The federal minimum wage was introduced in 1938 during the Great Depression under President Franklin Delano Roosevelt. It was initially set at $0.25 per hour and has been increased by Congress 22 times, most recently in 2009 when it went from $6.55 to $7.25 an hour.29 states plus the District of Columbia (DC) have a minimum wage higher than the federal minimum wage. 1.8 million workers (or 2.3% of the hourly paid working population) earn the federal minimum wage or below.
Proponents of a higher minimum wage state that the current federal minimum wage of $7.25 per hour is too low for anyone to live on; that a higher minimum wage will help create jobs and grow the economy; that the declining value of the minimum wage is one of the primary causes of wage inequality between low- and middle-income workers; and that a majority of Americans, including a slim majority of self-described conservatives, support increasing the minimum wage.
Opponents say that many businesses cannot afford to pay their workers more, and will be forced to close, lay off workers, or reduce hiring; that increases have been shown to make it more difficult for low-skilled workers with little or no work experience to find jobs or become upwardly mobile; and that raising the minimum wage at the federal level does not take into account regional cost-of-living variations where raising the minimum wage could hurt low-income communities in particular.
Early History of the Minimum Wage
In 1890 the annual wages of the average American were $380, well below the poverty line of $500 per year.“Progressivism,” a political movement, emerged at this time with the aim of improving American working conditions and wages. Following the example of Australia and New Zealand, which enacted the world’s first minimum wage laws in the 1890s, the Progressives introduced the idea of a US minimum wage, arguing that it should be high enough to support an average employee’s needs.
As a direct result of pressure from the progressive movement, the first state minimum wage laws were introduced, beginning in 1912 with Massachusetts.Eleven more states enacted minimum wage laws covering women and minors – but not men – between 1913 and 1917
While men generally earned higher wages, enjoyed freedom of contract, and could join and rely on the protection of unions, women and minors were not afforded such luxuries. Barred from joining unions and prevented from the free negotiation of contracts, they suffered from low wages which drove some to prostitution in order to cover their costs of living. It was thought that by introducing a minimum wage for women and minors at a level high enough to ensure an adequate standard of living, they would be given a level of protection not needed by the male workforce.
The Oregon minimum wage legislation of 1913 stated, “the State of Oregon requires that women and minors should be protected from conditions of labor which have a pernicious effect on their health and morals, and inadequate wages and unduly long hours and unsanitary conditions of labor have such a pernicious effect.”This law instituted a weekly state minimum wage of $8.25 for experienced women, $6.00 for inexperienced women and girls aged 16-18, and higher rates for employees in Portland.
In 1937 Oklahoma became the first state to enact minimum wage legislation covering men.These provisions were deemed void by the state’s 1939 Supreme Court ruling in Associated Industries of Oklahoma v. Industrial Welfare Commission; however this was due to the language used in the law, not the concept of a minimum wage for men.
In 1939 the Women’s Party of Connecticut argued that while the minimum wage law covering women and minors was designed to protect them, it was actually harmful as the conditions placed on their employment made them less employable than men.Their challenge resulted in a 1939 amendment to the Connecticut law which extended minimum wage provisions to men and set a precedent for other states to follow.
The National Industrial Recovery Act (NIRA), passed by Congress and signed by President Roosevelt in 1933, was the first piece of legislation that attempted to establish a federal minimum wage. However, the NIRA was declared unconstitutional by the Supreme Court in 1935 in A.L.A. Schechter Poultry Corp. et al v. United States, as it was deemed an “unconstitutional delegation of legislative power.”
Elements of the NIRA, such as minimum wage and maximum hour provisions, were carried over into future legislative acts.The Public Contracts Act (PCA) of 1936 covered workers employed in the manufacture of goods under government contracts worth in excess of $10,000. The PCA stipulated a minimum wage based on locally prevailing rates, an eight hour work day, 40-hour work week, and a ban on the employment of minors.
The Fair Labor Standards Act (FLSA) of 1938 set a national minimum wage of $0.25 an hour, a 44-hour work week, and the prohibition of “oppressive” child labor.At the time of its entry into force, the FLSA covered employees engaged in interstate commerce and those working in industries that produced goods for interstate commerce.
Early Supreme Court Decisions on the Minimum Wage
The 1917 case of Stettler v. O’Hara was the first case brought before the United States Supreme Court that challenged the constitutionality of minimum wage laws.An evenly divided court (4-4) upheld the state of Oregon’s minimum wage law. Following the success of this case, three more states and DC passed minimum wage laws between 1918 and 1923.
In 1923 the US Supreme Court in Adkins v. Children’s Hospital determined (5-3) that DC’s law was unconstitutional and “an arbitrary interference with the liberty of contract which no government can legally justify in a free land.”By Dec. 1932, minimum wage laws in six states had been repealed or deemed unconstitutional.
In Mar. 1937 the constitutionality of state minimum wage laws was again debated in the US Supreme Court in West Coast Hotel v. Parrish.The Supreme Court overturned (5-4) its prior anti-minimum wage ruling in Adkins by declaring that “the legislature has necessarily a wide field of discretion in order that there may be suitable protection of health and safety, and that peace and good order may be promoted through regulations designed to insure wholesome conditions of work and freedom from oppression.” By mid-1941, 26 states, DC, and Alaska (still a territory at this time), all had minimum wage laws.
The Supreme Court upheld the constitutionality of federal minimum wage provisions within the PCA in the 1940 case of Perkins v. Lukens Steel Co.The PCA is still in force today with the minimum wage provisions tied to the federal minimum wage as set by the FLSA.
