It seems that the term “poverty” has been sidelined from our national discourse, even though 15 percent of all Americans, and 26 percent of African Americans experience poverty. The Fair Labor Standards Act was signed on June 25, 1938, seventy-five years ago, so perhaps this is a good time to explore the roots of the minimum wage and why its establishment remains important.
The genesis of the Fair Labor Standards Act, was a note a girl wrote in Bedford, Massachusetts when Roosevelt was campaigning for his second term as President. The note said, “I wish you could do something to help us girls…We have been working in a sewing factory. Up until a few weeks ago we were getting our minimum pay of $11 a week…Today the 200 of us girls have been cut down to $4, $5 and $6 a week”. In the middle of the Great Depression, young women were earning between ten and fifteen cents an hour. Responding to the note, Roosevelt signed legislation that dealt with issues of the terms and conditions of work, including wages.
The law limited weekly hours to 44, established the minimum wage at 25 cents an hour, and banned child labor. When the law was passed, it applied to industries that employed only a fifth of the workforce. Private household workers (or “domestics”, mostly African American women), and farm workers (mostly African American at that time, though later mostly Latino) were exempted from the law.
There was enormous resistance to the legislation. Indeed the bill was, at one point, described as “unconstitutional”. Roosevelt signed 121 bills, including the Fair Labor Standards Act, after Congress had adjourned. Essentially FLSA restored textile workers, and many like them, to the $11 a week that was considered barely livable. In a fireside chat, Roosevelt chided the bills detractors, “Do not let any calamity-howling executive with an income of $1,000 a day, …tell you…that a wage of $11 a week is going to have a disastrous effect on all American industry.”
Fast forward. Now domestic workers are included in the Fair Labor Standards Act, to the point that employers are required to issue these workers W-2 forms if they are regular workers, to withhold Social Security and other federally-mandated taxes from their pay, and to match Social Security contributions as required by law. Of course, many of these workers are paid informally, or “under the table”, and they make less than the minimum wage.
Those who receive tips as little as $30 a month in tips earn just $2.13 an hour. That’s certainly something to think about when providing your server between 15 and 20 percent at the end. Some restaurants may offer more than the minimum $2.13 an hour, but many do not pay as much as minimum wage (currently $7.25).
While agricultural workers should, technically, earn the minimum wage, there are enough exceptions to this provision that many agricultural workers do not earn $7.25 an hour. Additionally, undocumented immigrants have little leverage at the bargaining table. They earn less than the minimum wage when they are desperate for employment. Small farms are also exempt from paying the minimum wage.
Someone who earns the minimum wage of $7.25 an hour who works 40 hours a week, 52 weeks a year, earns about $15,000 a year. If they are an hourly worker without benefits who takes any time off, the $15,000 earnings drops off. While many minimum wage workers are part-time workers, some cobble together several part time jobs to make enough money to live.
For full-time workers, parents, and others, the minimum wage is hardly a living wage. President Obama has suggested raising the minimum wage to $9 an hour over a three-year period, taking the annual minimum wage for a full-time worker to almost $19,000 a year. The Federal Minimum Wage Act would increase hourly wages to $10.10 by 2015, making annual pay about $21,000 by that year. It would also index the minimum wage to inflation. The feisty and fantastic new Senator from Massachusetts, lawyer Elizabeth Warren, has indicated that she considers $22 an hour (or about $45,000 a year) a living wage.
About two million people earn the minimum wage, and another 1.6 million actually earn less. These are the people recorded, not the actuality of those paid under the table. This represents less than five percent of the workforce, but this is why we should pay attention to them. African Americans, Latinos, and women are most likely to be represented in this 3.6 million. They are more likely to be young (though those 18-25 are adult and may be raising families), less educated and single. They are the least and the left out. They are young women raising families, students trying to scrap together living expenses, or those with qualifications but not opportunities.
These folks work in service and hospitality industries, serving our food, parking our cars, taking care of our mamas, and cleaning our rooms when we stay in hotels. I don’t care if they are 4.7 percent of the labor force, less or more. The bottom line is that it is overtime to raise the minimum wage!
Julianne Malveaux is a DC based economist and writer.