Who makes “Minimum Wage”?

Recently the “Federal Minimum Wage” rose to $7.25 per hour for most jobs and $2.13 per hour for workers also making tips. I realize this isn’t “breaking news”, however most people know very little about the history of minimum wage laws. Most people would be surprised to learn that on multiple occasions the Supreme court has struck down “minimum wage” laws, arguing once that “it may be said that if, in the interest of the public welfare, the police power may be invoked to justify the fixing of a minimum wage, it may, when the public welfare is thought to require it, be invoked to justify a maximum wage. (Adkins v Children’s Hospital of District of Columbia, 261 U.S. 525 (1923))
“Minimum Wage” was again struck down by the Supreme Court in 1935 when they invalidated “the National Industrial Recovery Act of 1933” with Justice Louis Brandeis stating, “This is the end of this business of centralization, and I want you to go back and tell the president that we’re not going to let this government centralize everything.”
The first Federal minimum wage law to “stand” was the “Fair Labor Standards Act of 1938” – a common exemption to the federal minimum wage is anyone working for a company having revenue of less than $500,000/year while not engaging in any interstate commerce. The latest increase was passed in 2007 as an amendment to the “U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007”
Advocates of increasing the minimum wage say “no one can raise a family on $x.xx per hour”. No one is arguing that a family can be raised on the minimum wage, and in fact the minimum wage isn’t supposed to be a “living wage”, it is the mandated minimum allowed – which the Supreme Court had previously invalidated as an infringement of the liberty of contract between the employee/employer. Minimum wage workers tend to be either students or people working a “second” job (including some women that work part-time) to supplement income earned from another job.

The Department of Labor and Statistics reports, “According to Current Population Survey estimates for 2008, 75.3 million American workers age 16 and over were paid at hourly rates, representing 58.2 percent of all wage and salary workers.1 On July 24, 2008, the Federal minimum wage increased to $6.55 per hour from $5.85 per hour. Data in this report reflect the average number of workers earning the prevailing Federal minimum wage or less for the year (those who earned $5.85 or less from January 2008 through July 2008 and those who earned $6.55 or less from August 2008 through the end of the year). Among those paid by the hour, 286,000 earned exactly the prevailing Federal minimum wage in 2008. About 1.9 million had wages below the minimum.2 Together, these 2.2 million workers with wages at or below the minimum made up 3.0 percent of all hourly-paid workers. Tables 1-10 present data on a wide array of demographic and socioeconomic characteristics for hourly-paid workers earning at or below the Federal minimum wage. The following are some highlights from the 2008 data:
* Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 11 percent earned the minimum wage or less, compared with about 2 percent of workers age 25 and over.
* About 4 percent of women paid hourly rates had wages at or below the prevailing Federal minimum, compared with about 2 percent of men.
* The percentage of workers earning the minimum wage did not vary much across the major race and ethnicity groups. About 3 percent of white, black, and Hispanic hourly-paid workers earned the Federal minimum wage or less. Among Asian hourly-paid workers, about 2 percent earned the minimum wage or less.
* Among hourly-paid workers age 16 and over, about 5 percent of those who had less than a high school diploma earned the Federal minimum wage or less, compared with about 3 percent of those who had a high school diploma (with no college) and about 2 percent of college graduates.
* Never-married workers, who tend to be young, were more likely than married workers to earn the Federal minimum wage or less (about 5 percent versus about 2 percent).
* Part-time workers (persons who usually work less than 35 hours per week) were more likely than their full-time counterparts to be paid the Federal minimum wage or less (about 7 percent versus about 2 percent).
* By major occupational group, the highest proportion of workers earning at or below the Federal minimum wage was in service occupations, about 9 percent. About 7 in 10 workers earning the minimum wage or less in 2008 were employed in service occupations, mostly in food preparation and serving related jobs.
* The industry with the highest proportion of workers with hourly wages at or below the Federal minimum wage was leisure and hospitality (about 14 percent). About three-fifths of all workers paid at or below the Federal minimum wage were employed in this industry, primarily in the food services and drinking places component. For many of these workers, tips and commissions supplement the hourly wages received.
* The proportion of hourly-paid workers earning the prevailing Federal minimum wage or less has trended downward since 1979, when data first began to be collected on a regular basis.”

About Darryl W. Perry

Darryl has spent most of his adult life as an advocate & activist for peace and liberty. Darryl is an award winning author, publisher & radio/TV host. He is a regular contributor to several weekly and monthly newspapers. He hosts the daily newscast FPPRadioNews, the weekly news podcasts FPP Freedom Minute and Police Accountability Report, hosts the weekly radio show Peace, Love, Liberty Radio, and is a regular co-host on Free Talk Live.   Darryl is a co-founder and co-chair of the NH Liberty Party.   Darryl is the Owner/Managing Editor of Free Press Publications.
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