’s take a look at the history of the minimum wage in the United States and examine why some are saying it should actually be as high as $22 an hour.
The History of the Minimum Wage in the United States
The idea for establishing a minimum wage first appeared in the United States at the end of the 19th century. At the time, sweatshops dotted the American landscape, paying substandard wages for dangerous and grueling labor which was done mostly by women and children.
Even though popular sentiment was in favor of establishing a minimum wage and other worker protections, legislation was met with fierce resistance from sweatshop owners and the Supreme Court.
In 1923, the Court crushed attempts to establish a minimum wage for women and children—leaving men “free” to negotiate their own wages—citing, of all things, the 19th amendment as its basis for the ruling.
In delivering the opinion of the Court, Justice Sutherland argued, “woman is accorded emancipation from the old doctrine that she must be given special protection or be subjected to special restraint in her contractual and civil relationships.”
If women want equal rights so bad, the Court argued, they can have the equal right to work for starvation wages.
By the time Franklin D. Roosevelt was elected, America was reeling from the Great Depression, unemployment was rampant and where there was work, it was either seasonal or not paying anything close to a living wage.
In an effort to provide fast relief, Roosevelt worked with congress to pass the National Industry Recovery Act (NIRA) in 1933 which incentivized companies to establish minimum wage standards for their industries.
The result was a wave of new standards that boosted wages across many industries and set the stage for a nationwide minimum wage law. Before Congress could pass a federal law, however, the Supreme Court struck down NIRA in 1935, arguing that it constitutes “wage fixing” and that workers should be free to negotiate their own salaries.
In 1937, President Roosevelt proposed a fun bill called the Judicial Procedures Reform Bill, which would grant him the authority to appoint up to six new justices to the Court. Coincidentally, the Supreme Court had a “change of heart” later the same year, deciding that minimum wages are constitutional after all. Having convinced the Court, President Roosevelt went on to pass the Fair Labor Standards Act (FLSA) of 1938, establishing the first federal minimum wage at $0.25.
As much of a landmark bill as FLSA was, it missed at least two important components that would have secured worker protections for decades to come. Notably:
- It did not tie the minimum wage to a living wage, as many supporters of the bill had wanted.
- It did not provide for automatic increases to keep up with inflation.
Because these two features were missing, later administrations (re: Ronald Reagan) had just enough wiggle room to slowly erode the standards the bill set.
While Congress would voluntarily raise the minimum wage every few years for the next 40+ years, the increases got smaller and smaller. In 1981, Reagan took office and refused to approve a minimum wage increase during his entire eight-year term. Americans were subjected to the first of multiple minimum wage freezes.
When Bush Jr. took office in 2001, he again refused to raise the minimum wage, plunging the country into a 10-year wage freeze. That freeze ended in 2007, when Bush came under mounting pressure during the Great Recession to do something to help struggling Americans.
By the time Obama took office, he came with the promise of raising the wage to $10.10, but after fierce resistance from a Republican-controlled congress, he only managed to raise it to $7.25.
That was 12 years ago.
This current fight for $15 comes in the midst of the longest minimum wage freeze in American history.
Who Works for Minimum Wage?
The myth that the minimum wage worker is a teenager looking to gain valuable work experience and some extra pocket money does not accurately reflect the people who work minimum wage jobs.
According to the Bureau of Labor Statistics, 1.1 million people are paid the federal minimum wage or less. Of those 1.1 million people:
- 78% are paid below minimum wage
- 68% are women
- 88% are adults (not teens)
- 40% are people of color
Of those paid below minimum wage, approximately 195,000 are workers with disabilities, who the government has decided are not entitled to receive even a minimum wage. Dating back to the 1938 passing of FLSA, paying disabled workers up to 75% less than the minimum wage was legal. In the 1980s, Reagan removed that floor and said there was no limit to how little you could pay a worker with disabilities.
In short, no, minimum wage workers are not teens earning extra spending money. They are predominantly adult women and people of color trying to earn an actual living. At $7.25 an hour with 40-hour workweeks, these adults make $15,080 a year if they take no days off.
There is nowhere in the United States where a person could afford to live on $15,080 a year.
What Should the Minimum Wage Be?
Originally, the minimum wage was supposed to be a living wage. That is, proponents argued that it should be based on the real cost of living. By the time FLSA passed, that idea was scratched. Instead, the minimum wage was the product of political compromise rather than calculations of the cost of living.
Still, research shows that for a minimum wage to be effective, it should be a living wage. By effective, researchers mean that it reduces poverty, reduces the need for public assistance programs, improves overall public health, and generally makes a society happier.
If wages were tied to the real cost of living, the federal minimum wage would be roughly $22 an hour. That’s about $45,000 per year before taxes. This is a livable income in about half the country, making it a good benchmark for a federal minimum wage.
Are There Valid Arguments Against Raising the Minimum Wage?
A lot of arguments against raising the minimum wage are either amoral or factually inaccurate. Raising the minimum wage would not hurt small businesses. It would not lead to skyrocketing prices. It would not cause mass unemployment.
Even so, a sudden wage hike from $7.25 to $22 an hour overnight could destabilize the economy in the short-term because there are more issues with American labor law than just the substandard minimum wage.
Without improving other areas of worker protection alongside that wage increase, a sudden and drastic minimum wage hike could lead to price inflation as companies push the cost onto consumers instead of fixing wage inequality within their own organization.
It could also lead to an increase in sweatshops and slavery overseas and increased exploitation of undocumented workers and prisoners at home. To prevent this, we need additional policies to prevent companies from finding new vulnerable populations to exploit.
One proposal to prevent price inflation is to levy tax penalties on corporations with excessive wage gaps between their CEOs and workers. Today, CEOs typically pay themselves 200 or 300 times as much as the average worker in their company. They are not, however, 300 times more productive. Funding a minimum wage increase by closing that gap would minimize the risk of costs getting pushed onto consumers.
Another proposal is to hold corporations accountable for substandard or exploitative labor conditions. Imposing harsh penalties or trade restrictions on companies that pay undocumented workers subminimum wages or rely on sweatshops or slave labor could curb their ability to circumvent minimum wage laws.
There is no shortage of great policy ideas that would make it possible to establish a living wage for all. There is merely a shortage of political will.
To build up that political will, it falls on Americans to increase the pressure on our representatives. Here are some ways you can do that:
- Join the Fight for $15 and demand your representatives support a minimum wage increase and unionizing rights.
- Join the Poor People’s Campaign in pressuring President Biden for comprehensive economic and human rights policy reform.
- Join Walk Free to demand an end to the use of slave labor and sweatshops.
- Join Migrant Justice to campaign for better migrant worker protections.
- Join Jobs with Justice in their campaign to push Walmart, the largest U.S. employer, to reform its business practices and set a new standard for the American economy.
- Support the Worker’s First Agenda to establish federal standards for workplace safety, living wages, and unionizing rights.