The following is a brief history of the minimum wage in America.
President Roosevelt asked the Secretary of Labor, Frances Perkins, “What happened to that nice unconstitutional you tucked away? [emphasis mine]” President Roosevelt was speaking of the “Fair Labor Standards Act of 1938 (FLSA).” The 1938 FLSA Act generally applied to employees engaged in interstate commerce or the production of goods for interstate commerce. FLSA (1938) demanded specific workers be paid a minimum wage of $.025 an hour while also setting the maximum workweek to 44 hours. Passing FLSA (1938) ran a gauntlet of Supreme Court (SCOTUS) decisions before and after being passed into legislation, and those SCOTUS decisions continue to influence FLSA even today.
FLSA (1938) has been revised several times by Congressional Legislation, and in 1961 Amendments extended coverage primarily to employees in large retail and service enterprises and local transit, construction, and gasoline service station employees. It also increased the Federal Minimum Wage to $1.00, but wage disparity remained where original minimum wage earners were concerned who continued to earn $1.15 an hour.
The 1966 FLSA Amendments extended coverage to State and local government employees of hospitals, nursing homes, schools, laundries, dry cleaners, and large hotels, motels, restaurants, and farms. Subsequent amendments extended overage to the remaining Federal, State, and local government employees. That was not protected in 1966 to individual workers in retail and service trades previously exempted and certain domestic workers in private household employment. The 1938 interstate wage disparity disappeared, and the first two classes of minimum wage earners made $1.40 an hour, while nonfarm and farm employees made $1.00 an hour.
FLSA revisions in 1977 saw legislation passed to start 1978 with all covered employees earning $2.65 an hour. This FLSA revision was important as now the wage disparity between groups of employees was finally eradicated, and FLSA finally applied to all workers.
Grandfather FLSA clause – Employees who do not meet the tests for individual coverage, and whose employers were covered by the FLSA on March 31, 1990, and fail to meet the increased annual dollar volume (ADV) test for enterprise coverage, must continue to receive at least $3.35 an hour. A piece of legislation that was a sop to the president and a contentious Congress.
FLSA revisions beginning 09/01/1997 created a subminimum wage — $4.25 an hour — established for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer. The FLSA revisions represented more contentious legislation that played the American worker and American Economy as pawns for personal political power.
What did the minimum wage do to America?
Never forget, the actions of a legitimate government will always cause injury. Where the minimum wage is concerned, this aphorism is doubly applicable. Minimum wages reduce entry-level jobs, training, and lifetime income. Politicians regularly propose a minimum wage as a means of raising income and lifting workers out of poverty. However, improvements in some young workers’ income due to a minimum wage come at a cost to other employees. For example, a young retail worker begins at minimum wage and works hard. After 5-years, that employee has had a couple of pay raises that they worked hard to obtain.
New FLSA revisions increase the minimum wage. Now that hard-working employee is back to working for minimum wage because a politician wanted to incentivize other young workers to get a job. But increasing the minimum wage cuts the hard-working employee’s hours; they now need a second job to make ends meet at the new minimum wage because they both lost their hard-earned raises and saw hours cut to afford new hires an opportunity. Add in the inevitable rise in the cost of living to pay for higher wages, and this hard-working employee has been injured three times by their employer, due to government actions.
To make matters even worse, the fraudulent president tells that employee they should have learned to code and program computers. The government injuries are sufficient to create an eternally challenged and debt-ridden poverty class in America. Begging the question, what is just or fair about a minimum wage?
The other injury to that hard-working employee, entry-level jobs are going to dry up due to a higher minimum wage because technology will be implemented to replace that entry-level worker and eliminate their positions. Look at the rise of contactless stores, walk-in, place items in your cart, walkthrough checkout, pay with your phone app, walk out. Robots have been developed to replace kitchen workers making pizzas, flipping burgers, and stocking shelves. More entry-level positions are dying because the cost of keeping an employee has become too expensive, which is especially true in the businesses and industries where profit margins are already slim, grocery stores, fast food, and warehouses, among others.
Minimum Wage Laws – State Government Injuries
Each state has the power to negotiate a higher minimum wage or meet the FLSA mandated minimum wage. When America had a lot of entry-level jobs, workers would move to states with higher minimum wages. The moving started a cycle that has now come back around to bite everyone involved in tender lower parts best left unbitten! To pay for the higher wages, taxes increased, the cost of living adjusted upwards, and entry-level jobs began requiring skills, experience, education, etc., to match the higher salaries in the states paying more minimum wages.
Inflation became a problem, excess populations began to despair of making that higher wage and improving their upward financial mobility, and depression set in. Instead of reducing the minimum wages, which would have lowered costs and incentivized hiring, the politicians increased the minimum wage, causing further injury to the government’s excess populations’ despair and disgust. The government compounded their error by increasing welfare benefits and then put exclusions onto welfare benefits, and the problems in depressed populations only grew!
Now, that hard-working employee has three jobs, cannot afford to stop working any of them, cannot obtain welfare, and with the reduced hours cannot maintain their standard of living without a spouse also working three to four different jobs. Leading to more chaos, less parenting, greater school influence, and the politicians keep compounding the injuries to the people voting them into office. Is it any wonder why the American population is so angry, disgusted with Congress, and politicians rank lower than public toilets and used car salesmen in integrity and usefulness?
What does a “Liberty FIRST Culture” look like?
- No minimum wage! I know this sounds completely counter-productive, but please understand, the minimum wage law was 100% unconstitutional when it first passed! The minimum wage is the source of inflationary price gouging and the source for a lot of social unrest, angry people, and wasted blighted neighborhoods in America.
- Return to the states their sovereignty where competing with other states is concerned. State sovereignty where wages are concerned will shift populations to where jobs are, incentivizing investments in local communities and local hiring. There are jobs here in the United States, there are populations who want the work, but the disparity comes from people needing incentives to move, not moving the jobs to those population centers. Cost value equations play a significant role in deciding where to put manufacturing facilities, warehouses, and other businesses. State sovereignty is more important in this issue than many realize.
- Realize this truth; not everyone needs to go to college. There are thousands of jobs where skill and experience matter more than academic degree success. The politicians are pushing education because the cost of a college education is where a lot of their power is derived from student loan debt. Bernie Sanders promising free college should scare the pants off every American; look how bad K-12 is, and imagine all advanced schools in America operating in the same manner.
America, and every other country with a mandated minimum wage, please consider the damage done by higher prices, runaway inflation, and market conditions where unskilled people are paid wages employers cannot afford, forcing massive shifts to technology or simply closing their doors. Skill attainment requires practice and time, learning, and working; as skills are developed, the market will pay a fairer share than any government mandate can demand. Trust the system; capitalism works because it rewards people for working, learning, developing new skills, taking risks, and being active in their own futures. Put Liberty FIRST and watch the world shift for the better.
© 2021 M. Dave Salisbury
All Rights Reserved
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