The Birth of the Minimum Wage

PETER: In the 15 years following Adkins versus Children’s Hospital, a number of states experimented with versions of minimum wage legislation. Almost all of them were struck down in the courts.

BRIAN: In 1938 as the Great Depression lingered, the federal government stepped in with a minimum wage law that would apply throughout the country. It was known as the Fair Labor Standards Act. The year prior, the Supreme Court had upheld a federal law securing collective bargaining rights for labor unions. And it was this case, says legal historian Risa Goluboff, that really paved the way for a national minimum wage.

RISA GOLUBOFF: Prior to the late 1930s, the Supreme Court had a lot of restrictions on the kind of economic regulation that the federal government could impose. And the restrictions came from two different places. One came from a sense of individual rights, that people had a right to contract, and a right to their property that shouldn’t be interfered with by the government. And the idea was that a minimum wage would interfere with a given employee and employers rights.

BRIAN: They could sign up for whatever wage they wanted to.

RISA GOLUBOFF: Exactly, if they want to work for $0.10 an hour, it’s up to them. And the second set of limitations came from constitutional limitations on federal power. The Constitution enumerates what the federal government, the national government can do. And one of the things that it can do is regulate interstate commerce. But it’s not supposed to regulate the internal commerce of the state’s regular, old, manufacturing production, retail, things like that. And the court had really kept the Congress to that distinction for a number of years. And it wasn’t until 1937 that it began to allow Congress more space in which to regulate commerce that wasn’t necessarily interstate commerce. And so there was more room for the Fair Labor stuff–

BRIAN: So if one was getting wages producing something that might be considered interstate commerce then those wages might be allowed under the more capacious understanding of interstate commerce.

RISA GOLUBOFF: Precisely. Exactly.

BRIAN: So legally speaking, based on that recent court decision, who was safely covered constitutionally?

RISA GOLUBOFF: Safely covered constitutionally were people working in interstate transportation, obviously, and in anything that crossed state lines. But then the idea that a Fair Labor Standards Act took seriously was that people who were producing for interstate commerce, working in manufacturing. And in the past, the court had rejected that kind of justification.

BRIAN: And in practice, were most of the people covered union employees?

RISA GOLUBOFF: Most, yes, absolutely were. So one of the distinctions in terms of coverage and not covered employees was manufacturing versus retail. And when you think about the lifespan of a product, manufacturing usually happens before something enters into interstate commerce, retail happens after it’s come to rest after the interstate commerce. And yet manufacturing was covered and retail was not covered.

The big categories of workers who were exempted go more to the political compromises and less to the constitutional ones.

BRIAN: So how did those political compromises determine who was not covered?

RISA GOLUBOFF: The political compromises were really those within the Democratic party between those in the north and white southern Democrats who really were worried about the effects on race relations in the South. And so, the two big groups of workers who were not covered were domestic workers and agricultural workers. And those two groups accounted for more than half of all African American workers in the South. They also accounted for the majority of many other minority groups across the country.

BRIAN: And how did that play out in terms of gender? Were a disproportionate number of women not covered?

RISA GOLUBOFF: Yes, precisely. So in agriculture, it was both men and women. But domestic workers were overwhelmingly women, as well as other kinds of industries like the retail industry, hospitality. Other kinds of service industries were also not covered and those were overwhelmingly women. Clerical industries, as well, were overwhelming women.

BRIAN: Yeah, Fair Labor Standards Act sounds so universal. But when you start adding up the numbers, what do they come to? Is it a majority of workers who are not covered?

RISA GOLUBOFF: In 1938, it was 33% of the workforce were covered, and 66% were not. As it turned out, it was about even in terms of men and women. But the real difference there then, was among those exempt workers, most of the men who were exempt were actually already earning more than the minimum wage. Agricultural workers were not, but many–

BRIAN: So these would be salaried workers who were disproportionately men.

RISA GOLUBOFF: Exactly. Whereas, the women who were exempt were disproportionately earning below the poverty line, earning below the baseline established in the Fair Labor Standards Act which would have been $800 a year. So for example, a woman in domestic service around that time earned $359 a year. The Fair Labor Standards Act numbers would have gotten you to $800 a year. Which is still incredibly low, but would have doubled that person’s salary.

BRIAN: OK. I have always been taught, and I have taught, that the Fair Labor Standards Act was a very big deal in the New Deal. But after talking to you, I’m beginning to wonder. I mean, if in fact, such a small percentage of workers were actually covered, why do we remember this as such a big deal?

RISA GOLUBOFF: I think we remember it as a big deal for two reasons. The first reason is that over time more and more workers did get covered. It took awhile, but you had the statutory infrastructure, and the administrative infrastructure. And it’s easier to amend something then to get in the first place. And so the political mobilization in the constitutional opportunity that existed during the New Deal era, I think, created the possibility for later mobilization by Cesar Chavez and others. To get the inclusion of agricultural–

BRIAN: To expand the number of people covered.

RISA GOLUBOFF: Exactly. So that’s one thing I would say. The other thing I would say is less concrete than that. Which is that a lot of what the New Deal legislation did was create these new apparatuses and create new expectations and new aspirations and new sense of rights that didn’t necessarily get implemented all at once. But what they did was change the nature of the relationship between the individual and the federal government in terms of expectations of what the federal government was required to provide.

In his 1944 State of Union address, FDR sets forth an economic bill of rights. And he talks about how at the founding of the country in the 18th century, the idea of rights was a negative idea of rights, that people had rights against the government for the government not to interfere with their freedom. And what FDR says when he talks about this new economic bill of rights is, government is so powerful now, and private industry is so powerful now, that we actually need for government to affirmatively protect people’s rights, and to make it possible for people to participate in American society by making sure that they have an adequate income, that they have a job, that they have old age insurance, that they have health care– this is an articulation of health care that doesn’t come to pass for some 70 years, but they have housing, and education.

And during the 1940s, people start to talk about the right economic security and the economic security of the person. And that’s all about changing the economic relationship between the citizen and the federal government. And the Fair Labor Standards Act is part of that story.

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FRANKLIN DELANO ROOSEVELT: America’s own rightful place in the world, depends in large part, upon how fully these and similar rights have been carried into practice for all of our citizens. For unless there is security here at home there cannot be lasting peace in the world.

BRIAN: That’s Franklin Delano Roosevelt in his 1944 State of the Union Address. Risa Goluboff is a professor at The University of Virginia School of Law.

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