KNOW YOUR RIGHTS: THE MINIMUM WAGE MYTH
by Doug Bonney
Continuing with the employment law myth busting theme I have been exploring in the Know Your Rights columns this year, I want to address the myth that the law guarantees workers a fair and living wage. The bottom line is this: There is no nationally applicable law that guarantees workers a fair and living wage.
There is, however, a patchwork of federal, state, and local wage and hour laws that provide a very meager floor for wages. But, as you can imagine, employers want to pay the lowest possible wages so as to maximize their profits. For that reason, employers and their lobbying proxies, such as the National Association of Manufacturers, fight like dogs to derail any efforts to strengthen America's wage and hour laws.
The idea of wage regulation has been around for a long time in this country. In World War I, the federal government set up War Labor Boards to regulate wages and arbitrate labor disputes so that war production would continue without interruption. After the end of the War, the federal government lost interest in the idea of wage and hour laws, in part because the War was over and in part because the Supreme Court had held, in 1923, in Adkins v. Children's Hospital, that a federal law establishing a minimum wage for women unconstitutionally infringed on the freedom of workers to enter into employment contracts. But a number of state legislatures continued to enact such laws. Washington State enacted a minimum wage law that led to a massively important change in Supreme Court rulings on labor and employment laws. In a 1937 decision called West Coast Hotel v. Parrish , Justice Owen Roberts changed his vote on such issues and upheld the constitutionality of Washington State's minimum wage law. That decision opened the flood gates as the Supreme Court proceeded to uphold a wide array of state and federal labor and employment laws.
In 1938, Congress passed the last significant New Deal law, the Fair Labor Standards Act, which set a minimum wage of 25 cents an hour or $3.22 an hour in 2005 dollars. Since then, Congress has periodically raised the minimum wage, but Congress has not passed a law raising the minimum wage since 1996, and the last increase occurred in 1997 when the minimum wage increased from $4.25 an hour to $5.15 an hour. The greatest purchasing power allowed by the minimum wage occurred in 1968, when the minimum wage was $1.60 an hour, which would equate to $9.12 an hour in 2005 dollars. One problem with the federal minimum wage, however, is that it only applies to employers engaged in interstate commerce. Although that's a large segment of the Nation's employers, it leaves out many small businesses.
Although many states have minimum wage laws, those laws are riddled with problems. For instance, Missouri's law includes exemptions that are written in a way that makes it unclear whether the law applies to any employees. One part of the law exempts all employees covered by the federal law, and another section exempts anyone working in a retail or service business with gross annual sales or business done of less than $500,000. The last exemption substantially guts the effectiveness of the law. Moreover, three states that have minimum wage laws, Kansas, Ohio, and Oklahoma, provide for minimum wages below the federal rate. Kansas's minimum wage is currently $2.65 an hour. Of course, there are six states that have no state minimum wage law at all. Most of those states are in the south. Washington State has the highest state minimum wage at $7.63 an hour, and many local governments have passed living wage laws that provide minimum wages in excess of the federal rate. For instance, San Francisco has an ordinance setting the living wage at $8.50 an hour indexed to inflation.
Organizers around the country are trying to place minimum wage increase referenda on many state ballots this year. In Missouri, supporters are trying to get a referendum on the ballot that will ask voters whether Missouri law should be amended "to increase the minimum wage to $6.50 per hour, or to the level of the federal minimum wage if that is higher, and thereafter adjust the state minimum wage annually based on changes in the consumer price index." Although that would be a decent start, the referendum will not solve the problems posed by the Missouri Wage and Hour Law's exemptions. Despite that flaw, the referendum deserves the support of all working people. Remember a rising tide raises all boats.
I want to sound one note of caution, however. Although polls show broad support nationally for minimum wage increases, working people should not take the outcome of the referendum for granted. Missouri voters rejected a minimum wage referendum in 1996. So, turn out and vote yes on this important issue and show the politicians that working people need a living wage.
Doug Bonney, a Kansas City area labor and civil liberties attorney, is labor law editor of the KC Labor site. He also presents Know Your Rights features on the Heartland Labor Forum on KKFI.