Minimum Wage Essay, Research Paper

Economy, Jobs, and You

Term Paper

Minimum Wage

Minimum wage is the lowest rate employees may legally pay for an hour of labor (Merriam, 741). The United States has a minimum wage law to guarantee minimum hourly wages and to prevent the exploitation of workers and provide unskilled and part-time workers with a wage floor. People have argues that the minimum wage has become less of a safety net for primary earners in poor families than a floor for the wages of teenagers and other secondary earners from higher-income families.

In 1933, there were a long series of ?Conferences on the Minimum Wage,? established by the Department of Labor. There were many minimum wage administrators and representatives of organizations with an interest in these programs. Some of these groups were: The National Consumers? League, the General Federation of Women?s Clubs, the National Women?s Trade Union League, the AFL, the National League of Women Voters, and the National Young Women?s Christian Association. The original bill that was written provided for 1. A five member Fair Labor Standard Board, 2. A minimum wage of not more than 80 cents an hour or $1,200 per year, 3. The general initiation of a 40 cents-an-hour, 40 hour workweek except in exceptional circumstances, 4. The prohibition of interstate shipment of goods produced with ?oppressive child labor,? 5. The exception of agricultural workers and executives, administrative, supervisory and professional employees, and 6. Authorization of the Fair Labor Standard Board to appoint advisory committees to consider conditions in industries or occupations before establishing specific wage and hour standards (Ayres, Online).

On June 25, 1938, President Roosevelt signed into law the Fair Labor Standards Act, which established the national minimum wage at 25 cents an hour; it banned oppressive child labor and set the maximum workweek at 44 hours. Since then, Presidents Truman, Eisenhower, Kennedy, Johnson, Nixon, Carter, Bush, and Clinton have signed minimum wage increases into law.

When President Truman was in office, he signed the conference compromise bill, which about 1.5 million earners received wage increases of more then 5 cents an hour, when the amendment came into effect on January 1950. ?The Act has proved to be wise and progressive remedial legislation for the welfare not only of our wage earners but of our whole economy,? President Truman observed while signing his statement (Ayres, online). On January 25, 1951, during the Korean War, United States wages and prices were frozen. This was the second debate of minimum wage legislation with a period of experimentation combined with an effort to regularize enforcement of the law. There were more then 1.5 million workers in lowest paid jobs in retail trade, services, and agriculture and were provided with no protection by the Fair Labor Standard Act. When President John F. Kennedy was in office, he signed a bill into law that raised the minimum wage from $1 an hour to $1.25 and hour, in 1961. From 1960 to 1969, the number of wage and salary workers increased 29.3 percent and average weekly hours continued to decline from 38.6 hours per week in 1960 to 37.7 hours in 1969. In 1960, the total population was 180.7 million people, and 39.9 million people, 22.1 % were classified as poor (Ayres, online). During the 1970?s and 1980?s, there was evidence that forged a strong tie between changes in the minimum wage and youth employment and unemployment. But according to data that was collected, consequences of raising the minimum wage are certain, at best. By the 1980?s the minimum wage went up to $3.10 an hour and by the next year a raise in 25 cents brought the minimum wage to $3.35. By April of 1990 the raise in minimum wage went to $3.80 and then in 1991 it went to $4.25 (Ayres, online).

The minimum wage for this country is currently $5.15 an hour, which went into effect on September 1, 1997. The minimum wage needed to be increased because inflation was approaching a 40-year low. Inflation had largely wiped out the last increase in the minimum wage approved by Congress in 1989. In August of 1996, Congress passed and President Clinton signed a law for a two-step increase. The first step lifted the minimum wage from $4.25 to $4.75 per hour, which was effective on October 1, 1996. The second step raised the minimum wage from $4.75 to $5.15 per hour, which has been effective since September 1, 1997. Full time minimum wage workers will now make $10,300 a year, which is up $1,800 from the full-time annual earnings under the $4.25 an hour minimum wage, in effect from April 1991 to October 1996. There are many people that are paid minimum wages in this country. More than 4.8 million people in 1994 worked for wages at or below $4.25 per hour. Of these, 1.4 million were teenagers and 3.4 million were adults. Corporate profits and earnings for the average worker are rising. According to Secretary of Labor Alexis M. Herman, ?America?s robust economy has created more than 2 million jobs since October 1996. This minimum wage increase will help ensure that the lowest-paid Americans also share in this prosperity (OPA Press Release).?

