|April 29, 2013|
Previously published on April 10, 2013
As early as 1912 states began proposing minimum wage standards meant to protect women and children in the workforce. By 1920 thirteen states passed minimum wage laws. In a series of cases culminating with the 1936 case of Moreland v. New York ex rel. Tipaldo, 298 US 587, the United States Supreme Court struck down state mandated minimum wage laws. It was decided that the due process clause prohibited any state from impeding the ability of employers to contractually negotiate with their employees to determine wages.
The federal minimum wage was first established by the National Industrial Recovery Act (NIRA) of 1933 at $0.25 per hour. In Schechter Poultry Corporation v. United States, 295 US 495, the United States Supreme Court invalidated portions of the NIRA, effectively abolishing the federal minimum wage. It was not until 1938 that the federal minimum wage was reestablished under the Fair Labor Standards Act (FLSA) at $0.25 per hour. Initial opposition to the federal minimum wage came from agriculture, predominately in the south, that depended on cheap labor for their livelihood. This opposition did not consider the plight of the worker, who faced particularly poor living conditions.
The current federal minimum wage was last raised in 2007. At that time it was raised from $5.15 an hour to $7.25, phased in over several years ending in 2009. Prior to this, the federal minimum wage had not been raised in ten years. A full time worker who earns the current federal minimum wage makes only $15,080 a year. For a single person this places them marginally over the 2013 poverty threshold of $11,490.
In his 2013 State of the Union address President Barack Obama called on Congress to raise the minimum wage to $9.00 an hour. The proposed raise would be phased in over several years and would tie the minimum wage to the cost of living, allowing the minimum wage to rise with the rate of inflation. “This single step would raise the incomes of millions of working families,” the president said. “It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead.”
The opposition to President Obama’s call to raise the federal minimum wage drew on the general themes that have been associated with prior calls to raise the minimum wage. The main thrust of the opposition is that it will kill jobs and won’t help those that it is intended to help. With the higher cost for payroll business will hire less people leaving more people looking for work.
These dire predictions about how the minimum wage is bad for business have yet to materialize. As low wage workers have more money to spend they spend it, almost entirely in their local community. With low wage workers spending more money in their communities businesses have more customers. A federal minimum wage of $9.00 per hour would pump $21 billion into the United States economy. Companies that support the raise in the federal minimum wage, such as Costco and Stride Rite, say it reduces employee turnover and improves worker productivity. All of which is good for business.
Minimum Wage In New York State
The minimum wage in New York State has been in line with the federal minimum wage since it was last raised in 2007. In his 2013 State of the State speech Governor Andrew Cuomo announced his plan to raise the minimum wage in New York State to $8.75 an hour. In doing so he noted that the current $7.15 an hour is below that of 19 other states and has not kept up with the cost of living in New York. Currently over 900,000 New Yorkers earn the minimum wage, this translates into just over $15,000 per year. In proposing this raise to the minimum wage Governor Cuomo noted this would increase the standard of living, reduce poverty and ensure that the most vulnerable members of the workforce can contribute to the economy. Opposition from the business community felt that this was the wrong time to raise pay and that any additional costs to businesses would put them under or force layoffs.
The Governor’s proposed budget for fiscal year 2013-14 included the proposed raise in the minimum wage in New York to $8.75. Response from the New York State legislature to this proposal in the budget was mixed. The Assembly, with leadership from Speaker Sheldon Silver and Labor Committee Chair Carl Heastie, agreed with President Obama that the minimum wage should be at $9.00 per hour. In support of this the Assembly passed bill A.38-A which would raise the minimum wage to $9.00 per hour on January 1, 2014 and starting January 1, 2015 would raise the minimum wage based on the rate of inflation. The minimum wage for tipped workers was raised to $6.21 starting on January 1, 2015 and was also tied to the rate of inflation in the same manner as the minimum wage for non-tipped workers. This bill had no sponsor in the Senate which means it will not become law. Passage of this bill showed the strong support of the Assembly majority to raise the minimum wage.
The Senate republicans, who have a coalition majority with a group of five democrats known as the Independent Democratic Conference (IDC), had a very different reaction to Governor Cuomo’s proposed raise of the minimum wage. Citing the unfriendly business climate in New York Senate republicans opposed the raise in the minimum wage. Opposition was based on the fear that businesses would be for