Minimum Wage Thesis

Minimum Wage When discussing wage payment policies and strategies, one of the forefront topics is minimum wage. Minimum wage has historically been a point of contention and much debate among politicians, community leaders, and businessmen. The current presidential primaries have continued this storied argument, and continued the historic trend. The more conservative politicians argue against increasing the minimum wage, often suggesting it be eliminated entirely, while the more progressive politicians use an increased minimum wage as a central plank in their political platforms. This relationship amongst the conservative and liberal politicians has seen its correlation extended to states and cities that have similar ideologies. Red states
Roosevelt had made a federal minimum wage part of his election promise, and used his landslide election as proof that the people of the United States were in favor of his New Deal policies. Knowing that the Supreme Court would stand in the way of any federal minimum wage law, he threatened to stack the Supreme Court with six additional justices. While historically this has been viewed in a negative light, the threat may have been what prompted one of the pivotal events in United States history, and certainly in the history of the Supreme Court, the “Big Switch”. The big switch is so named because Justice Owen Roberts, who had always sided with the conservative justices and voted against minimum wage laws, switched his position on the matter and voted in favor of a minimum wage law in the West Coast Hotel Company v. Parish case. With this precedent being made, President Roosevelt had a clear path to establishing a federal minimum wage, and did so with the Fair Labor Standards Act. The Fair Labor Standards Act set a minimum wage rate of $0.25, which adjusted for inflation is close to $4.19 today. The Fair Labor Standards Act passed it litmus test soon after in 1941, with the United States v. Darby Labor Company case. In that case the Supreme Court ruled in favor of the Fair Labor Standards Act by explicitly agreeing that the United States Congress had the power to regulate wage payment policy because of their power to regulate commerce granted to them by
However, by the latter half of the 1940’s there begun to be some opposition expressed by economists, notably George Stigler of Chicago, regarding the minimum wage laws. Sigler was one of the first economists to make the argument that minimum wage laws were a detriment to employment, increased the unemployment rate, and did nothing to reduce poverty (Kruger, 2015, p. 534). By the 107-‘s and 1980’s more economists had sided with Stigler’s opinion, and had developed studies to prove his point. One of the main studies conducted was by Charles Brown, who in 1982 published an article in the Journal of Economic Literature entitled “The Effect of the Minimum Wage on Employment and Unemployment”, along with coauthors Curtis Gilroy and Andrew Cohen. In the article the authors made reference to a statistic that would provide opponents of minimum wage laws with the ammunition to prevent any increase in the minimum wage for years to come. The article made the assertion that teen employment was reduced as much as three percent