There is special minimum rate paid to a worker with a disability, which is called a commensurate wage rate. This is based on the worker?s individual productivity, no matter how limited, in proportion to the wage and productivity of experienced non-disabled workers. The non-disable workers were performing essentially the same type, quality, and quantity of work in the geographic area from which the labor force of the community is drawn. For example, if a experienced non disable worker makes boxes and can produce 40 boxes in an hour, but a worker with a disability can only produce 10 boxes in an hour; then the worker with a disability is considered 25% as productive as the experienced non disable worker. This person should receive at least 25% of the prevailing wage for such work. If the prevailing wage rate is determined to be $6.00 an hour, the worker with the disability employed under special certificate should receive at least 25% of the wage rate or $1.50 an hour for performing the box production work (Miller, online). Wages based on a wage determination issued under SCA do not have to be increased unless the wage determination calls for a wage rate less then the new, increased statutory minimum wage. Commensurate wages rates must be based on a prevailing rate at least equal to the statutory minimum wage.

There are many benefits for minimum wage increases. One of the most important benefits accrues to the millions of families with workers who are paid the minimum wage. There have been studies done, that have found that the two decade old increase in the pay gap between high paid and low paid jobs ended in 1996 and 1997 after the mandated increases for the lowest paid workers. Consumers of services would benefit because higher paid workers are more likely to be more motivated and more experienced. Higher paid workers are, also more likely to be covered by private-health insurance, which would reduce the burden on public-health facilities and hospital emergency rooms. According to Harry Holzer, who is the chief economist with the wage division of the U.S. Department of Labor disputes the notion that a modest increase in the minimum wage has a significant impact on either business profits or employment (Alpert, online). Because of the overall strength of our economy, which continued after the minimum wage was increased in 1997, is evidence of that. There was a survey done of businesses about the minimum wage increase. About 89.4% of businesses that were surveyed, most of whom employed fewer than 100 workers, said that ?50 cents increases in the minimum wage in 1996 and 1997 had no effect on their hiring (Alpert, online). More then 85 percent of the American public, support the raise in the minimum wage. Raising the minimum wage was a simple and fair way to make-work really pay off. The higher the minimum wage, has not prevented jobs from growing, but most labor economist increasingly recognize that minimum wage laws have much less of an impact on employment than was thought to be a decade ago. ?You always have these folks crying poverty, but it?s a little hard to understand how you can have hotel operators in New Orleans, getting record high occupancy and big profit margins, saying they can?t afford a small increase in the minimum wage. We don?t think you can make a decent standard of living getting $5.15 an hour or anywhere near that,? said Louis Jamerson, the field director of the AFL-CIO?s Hospitality and Restaurant Organizing Council (Alpert, online).

Some business leaders say that an increase in the minimum wage will hurt those in the labor pool because with higher costs owners are likely to cut work hours, or even eliminate jobs. ?I employ mostly teenagers, and for them I?m giving then their first job experience, training them on showing up an time, food safety, proper hygiene and things like that, which will help them down the road,? Pratt Landry, owner of Chelsey?s Frozen Custard in Harvey and Metairie explains (Alpert, online). Some workers that regularly receive more then $30 a month in tips, can be paid as little as $2.13 an hour, under the minimum wage law. Lloyd Weber, senior vice president of the Louisiana Restaurant Association, has his own opinion on this minimum wage issue. ?It is a little bit upsetting that the part that claims it has a platform to support business would bow to this kind of pressure and think about increasing costs that make it so much more difficult for businesses to survive (Alpert, online).?

These are some high lights from the list the White House sent to reporters about minimum wage. 267,900 new jobs, or a growth of about 44,000 per year; the poverty rate has fallen about 10 percent?from 26.4 percent in 1993 to 16.3 percent in 1997. About 142,000 Louisiana residents got a raise when the minimum wage was bumped from $4.25 to $4.75 in 1996 and another 167,000 got a hike when it went to $5.15 an hour in 1997 (Alpert and Walsh, online).

Today the minimum wage, which corrected for inflation, is still thirty percent below its 1968 peak, when the wage was closer to actually covering the costs of a family. Most United States employers used to expect to be able to provide full-time work and pay a wage that provided a subsistence budget for a family.

Some democrats are backing a plan by Republican Jack Quinn of New York to increase the minimum wage by $1 over two years, with a 50 cent increase going into effect on September 1, 2000 and another 50 cent raise in 2001. The president is also proposing to increase the minimum wage over next two years. This would provide for automatic increases in the minimum wage in the future?tied to the rate of inflation. Quinn says, ?The working poor of this country deserves a fair increase in their paychecks to help feed their families and live with dignity (Alpert, online).?

Thomas Jefferson once said, ?This increase in the minimum wage affirms our commitment to stand like a rock? for our working families and their right to jobs that provide fair compensation (OPA Press Release, online).?

v