“A Fair Day’s Wage” The History, Philosophy, and Economic Theory of the United States Minimum Wage

Abstract

This thesis is an investigation into the history, philosophy, and labor economics of the U.S. minimum wage. In recent years, the federal minimum wage has been under political scrutiny with a large labor movement pushing for an increase in the wage, the failure to pass the 2014 Minimum Wage Fairness Act, and a political backlash warning that raising the minimum wage will increase unemployment (Hassett and Strain) (113th Congress). Rather than address the age-old question of whether or not the minimum wage increases employment or grows the economy, I address the intent behind the policy and discover where and why it has evolved into a different type of legislation. My main focus is the philosophical debate surrounding the minimum wage since 1938 and the career trajectory of individuals in industries that heavily utilize minimum wage job. Through analyzing the policy rhetoric through the years as each amendment and minimum wage raise comes up in Congress, I trace the evolution of policymakers’ intended purpose behind these laws. My analysis investigates two main themes that constitute the two competing interpretations of minimum wage policy: social justice and social mobility. I determined that the original intent for minimum wage policy from the Fair Labor Standards Act of 1938 was social justice, defense of the labor rights of workers on a microeconomic scale, intended to eventually equate minimum wages with living wages. However, over time policymakers found new ways to address poverty that were more successful, leading to a new interpretation of minimum wage jobs as entry-level, intended for social mobility. In recent years the social justice argument has returned in rhetoric and political discourse. I next measure whether these jobs are truly being used as entry-level positions, and employees make larger salaries as they age, or if minimum wage workers do not progress in their industry. Through BLS data and one case study of California I built a complete picture of the minimum wage worker, who is older than 25 and using the minimum wage job to make a living, not as entry-level. This led to the recent demand, like the original demand in 1938, for minimum wage to legislate a living wage for all workers. However, drawing on the philosophical basis of living wages, history of successful alternate policies, and American values, raising the minimum wage unconditionally is inconsistent with what U.S. society needs. Based on my analysis, I recommend a focus on education and social alleviation of policy through the social mobility interpretation of minimum wage policy. However, I also advocate a compromise with social justice to allow the policy to accomplish its original intent while also supporting the American and capitalist values of industry and personal development. Like the New York and California legislation increasing the minimum wage with a mind to reducing it in the future, I recommend that policy make steps to bring the U.S. social support back to a social mobility interpretation through education, but in the meantime raise the wage to allow policy to be the safety net for low-income workers that society requires.