Early Minimum Wages
Overview | Early Minimum Wages | The FLSA - Reasons and Conflict | Conclusion & References
State-level Wage Floors
Before the introduction of the National Industrial Recovery Act, the minimum wage was a state government issue. While each state had differing legislation and reasons for enacting said laws, there were two common themes present: Depression recovery and protection of low-wage groups. Despite public support for state-mandated wage floor laws, the idea faced both political opposition and logistic problems.
Depression Recovery
The Great Depression's hardship had a devastating effect on wages. High rates of unemployment meant that individuals were forced to take pay far below what they would normally accept. Employers took the chance to exploit workers in this way, lowering wages even more. While the cost of living did fall drastically during the period, wages decreased faster, causing a drop in the standard of living (Ingalls 1974).
Americans saw minimum wage legislation as a way out of the Depression. If wages could be raised, then individuals would have a higher standard of living, helping the United States return to its former economic success (Ingalls 1974). Despite public perception, no evidence is shown that state minimum wages truly improved living standards or significantly aided in Depression recovery.
Protection of Low-Wage Groups
In some cases, state minimum wage legislation was seen as a method of protecting groups prone to low wages, such as women and children (Mutari 2004) By establishing wage floors, employers were prevented from exploiting workers at the minimum wage level because they could not reduce workers' earnings even further. In certain states, such as Rhode Island, wage floors were enacted specifically for female-dominated industries like jewelry manufacture and dry cleaning ("Effects of minimum wage" 1938).
Problems and Opposition
During the 1920s and 30s, federal courts were a main opponent of minimum wage law, constantly striking down wage floors in cases like Adkins v. Children’s Hospital that invalidated Washington DC's minimum (Grossman 1978). States like New York also had their wage floor invalidated by the courts. The State chose to get around such decisions by putting the spin on it that the State could determine if industries were paying wages below the value of the laborers' work and act accordingly (Ingalls 1974).
Court disapproval was not the only issue minimum wage legislation faced. Such laws were often incredibly difficult to enforce. In the New York case FIND CASE TITLE AGAIN, an employer faced charges of first lying about the wages he paid his workers, even going as far as to force his employees to return money to him when inspectors made him pay them the difference between his wage and the minimum (Ingalls 1974). This incident illustrates that, during this time period, state-level wage floors were politically not as feasible as a federal wage would be.
The National Industrial Recovery Act of 1933
1933 saw the introduction of the National Industrial Recovery Act (NIRA) which, among other things, was the first attempt at setting a federally mandated minimum wage. NIRA was just one portion of the government's Depression recovery plan before its defeat by the Supreme Court. While some economists argue that the Act did aid in raising output through its resulting boost in wages and prices, others do not agree (Silver and Sumner 1995). Such findings suggest that it may have not been purely economic forces that spurred the United States to adopt a federal wage floor.
In 1935, the Supreme Court struck down the NIRA, citing its interference in businesses' freedom to make their own contracts (Grossman 1978).
Overview | Early Minimum Wages | The FLSA - Reasons and Conflict | Conclusion & References
