Is Minimum Wages Unconstitutional? Essay, Research Paper

Every nation in this world has specific ideas and beliefs associated with it. The French are associated with wine and fine food, while Italy is known for their geographic beauty. Up until 70 or so years ago the words ?Lassie Faire? went hand and hand with the United States. Lassie Faire, or free market, was one of the major ideals that propitiated the foundation of this nation. Yet in the mid 1930?s the Federal Government pushed into law the Fair Labor Standards Act there by betraying the American peoples trust and turning it?s back upon our illustrious past.

Up until 1938 the United States Supreme Court had routinely declared any type of minimum wage law unconstitutional. First in 1923, where minimum wage laws for women and minors had been enacted by 15 states, Puerto Rico, and the District of Columbia. Then again in 1933 the High Court declared the National Industrial Recovery Act, which mandated federal minimum wages, unconstitutional. The basic problem they cited in both these rulings falls under the ?reserve clause? of the Constitution (the 10th Amendment), which declares that powers not specifically granted to the federal government are reserved for the States or the people. Minimum wages was not the only federal program that felt the axe of the Supreme Court during this time. Almost every New Deal Legislative was declared unconstitutional from the Railroad Retirement Act, to the National Recovery Act. Now one must pose this question; Why did the Supreme Court go against all of it?s previous rulings, some ruling which were only done six years before, and declare minimum wages constitutional? The reason for why the Supreme Court made this complete 180-degree turn in their stance can best be summed up with one word, Roosevelt.

Federal judges are appointed for life, and the Supreme Court of the 1930?s was the most elderly in the history of the republic with an average age of over 71.(Leuchtenburg,133) The court was split down the middle in political terms, with three liberal justices being sympathetic for the New Deal (Brandeis, Stone and Cardozo); on the conservative side were four justices who voted against the New Deal(McReynolds, Butler, Van Devanter and Sutherland) The swing votes were Chief Justice Evan Hughes and Justice Owen Roberts. The court was officially split 5-4 on all New Deal related cases there by defeating the Presidents efforts by one vote. President Roosevelt?s response was seen on February 5, 1937, when he sent a special message to Congress proposing legislation granting the president new powers to add additional judges to all federal courts whenever there were sitting judges age 70 or older who refused to retire. The President acted as if his proposal was a kind gesture to help relieve the workload burdens, yet Roosevelt?s real intentions can be seen in his blunt language.

?A part of the problem of obtaining a sufficient number of judges to dispose of cases is the capacity of the judges themselves. This brings forward the question of aged or infirm judges- a subject of delicacy and yet one which requires frank discussion. In exceptional cases, of course, judges, like other men, retain to an advanced age full mental and physical vigor. Those not so fortunate are often unable to perceive their own infirmities?.A lower mental of physical vigor leads men to avoid an examination of complicated and changed conditions. Little by little, new facts blurred through old glasses fitted, as it were, for the needs of another generation; older men, assuming that the scene is the same as it was in the past, cease to explore or inquire into the present or the future. (Leuchtenburg, 134)?

The practical effect of his idea would be that now the President could appoint 6 new judges to the Supreme Court( and 44 to the lower) thus tipping the scales in his favor. Despite the fact that his court-packing scheme caused major debate and division of loyalty it appeared that the legislation was headed for passage. In what is considered ?the switch in time that saved nine? Justice Roberts voted to uphold a minimum wage law in Washington that was previously declared unconstitutional in New York. This switch helped save the Supreme Court, and after Justice Van Devanter retired in 1937, Roosevelt?s position was secure. So in 1938, the Fair Labor Standards Acts were passed there by regulating the length of the workweek, establishing a minimum wage, and banning the use of children under the age of 14 for work. The constitutionality of the Fair Labor Standards Act rests on meeting the Criteria established by Section 3, Article 8, of the United States Constitution. This states that Congress shall have the power to provide for the common defense and general welfare of the United States. To make all laws, which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers, vested by the constitution in the government for the United States, or in any department of office thereof. Yet as one will see minimum wages in fact hurt?s the American people instead of helping, thus rendering it unconstitutional due to the fact that it does not live up to the criterion that was used to justify the act.

