By Kirk Johannesen, The Republic
johannesen@therepublic.com
Second of a four-part series
The minimum wage is a poor-person issue, but when it became federal law in the late 1930s it was a labor-management issue, according to a professor who studied the history of the minimum wage.
In the early 1900s, several states tried to create subsistence wages or maximumhours laws, said Oren Levin-Waldman, professor of public policy at Metropolitan College of New York.
Levin-Waldman, author of "Case of the Minimum Wage: Competing Policy Models," said early attempts sometimes centered on protecting the morals and physical health of women.
He said states feared that if women failed to make wages off which they could live, they would turn to prostitution.
Court battles
Attempts by states to create subsistence wages met with resistance from the U.S. Supreme Court.
It said the laws violated personal liberty contracts, or a person's ability to negotiate a contract.
Some states' maximumhours laws also were argued to the Supreme Court.
A case in New York in 1905 dealt with limiting bakers to 60 hours per week.
The court ruled that the restriction violated bakers' personal liberty contracts, and that baking did not pose a health hazard.
However, the Supreme Court upheld a maximum-hours law in a 1908 case in Oregon involving women who worked in laundry facilities.
The court said it was necessary to protect women because they carried the next generation through pregnancy, so the restriction of their liberty contracts was in the public's interest.
About this time, an economic theory held that if workers received higher wages they would invest more into their work, Levin-Waldman said. The result would be increased productivity and efficiency.
Women also were the focus of a Supreme Court case in 1923, in which the District of Columbia tried to establish a minimum wage for women.
In a reversal of the protection established in the Oregon case, the court struck down the city's minimum wage.
"It said the circumstances had changed and women no longer needed protection because they had the right to vote," Levin-Waldman said.
The Great Depression brought about the idea of a federal minimum wage.
Unemployment was in double digits, and wages and a worker's buying power were deflated, said Jared Bernstein, senior economist at the Economic Policy Institute, a progressive think tank in Washington, D.C.
Levin-Waldman said President Roosevelt's New Deal supported the idea of giving workers purchasing power through higher-paying jobs, which in turn would energize the economy.
The New Deal legitimized unions, which drove up wages and boosted the economy.
Levin-Waldman said Roosevelt's ability to pack the Supreme Court with justices who supported his New Deal legislation set the stage for the creation of a federal minimum wage.
The court affirmed the rights of states to create minimum wages in a case in Washington in 1937.
That served as a precedent for the Fair Labor Standards Act of 1938, which established a federal minimum wage.
The act passed with difficulty, Levin-Waldman said, because many congressmen from southern states opposed a minimum wage and controlled the committees.
Levin-Waldman said it is believed Roosevelt said he would not push for any civil rights legislation in exchange for the minimum wage passing.
Middle-class issue
With a national minimum wage established, many states followed suit.
Bernstein said Indiana's has mirrored the federal standard.
While the relationship between labor and management played a role in the creation of the minimum wage, Levin-Waldman said it has become a political issue and an attempt to help people at the lowest end of the economic scale.
However, Levin-Waldman believes that the minimum wage should be viewed more as a middle-class issue.
He said many lower-middle class people earn wages of $6 to $7.25. If the federal minimum of $5.15 is raised, the wages of lower-middle class workers are likely to increase, too.
"That's more like 15 or 20 percent (of workers) earning higher wages than just 5 percent," Levin-Waldman said. "If you raise the lower middle class they will be able to demand goods and services."
Levin-Waldman thinks the minimum wage could increase if members of Congress can agree on tax incentives.
He said tax incentives also were tied to the last two minimum-wage increases.