Minimum Wage and Society

Minimum wage positions are typically learning wage positions—they enable workers to gain the skills and knowledge necessary to become more productive on the job. As workers become more productive they command higher pay and move up their career ladder. During the Great Depression, with jobs scarce and many job-seekers, workers frequently found themselves exploited and their wages hitting rock-bottom. In 1938, President Franklin Roosevelt signed into law and “congress instituted the minimum wage… as part of the Fair Labor Standards Act” (Sterk, 2013). The Fair labor Standards Act establishes wage guidelines for businesses with hourly employees. The purpose of the minimum wage during this time was to stabilize the post-depression economy and protect the workers in the labor force. The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees.  The first minimum wage was set to 25 cents an hour, in 2007 changed to $7.25, reaching its highest in modern times U.S. in Washington State at $9.19. The minimum wage law serves the purpose of establishing a “living wage”–mostly for lower-class families that depend on labor jobs which often pay the least.

Brook and Watkins’ argument against minimum wage explains that “minimum wage doesn’t ensure everyone can earn a living… it doesn’t guarantee that everyone is paid fairly” (Brook & Watkins, 2013). This is a broad statement about minimum wage. Brook and Watkins are simply stating that the minimum wage does not allow one to save/ earn anything, and it denies you the right to decide what pay rate to offer or accept by your employers. Watkins gives a great example of himself when he was seventeen years old as he applied for his first job at the local mall for an entry- level position as a ticket taker at the theatre. He explains how he was offered $5.35, just above the minimum wage at the time, with little to no experience in the work field. The only reason he took the job was because no one else was offering more at the time. If he were offered $5.00 and tried to counter offer to get todays minimum wage of $7.25, he would have never gotten the job. The only reason Watkins accepted the offer of $5.35 was because no one was offering him that much at the time, and with no experience he was eager to start and understood that he was not worth more yet. He knew that it was not about the pay rate. It was about building your resume in order to move up the ladder to earn more than the minimum wage. To conclude Brooke and Watkins’ argument, they state that “it isn’t low pay that’s unfair—it’s preventing people from offering and accepting jobs that are unfair” (Brook & Watkins, 2013). 

There are three major schools of thought that have shaped the study of labour law. The first, Unitarianism—envisions the capitalist labour market as a realm of freedom and an engine of economic growth. The second, Liberal Pluralist—believe that the labour market is characterized by an imbalance of power between the individual worker and the employer. The third, Marxists—argue that capitalism produces crisis and that over time capitalist relations of production (the wage relation) become a restraint on economic development.

In relation to the three schools of thought, Brooke and Watkins’ argument falls under the Unitarianism view. Unitarians see labour laws as the product of special interest groups that have distorted the political and legal process for their own selfish ends. They believe that without labour law workers and employers can share a common set of interests which include maximizing their individual liberty and in gaining from the wealth generated by capitalism. They believe that labour law should provide a legal framework within which workers and employers can freely negotiate the terms of their relationship. In Brooks and Watkins argument that is exactly how they feel. They feel as if the government is sitting there at the interview table with the employer and the job- seeker, but the employer and job- seeker are not the ones negotiating the wage, the government is doing it for them by implementing the minimum wage.

The liberal pluralists claim that capitalist is a powerful engine for producing wealth, however the joint efforts by the workers and employers are not fairly divided and the workers interests and voice are insufficiently recognized and protected. Their counter- argument to the article is that they think for the state to protect vulnerable workers they need to set minimum standards which would produce fairness in the labour market. This kind of delegation of power protects labour law. The article argues that minimum standards does not provide fairness, therefore abolishment of minimum wage is required. The article states that “the problem is that the minimum wage doesn’t ensure everyone can earn a living—it ensures that many of us can’t earn anything. And it doesn’t guarantee that everyone is paid “fairly”—it unfairly denies us the freedom to decide for ourselves what pay to offer or accept” (Brook & Watkins, 2013). It contradicts with the liberal pluralists as they argue for the idea of having labour laws that set out minimum standards, as labour laws do not provide fairness matter of fact it takes freedom away from both the worker and employer to negotiate what pay to accept.

In my opinion, I agree that a person should make a wage according to their skill set and experience. I also believe that minimum wage is necessary as it helps those in poverty. Minimum wage also stops companies from exploiting those with little employment options. I agree with the article as the article states minimum wage takes away freedom from both the worker and employer. However, minimum wage is necessary for the unprivileged group, who do not get to discuss/negotiate their wages with their employers. Minimum wage is required so the employer has a standard of paying his workers. This keeps the employer from abusing the employees’, if the company is losing money the employer cannot just cut the employees’ wages. This was a common issue in the industrial revolution, where the emergence of the labour laws needed to come about and did.

Sources:

Comack, E. (2006). Locating law: race/class/gender/sexuality connections (2nd Ed.). Halifax, NS: Fernwood Pub.

What is Minimum Wage: Its History and Effects on the Economy. (n.d.). The Heritage Foundation. Retrieved November 8, 2013, from http://www.heritage.org/research/testimony/2013/06/what-is-minimum-wage-its-history-and-effects-on-the-economy

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One response to “Minimum Wage and Society

  1. Thanks for the interesting post.

    I’m going to have to disagree with your opening statement! You state that ‘minimum wage positions are typically learning wage positions’. This is certainly an argument (perhaps a myth or anachronism) that is advanced by Brook and Watkins, but it does not appear to reflect the realities of contemporary labour. Many minimum wage positions are not geared towards upward mobility for workers. Late modern neoliberal capitalist economies require a certain portion of the workforce to be employed in low-wage labour. Increasingly, this labour is precarious, with little in the way of guarantees, benefits, or job protection. Many people are ‘locked into’ minimum wage work.

    You are correct to locate Brook and Watkins’ argument within the ‘unitarian’ school of thought on labour law.

    You propose that “Minimum wage also stops companies from exploiting those with little employment options”. This is certainly one of the central goals behind the concept of a minimum wage. Is it true that the minimum wage prevents exploitation, though? In thinking about this, we should note that the inflation rate has vastly outstripped increases in the minimum wage – meaning that in many ways, the minimum wage today offers less protection against exploitation (and impoverishment) than it did decades ago. One could argue that the legal requirement that employers pay a minimum wage creates a perception of legitimacy (as you note, it gives the impression that employees are not abused), while at the same time perpetuating – even authorizing’ exploitative labour relations.