First, advocates for minimum wages claim that an increase in said wages will decrease the amount of people who fall under the official poverty level and consequentially diminish economic inequality. Such an increase would lead to an overall increase in a family?s yearly income that currently resides just below the official poverty line. One of the first problems with that assessment is minimum wages in itself does not provide income, that is dependent upon hours. If it was possible to eliminate poverty by raising minimum wages why stop at $6.75, why not increase it to 50 dollars an hour? Second, over 50% of minimum wage workers are under 21, with an average family income of $47,000. Only 2 percent of the classified working poor are paid minimum wages, and last a large majority of people living under the official poverty line have no interest what so all in working. (Bandow, 2) In 1987 New York Times editorial ?The right Minimum wage: $0.00? urged the abolition of the minimum wage arguing, ?An increase in the minimum wage?would increase employers incentive to evade the law, expanding the underground economy. More important it would help increase unemployment, if you raise the legal minimum price of labor above productivity of the least skilled workers and fewer will be hired. (Elder, 2)? Studies also show that most hired for the minimum wage have wage increases within a matter of months. Many fast food executives started out flipping burgers. So the image of a guy with a family of four supporting them with this job is false. Most minimum wage earners are teens and secondary household wage earners. Minimum wages hurt the very people they are trying to save, mainly, minorities, teenagers and female heads of families. Before minimum wages the employment rate for white and black teenagers were the same. Yet look, blacks teens between 16-19 have a 30.1% unemployment rate (Elder,2) When congress raised minimum wages from $4.25 to $4.75 teenagers, blacks, and women heading families all experienced greater unemployment, during a time of over all job growth. Allen Reynolds, director of economic research at the Hudson Institute, writes, ?Such a sudden rise in national unemployment rate would be front page news. But when only teens, blacks, and single moms are affected, it apparently does not attract much attention (Elder,1) This is why Nobel laureate economist Milton Friedman said ?We regard the minimum wage as one of the most, if not most, anti-black laws on the stature books.?(Elder,1)

90% of every economist agrees that any type of minimum wage hurts more people than it helps. To see what they are talking about simply look at the Law of Demand. Demand represents the price level in which a consumer is willing to pay for a commodity. The relationship between price and commodity is negative, meaning that the higher the price level of that commodity the lower the quantity demanded and, conversely, the lower the price of a commodity the higher the quantity demanded. Economist Richard Burkhauser estimates that every 10% increase in minimum wages reduced employment by 2 to 6 percent. (Bandow, 1). An editorial in Investors Business Daily put it this way, ?Minimum wage laws, an icon of the political left, are particularly damaging to low income workers. Many are locked out of jobs. The Employment Policies Institute figures that the first 50 cents out of the 1.00-dollar hike in the minimum wage in 1996 through 1997 cost 645,000 jobs (Elder, 114)? Studies show that minimum wage hikes raises the price rates for all commodities, not just the ones affected by the rate. Plus the actual gain is minuscule to the employee after the 50-cent raise has been taxed. Association of Community Organizations for Reform Now, also known as ACORN, goes from state to state raising signatures for ballots initiatives for an increase in minimum wages. They eventually found there way to California, yet to accomplish their quota of signatures to pass their increase they need to hire a lot of workers. So ACORN filed a lawsuit, seeking to exempt itself from California?s minimum wage and overtime laws. The Investors Business Daily published excerpts from ACORN?s brief, where it explained why they need an exemption from paying the very minimum wages they were trying to increase. ?The more ACORN must pay each individual outreach workers-either because of minimum wage or overtime requirements- the fewer outreach workers it will be able to hire (Elder,112)? The only economist lately that does not believe minimum wages hurt people are Yale researchers Kruegar & Card. After studying fast food restaurant employment in California and New Jersey, after they raised minimum wages, they concluded that they were no drops in employment (Kruegar, 29). Yet when researchers tried to duplicate this result they could not. Later it was found out that those working for the researchers called the fast food restaurants and asked if they planned to increase, decrease, or keep employment the same. A study done by the Employment Polices Institute refutes the claims by Kruger, by examining the payroll data, employers and tax collecting agencies of the period they found that the minimum wage increase did have a negative effect on employment (Adie,5). As one Santa Monica dentist said of the proposed $10.67 minimum wage hike ?This isn?t a living wage; this is a death wage (Elder,2)? Yet according to the Council of Economic Advisors, an increase in minimum wages would decrease the current welfare workload. They point out that the minimum wage increase in 1996 was responsible for 10 to 16 percent of the decline in the welfare caseloads between 1996 to 1998 (White House Office of Press Secretary). Yet Peter Brandon of the Institute for Research on Poverty found that an increase in minimum wages correlate with an increase in new workers, such as students or teens, and as a result, states in which minimum wages were increased had their welfare recipients remained 44% longer on welfare than ones that did not increase minimum wages (Bandow,4) He goes on to state that the lowering of the caseloads was due to the 1996 Welfare Reform Laws. Welfare Reform Laws or the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 eliminated open-ended entitlement and created a block grant for states to provide time-limited cash assistance for needy families, with work requirements for recipients.

In the end minimum wages hurts almost everything it touches. Since it does not fulfill the criteria established in Section 3, Article 8, of the United States Constitution, it is unconstitutional. ?It?s clear to everyone but the most die hard socialist how this happens. Employers who can afford to pay four workers $5.00 can?t afford them all at $6.00. Somebody has to go. So, three are marginally helped, a fourth is out of a job, and the fifth or sixth do not even get hired (Elder, 24)