If you haven’t read a newspaper or watched the news as of late, you may not be aware that there are ongoing debates to raise the federal minimum wage. Right now, there is a bill in the House that would gradually raise the federal minimum wage to $10.00 an hour by January 1, 2015. As the happy-go-lucky side of me wants to see everyone make as much money as possible, there is a side of me that understands the fundamentals of business and that potential risk involved in a minimum wage hike.
I imagine that you are familiar with the definition of minimum wage, but in case you are not: minimum wage is the lowest hourly, daily, or monthly remuneration that an employee may receive for working in a particular industry.
The History of Minimum Wage
The minimum wage was first enacted in New Zealand, in 1894. It was–and still to this day is–created for one sole purpose. This purpose was to guarantee unskilled laborers the ability to maintain a certain standard of living. It is for this reason that the United States of America saw a need for their own federal minimum wage. Unfortunately for Americans, it did however take another 30 years and the Great Depression before Franklin D. Roosevelt would pass the Fair Labor Standards Act, in 1938.
They say it went down like this: (Time Magazine, The Minimum Wage. Fitzpatrick, Lauren. 2009.)
With voters seeking a bulwark against the Great Depression, wage-hour legislation was an issue in the 1936 Presidential race. On the campaign trail, a young girl handed a note to one of Franklin Roosevelt’s aides asking for help: “I wish you could do something to help us girls,” it read. “Up to a few months ago we were getting our minimum pay of $11 a week…Today the 200 of us girls have been cut down to $4 and $5 and $6 a week.”
Roosevelt rode back into office in part on a promise to seek a constitutional way of protecting workers.
After being re-elected for president, he made it his number-one priority to find a way to constitutionally ensure a way to protect workers. This was an issue because in 1923, the Supreme Court voted against Adkins v. Children’s Hospital, ruling the previously passed minimum wage law as unconstitutional. In 1918, the District of Columbia passed a minimum wage law for women and children. The Children’s Hospital, in the District of Columbia, was enraged, as their employees were predominately female workers. The legal brain-trust of the Children’s Hospital claimed that by passing this law, the city was violating the “liberty of contract” as defined by Lochner v. New York. The case made its way to the Supreme Court and they agreed in a 5-3 vote that, indeed, the minimum wage law established in the District of Columbia was unconstitutional and impeded a worker’s right to price his/her own labor.
The original Fair Labor Standards Act of 1938 was drafted by Hugo Black and enforced the following: workers must be paid a minimum wage, overtime pay must be paid at 1 1/2 times regular pay, and implemented several child labor laws. At this time, the federal minimum wage would stand at $0.25 an hour. Throughout the years, Congress has convened and increased the minimum wage gradually. (Click here to see the chart of changes from 1938-2009.) The passing of the minimum wage law would help thousands, especially women, make a wage that would allow them to maintain a “minimum standard of living necessary for health, efficiency, and general well-being, without substantially curtailing employment.”
As the years passed by, there would be several laws that would be passed in conjunction with the statues of the Fair Labor Standards Act. In 1947, Congress would pass a Portal-to-Portal Act, which would define what time would be considered compensable work time, which would include items such as travel time. In 1961, the 1961 FLSA Amendments would be passed. These additional amendments would define coverage based on enterprise coverage. It would also set specified coverage for schools, hospitals, and nursing homes. Additionally, the entitlement to sue for back wages was granted in these amendments.
Even though the minimum wage laws were passed specifically with women and children as a priority, women were still mistreated in the work place. They were paid unfair wages, based purely on their sex. That was until the Equal Pay Act of 1963 was passed, making it illegal to pay workers lower wages strictly on the basis of their sex. As well as women being mistreated, so were the elderly. In 1967, an amendment was passed which made it illegal to discriminate based on age. This would extend to prohibiting employment and denying older employees health benefits and training opportunities. As the years continued, more and more amendments would be passed making pay no longer be an issue as a civil right.
As is stands today, minimum wage is $7.25. As this rate does allow one to live above the government’s definition of the poverty line ($11,170), it definitely doesn’t give you much to work with.