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Raising the Minimum Wage—a Clear Matter of Economic Justice

Honoring American Workers as We Celebrate Our Freedoms

July 1, 2013

When asked what historic event Americans have to celebrate this week, the universal answer will prove to be the Fourth of July. While true, another cornerstone of modern American society, unnoticed and unmarked by most Americans, warrants celebration and contemplation.

Seventy-five years ago, President Franklin Roosevelt signed into law a bill that altered the course of American industry and labor—the Federal Labor Standards Act of 1938 (FSLA). Despite negotiating in the midst of the worst economic crisis in American history and with violence and tension mounting around the world, Congress turned its focus inward towards the nation’s most vulnerable.

The Federal Labor Standards Act established the first federal minimum wage, regulated weekly work hours, and federally protected working conditions for child labor. Now, as we mark the anniversary of its signing, we must ask if our Congress will be bold enough to continue promoting economic justice in the face of financial struggles.

The Roots of Minimum Wage in America

In light of modern standards, the stipulations of the original FSLA appear reasonable; when placed in our times, they hardly seem to justify President Roosevelt’s statement that the law was “the most far-reaching, far-sighted program for benefit of workers ever adopted here or in any other country.” The law required employers to pay employees a minimum of 25 cents per hour—with a guarantee of 40 cents per hour by 1945—mandated a 40 hour work week, and limited the occupations and improved the standard conditions under which children could work.

However, even then doubters sought to block steps towards economic justice. Naysayers warned Congress that the proposed bill would cripple the economy, increase unemployment, and violate the rights of employers; despite the concern, Members of Congress fulfilled their promise to best serve constituents by passing the bill. The doomsday premonitions of 1938 never materialized and America soon saw the hard-won end of the Great Depression.

Congress's Wavering Commitment to Economic Justice

As we mark this law’s diamond anniversary, we need to consider our current commitment to upholding its principles. Congress published its motivations for establishing a minimum wage in the law’s initial lines: “The Congress finds that the existence, in industries engaged in commerce or in production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers…It is declared to be the policy of this chapter…to correct and as rapidly as practicable to eliminate the[se] conditions.” In writing such a statement and the regulations that followed, Congress committed the federal government to protecting the financial wellbeing and human dignity of all laborers.

In spite of this covenant to uplift and assist workers, America has failed to follow in the footsteps of these groundbreaking legislators. Despite a dream to continue growing the minimum wage in alignment with the economy, Congress has not approved an increase in the minimum wage since 2009; as recently as last year Congress failed to pass a bill raising minimum wage.

Federal Minimum Wage Now

Federal minimum wage today stands at $7.25 per hour for most workers. Studies have shown that a single parent making minimum wage with two children earns $3,000 below the poverty line; millions of other minimum wage-earning Americans stand at the cusp of the poverty line.

Map Showing Minimum Wages, State and Federal, In America

Under-discussed Realities for a Tipped Wage Worker

Currently, employees for whom there is an expectation of receiving tips for their service are guaranteed a minimum wage of only $2.13 per hour. Under the recent iterations of the law, an employer of a tipped worker is only required to pay $2.13 in direct wages if this plus an employee’s received tips equal federal minimum wage. If an employee’s tips and direct wages do not equal federal minimum wage, the employer required to make up the difference; however, this rarely happens.

Tipped wage workers labor in a variety of services. Although commonly thought of in the context of restaurants, tipped status is also given to bussers, hotel employees, counter personnel and bartenders. These workers often remain below 50% of the poverty line.

Statistics from the Department of Labor 

The Promise of a Stronger Minimum Wage

The bill introduced by Sen. Harkin and Congressman George Miller is a significant step toward fixing the economic injustices that hinder millions of Americans.

Today and in the coming months, Congress has the opportunity to reaffirm its earlier promise for economic justice. In March of this year, Senator Tom Harkin (D-Iowa) and Rep. George Miller (D-California) proposed the Fair Minimum Wage Act of 2013. The bill would increase federal minimum wage to $10.10 per hour; tipped minimum wage would increase to 70% of regular minimum wage. The increases would be incremental and occur over the course of three years, with a continued commitment to index the minimum wage to inflation.

In its current form, economists argue that increasing the minimum wage would raise the wages, and potential spending power, of roughly 30 million Americans. Other studies, such as the one published by the Economic Policy Institute, also show that increasing the federal minimum wage would create as many as 140,000 full-time jobs. The largest and most basic fact presented by economists is that increasing federal minimum wage will push thousands of Americans out of poverty.

Report on the Estimated Benefits of the Fair Minimum Wage Act of 2013

Sen. Harkin’s Motivations for Proposing the Bill

The Hard Road Ahead

Just like 75 years ago, this bill faces outright criticism. Despite numerous studies that argue the potential for growth and America’s longstanding promise to secure citizens’ dignity, many politicians want to preserve the status quo; some go so far as to propose the complete abandonment of minimum wage.

Since its proposal in March, the bill has struggled to gain political momentum. Now, the day after the FSLA’s anniversary, Senator Harkin will chair a hearing of the Senate HELP Committee and discuss the current state of minimum wage and the necessity of this bill.

Your Role in the Solution

We cannot let a critical piece of just legislation go unnoticed. With the potential to improve the lives of millions of Americans today, and many more in the years to come, we must show our support for change; we must remember our past and look to our future. In the face of ignorance and obstinacy, we as citizens must remain educated on this issue and educate others. In the coming months we must raise our voices and call upon our Members of Congress to honor the innovative aims of the past members and to fulfill their promises to their constituents.

We as Americans must listen, and ask Members of Congress to listen, to the advice of President Roosevelt; “Do not let any calamity-howling executive with an income of $1,000 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you—using his stockholders’ money to pay the postage for his personal opinions—that a wage of $11 a week is going to have a disastrous effect on all American industry.” With the Fair Minimum Wage Act of 2013 we have the potential to honor both America’s past and our future, and we must not waver in continuing to blaze the trail left by the Congress of 75 years ago.

Hundreds Economists Advocate for Increasing Federal Minimum Wage

Full Text of the Bill