It's time to raise the minimum wage

AFL-CIO American Federationist, The, March 21, 1987 by Jay Mazur

It's Time To RAISE THE MINIMUM WAGE

On January 7 of this year, the New York Times ran a story in its news pages, headlined: "Now, Maximum Interest in the Minimum Wage."

One week later, the New York Times ran an editorial, titled: "The Right Minimum Wage: $0.00."

This dramatic juxtaposition of news and opinion strongly suggests that the question of the federal minimum wage will be high on the legislative agenda this year and that the matter will be hotly contested.

That has been the fate of the minimum wage since its inception almost a half-century ago in 1938.

Those opposed to a minimum argued that by elevating the wage to 25 cents an hour, the legislation would be pricing many workers out of the market. They would be too expensive for their employers. Hence, unemployment would increase, especially among the lowest paid.

Those favoring a floor to wages and a ceiling to hours argued that the law would put more people to work and would elevate their living standards. The higher wage would increase buying power and would therefore stimulate the economy. The shorter work week would distribute the work so that unemployed could now find jobs. Increased supply would help enrich the lives of one and all.

Between 1938 and the present, the minimum wage law has been changed several times--to raise the level and to extend coverage. (Not all employees were covered by the law then and not all are covered today.) Inevitably, with each move to lift the floor and to widen its benefits to more people, the debate broke out all over again--with the same old arguments. The opponents said that to lift the floor would bring on unemployment and hurt most those who were supposed to be helped most; the proponents said that a higher wage would be of direct benefit to the lowest paid and that added buying power would add more jobs.

Living Wage

Why has the minimum wage been changed--raised--repeatedly over the last half-century? Fundamentally, to stay abreast of the times. The original idea was to set a minimum that would somewhat resemble a living wage. The rule of thumb was a wage that was slightly more than half the going wage in the private sector. As the general wage level rose, it was expected that the minimum was to go up accordingly. In addition, if the "living wage" was to be maintained, there had to be adjustments for the cost of living; otherwise the livable would become unlivable.

Unfortunately, this concept was never written into law. The minimum was changed at the whim of Congress--and, of course, the President. When enough fuss was made about how the floor was collapsing into the cellar, the government would bestir itself. Where there was no agitation, there was no action. And since the direct beneficiaries of the minimum wage are, as might be expected, usually unorganized and politically unpowerful, the fight had to be made on their behalf by unions.

They added buying power implicit in a higher minimum means greater demand and more work for wage and salaried workers in general. In addition, a living wage makes it less likely that the wage earner's family will end up on the welfare rolls--as millions do when the minimum begins to lag behind the rising cost of living.

Step Increases

The idea that the minimum should not be frozen at some fixed sum was clearly in the mind of those who wrote the original law. It provided that the minimum would be 25 cents an hour for the first year; 30 cents for the second, and was to become 40 cents in 1944. What happened after that date depended on the mood of Congress and the White House. Sporadically, the minimum was raised in a sort of "collective bargaining" among congressional factions and between Capitol Hill and the White House. The last big change took place in the Carter Administration when, as in the original bill, the legislation provided for a series of ascending steps that ended in January 1981 at the present $3.35 per hour. There the minimum has been frozen ever since.

Now it is proposed that the minimum once more be adjusted to keep up with the times. And again the old debate is renewed as if we were back in 1937--a half-century ago--and as if there were no body of historical experience from which to draw conclusions.

But the experience is there. In 1950, when the minimum rose from 40 cents to 75 cents an hour, the New York Times, informed by the lessons of more than a decade, concluded: "None of the dire results predicted have materialized from the 1938 Act, and the present legislation merely brings the latter into line with the wage and living-cost realities of today. So long as the principle is confined to its original social objectives of protecting the worker from exploitation and assuring him a living wage there is no reason to doubt that it will continue to justify itself in the future as it has in the past." (Jan. 26, 1950.)

To prevent exploitation and to provide a living wage, however, requires constant review and revision of the minimum--with several objectives in mind. First, to keep the minimum abreast of changes in the cost of living so that anyone at the legal minimum does not find himself or herself in a declining state of living as prices rise. Second, to keep the minimum slightly above 50 percent of the average wage in the private sector. Third, now that the government has, since 1959, officially been defining "poverty," to see to it that the minimum allows a person to maintain a family of three above the poverty line. In all these respects, the present minimum wage is not working.