Thursday, December 18, 2014

Minimum Wage History, Briefly

In the last several months several news reports related to raising our federal minimum wage have come to the forefront of our attention. Fight for $15 (Chicago), Fast Food Forward (New York), or We Can’t Survive on $7.35 (St. Louis) are all groups organized to help low-wage workers bring this to the public’s attention. So where did our minimum wage originate?  (Gupta, 2013)
The concept of a minimum wage has been debated from the early 1900s, with over 14 states enacting legislation by 1923. Most legislation at the time was applied to women and children in hopes to avoid legal battles. Various states also set up central minimum wage commissions that covered a broad range of industries, unlike countries like Australia, who set up industry specific commissions. Unfortunately, most of these laws, which were continually being challenged by industry, were declared unconstitutional by the U.S. Supreme Court because they “violated employers’ constitutional rights to enter freely into contracts and deprived them of their private property (i.e., their profits) without due process of law.” (Neumann & Wascher 2008, p. 14)
Interest in a federally mandated minimum wage came to the forefront with the economic environment brought about by the Great Depression. In 1933, President Franklin D. Roosevelt was able to successfully get his first attempt at a minimum wage through as the National Industrial Recovery Act (NIRA as part of his “New Deal” program. NIRA pushed employers to accept a 35 to 40 hour workweek and a minimum weekly wage of $12.00 to $15.00 per week.
NIRA would be short-lived as the U.S. Supreme Court, in Schechter Corp. v. United States, would vote the Act “an unconstitutional delegation of government power to private interests;” all nine justices voting together. (Grossman, 1978, para. 4)
The wage-hour legislation would be a continuing campaign issue for President Roosevelt in 1936, but it would not be until June of 1938 that he would be able to sign a compromise bill featuring a 25-cent minimum hourly wage with an automatic increase to 30 cents one year after signing. Additional provisions were in place for increases up to 40 cents per hour by 1945 and steps for overtime hours and rates. Also included were provisions for a sole administrator under the newly created Wage and Hour Division in the Department of Labor. (Grossman 1978)

"No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” (President Franklin D. Roosevelt, 1933, Statement on National Industrial Recovery Act)

            Also important to the minimum wage debate is the development of the poverty threshold. There was no official definition of poverty before 1963, the year Mollie Orshansky, a former family and food economist for the U.S. Department of Agriculture (USDA) and social science research analyst for the Social Security Administration. Her in-house research project “Poverty as it Affects Children” used information from the USDA’s 1955 Household Food Consumption Survey, for which she was also a major contributor.
            In 1964, President Lyndon Johnson declared his War on Poverty using a rough measure provided by his Council of economic Advisors. As an indirect result of this, Mollie is tasked with extending her original analysis from families with children to the broader population. This bulletin was published by the Social Security Administration in January 1965 as “Counting the Poor: Another Look at the Poverty Profile.”
            Shortly after, the Office of Economic Opportunity (OEO), the agency tasked with the lead in the War on Poverty, adopted Mollie’s extended threshold in May, 1965, as its working definition, but it wouldn’t be until August, 1969, that her threshold is made the Federal Government’s official statistical definition of poverty. (Fisher, 2008)
Understanding how our minimum wage came about and what our poverty line is based on is essential to developing an opinion about the current minimum wage issue. Considering the track record for the original minimum wage act and the most recent minimum wage increase, will the current minimum wage raise proposal be enough?
Fisher, G. (2008, January 1). Remembering Mollie Orshansky—The Developer of the Poverty Thresholds. Retrieved December 7, 2014, from
Gupta, A. (2013, November 11). Fight For 15 Confidential. Retrieved December 17, 2014, from