Labor 101: Without a Living Wage, Prosperity Is Nothing but Fools’ Gold


The Working Stiff Journal
Vol. 3 #2, March 2000
by Jackie Dana

How is it that in a time of unprecedented prosperity and low unemployment, so many Austinites still can’t pay their bills?

It’s good to see that one of the hot topics in Austin these days is the “wage gap.” The only thing amazing about it is that it took the politicians so long to acknowledge something the rest of us have been experiencing for years. While the rich get richer, there are still lots of people all over the country who work full time but do not earn enough to make ends meet.

Elizabeth McNichol, an author of a recent economic report on U.S. incomes, noted that “the booming stock market… has mainly benefited people at the top end of the income scale,” while the “incomes of the poor and middle class have fallen or stagnated.”

Based on the concept that one should only pay one-third of a full-time salary towards rent, Austin workers would need to earn over $9.00 per hour to afford a one-bedroom apartment. As it stands now, someone earning minimum wage ($5.15/hour) would need to spend nearly all of their salary—about $900 a month before taxes—just to pay rent.

One way to improve the condition for poorest workers is to raise the minimum wage to a livable one. As obvious as that may be to many of us, the concept of a minimum wage, as well as basic workplace safety rules, has always been a sore spot with business owners and conservative politicians, dating back to the first minimum wage struggles in the 1930s.

As the United States suffered from the Great Depression, several states passed minimum wage laws, and as part of the National Industry Recovery Act in 1933, President Frankin D. Roosevelt had employers sign a “President’s Reemployment Agreement” covering 16.3 million employees. The employers who signed on agreed to limit work weeks to 40 hours, to pay a minimum wage of $12-$15 per week (at least 30 cents/hour) and to not hire children under 16. In exchange citizens were encouraged to patronize only participating companies, who displayed a “Blue Eagle” sign. However, in 1935 the Supreme Court declared the Agreement to be unconstitutional.

In 1937 Secretary of Labor Frances Perkins drew up a bill and Roosevelt submitted it to Congress. Senator Hugo Black and Representative William Connery sponsored the bill, which called for a 40-cent minimum wage as well as the 40-hour week and a minimum work age of 16. It also proposed a labor standards board that could raise wages and shorten hours further if necessary.

Opponents of the Black-Connery bill claimed that it was “a bad bill badly drawn” and it would lead the U.S. to become a “tyrannical industrial dictatorship.”

Organized labor was divided on the bill. Some unions, such as the International Ladies’ Garment Workers’ Union, called for strong regulations. (In response to those in the South who requested lower wages for their region, the ILGWU leader, David Dubinsky, suggested that perhaps there should also be lower pay for southern Congressmen.) However, both the AFL and CIO, in an uncharacteristic moment of agreement, favored a weaker bill that would limit the new standards to low-paid, unorganized workers. The union leaders argued that a minimum wage might end up becoming a maximum wage. When the bill was amended to exclude work covered by collective bargaining agreements, the unions were largely satisfied.

The Senate passed the bill in July 1937, but it was held up in committee, and Congress adjourned without its passage. Despite the opposition, a 1938 national poll showed 67% of Americans approved a minimum wage law, prompting Roosevelt to call a special session of Congress to revisit the bill.

Its opponents remained steadfast. Southern states complained about the proposed minimum wage was too high. Rep. McClellan of Arkansas asked, “What profiteth the laborer of the South if he gain the enactment of a wage and hour law—40 cents per hour and 40 hours per week—if he then lose the opportunity to work?”

Over the next few months the bill was reworked, and finally the House passed the bill in May 1938. The Senate-House Conference Committee proposed still more amendments, almost all of which weakened it further, but it eventually passed both houses.

On June 25, 1938 President Roosevelt signed the Fair Labor Standards Act, with provisions banning child labor, establishing a 44-hour work week, and creating the first federal minimum wage of 25 cents/hour. Although this act only applied to approximately one-fifth of the labor force and set a much lower minimum wage than the original proposal, it was still ground-breaking.

In 1961 and again in 1966 amendments to the original act extended the Fair Labor Standards Act to workers in the retail and service industry, farm workers, transit employees, restaurant and hotel workers, government employees and domestic workers, and other categories. It was not until 1978, however, when all employees covered by the act would earn the same rate (some categories of jobs had a lower minimum wage), and in 1997 a subminimum wage of $4.25 was instituted for employees under 20 for their first 90 days of employment.

Over the years the minimum wage has not kept up with inflation and escalating costs of living. According to a survey by the U.S. Conference of Mayors, 37% of people who sought food assistance in 1998 were employed, up from 24% in 1994. From 1980 to 1995, the minimum wage has increased by 37% while inflation has risen 86%.

In 1999 several bills were introduced in Congress to increase the minimum wage. One bill, S 192/HR 325, introduced by Senators Kennedy (MA) and Daschle (SD) and Representative Bonior (MI), would raise the minimum wage from $5.15/hour to $6.15/hour within a year’s time and would extend the entire Fair Labor Standards Act to the Northern Mariana Islands, where many products are made carrying the “Made in the USA” label. Another bill, HR 964, introduced by Rep. Quinn (NY), would spread the wage hike over three increments through 2001. Although it would not extend protections to the Northern Mariana Islands, it would provide for indexing the minimum wage to inflation, meaning it would increase as needed over time. A third bill, HR 3081, introduced by Rep. Lazio (NY), would spread the dollar hike over three years and would be coupled by massive tax breaks for the wealthy.

Needless to say, it is HR 3081, the weakest of the three bills, that stands the best chance of passage. It was discharged from committee on January 28, 2000. The other two bills remain locked in committee and may never reach the floor of the House or Senate.

Notwithstanding the constant and often unsuccessful wrangling in Congress, several states have even higher minimum wages. Oregon, for example, raised its minimum wage to $6.50 in 1999, while Washington state and Connecticut will raise theirs to $6.50 and $6.15, respectively, this year. Despite the Texas minimum wage remaining at $3.35, local Living Wage efforts have had some success in Austin. The City of Austin has set a living wage minimum at $8 for its full-time employees in April 1999, and several institutions, including Austin Community College and the University of Texas, have raised their lowest salaries. Still, there is much work to be done.

As Roosevelt argued in 1936, “A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers’ wages or stretching workers’ hours.”

The Working Stiff Journal was a free community newspaper produced in Austin, Texas and distributed across town. All of the articles were available online on the UT Watch site for many years, but they are no longer available, so I am republishing my own work here (in 2014). You can still read back issues thanks to the Internet Archive’s Wayback Machine.


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