The constitutionality of the FLSA was upheld by the Supreme Court in the 1941 case United States v. Darby, in which the court ruled unanimously that the “wage and hour provisions of the Act do not violate the due process clause of the Fifth Amendment” and that the “statute is not objectionable because [it is] applied alike to both men and women.”
Who Earns the Federal Minimum Wage?
According to the US Department of Labor, about 1.8 million workers, or 2.3% of the hourly paid working population aged 16 and over earned at or below the federal minimum wage of $7.25 an hour in 2017.Workers earning below the federal minimum wage include full-time students who can be paid no less than 85% of the federal minimum wage, workers with disabilities who can be paid a wage commensurate with their productivity, new hires under the age of 20 who may be paid $4.25 an hour for the first 90 calendar days of employment, and tipped workers who may be paid less than the federal minimum wage but whose cash tips must make up their take home pay to equal at least the minimum wage.
US Department of Labor statistics show that in 2017, 51% of workers who earned at or below the federal minimum wage are over 25 years old.63% are women and 65% are working part time. 75% of minimum wage workers are white, 17% are African American, 17% are Hispanic or Latino, and 4% are Asian. 53% work in food preparation and serving related occupations.
State Minimum Wage Levels and Restrictions
In Jan. 2018, 45 states plus DC had their own minimum wage laws in place.29 of these states plus DC had minimum wages higher than that of the federal minimum wage of $7.25 an hour – the highest being DC at $12.50 an hour. When a state minimum wage is set at a higher rate than the federal minimum wage, the highest rate prevails. 14 states set their minimum wage in line with the federal minimum wage; and two states – Georgia and Wyoming – set their rates lower at $5.15 an hour. However, Georgia and Wyoming must pay the federal minimum wage to those employed in positions covered by the FLSA.
Only workers employed in positions not covered by the FLSA, such as outside salespersons and certain domestic service workers providing companionship services, may be paid $5.15 an hour.Five states – Alabama, Louisiana, Mississippi, South Carolina, and Tennessee – do not have minimum wage legislation on their statute books and as such are required to pay workers covered by the FLSA a minimum of $7.25 an hour.
In addition to state minimum wages, there are at least 30 cities and counties that have adopted legislation enforcing a higher minimum wage than their respective state levels. As of Jan. 2018, the highest of these is $15.00 an hour in Mountain View, CA, Sunnyvale, CA, and Seattle, WA.When a city or county minimum wage is set higher than its respective state and the federal minimum wage, the highest rate prevails.
Many states have laws prohibiting cities and counties from setting their own minimum wage levels.
Proposals to Raise the Federal Minimum Wage
Since the Fair Minimum Wage Act of 2007 raised the federal minimum wage to $7.25 an hour starting in 2009, there have been numerous unsuccessful attempts by Congress to raise the wage further. The two main efforts are the Harkin-Miller proposal to raise the wage to $10.10 and the Living Wage Movement to raise the wage to $15.
US Senator Tom Harkin (D-IA) and US Representative George Miller (D-CA) introduced legislation in 2012, 2013, and 2014 to raise the minimum wage, but none of those efforts passed.When their proposal to raise the minimum wage to $10.10 was re-introduced for a third time in 2014 under the Minimum Wage Fairness Act, it was supported by President Obama. However their bill failed by four votes to overcome a Republican-led filibuster in the Senate on Apr. 30, 2014.
The US Living Wage Movement was established in the 1990s. They campaign for wages that are at a level where people who work full time earn enough to support themselves and their families without the need to rely on public welfare or assistance programs.In the 114th Congress (2015-2016) US Senator Bernie Sanders (I-VT) introduced living wage legislation in the Senate, and US Representative Donald Norcross (D-NJ) introduced similar legislation in the House.
Supporters of the living wage include Governors Andrew Cuomo of New York and Jerry Brown of California, the New York Times Editorial Board, and former US Secretary of Labor, Robert Reich. Opponents of the living wage include President Donald Trump, Senator Marco Rubio (R-FL), and the US Chamber of Commerce.
Several companies have committed to pay their hourly paid workers more than the federal minimum wage. From November 2018 onwards, Amazon will pay all US workers a minimum of $15 a hour.Both Walmart and Target have raised their minimum wages to $11 an hour with a view to $15 an hour by 2020. Disneyland in California will pay workers $15 an hour from 2019 with Disney World in Florida following suit in 2021. Ben & Jerry’s pay their full time workers in Vermont a living wage that is recalculated each year to ensure it keeps up with the cost of living; in 2015, this was $16.92 an hour.
A 2017 poll by the University of Maryland and Voice of the People found that 73.8% of Americans support raising the minimum wage to $9.00 an hour, while 56.8% support raising it to $10.10 an hour.A 2017 Quinnipiac University poll found that 54% of Americans would support raising the federal minimum wage to $15.00 an hour with 44% opposing.
A May 2015 poll conducted by CBS and the New York Times found that 86% of Democrats, 50% of Republicans, and 76% of independents were in favor of raising the minimum wage to $10.10 per hour, and 67% of men and 75% of women were in favor.
Public support for raising the minimum wage has been over 70% as far back as 1994.
A 2013 Gallup poll found that 50% of small business owners were opposed to raising the minimum wage to $9.50 an hour and 60% believed such an increase would hurt most small business owners.A 2015 poll by the Wall Street Journal and Vistage International found that 49% of small business owners favored raising the minimum wage while 49% were opposed.
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