House Labor Committee Issues Testimony From AFL-CIO
"Thank you for the invitation to testify before your committee regarding the Raise the Wage Act (H.R. 582), legislation to raise the federal minimum wage. I am pleased to offer this testimony on behalf of the
"It is a little over nine and one-half years since
"Those original compromises, however, were not benign. They have had long lasting impacts in creating substantial racial and gender inequalities. Before the FLSA became law, many of those compromises had already become the framework of labor law protections; first in the passage of the National Labor Relations Act and the Social Security Act in 1935. One of those compromises, fought ardently by the Civil Rights movement of that era, was the exclusion of agricultural and most service workers, especially domestics, from labor law protections. Those exclusions, argued for by Southern Democrats with heightened animus toward African Americans, lowered labor standards in the South by excluding a large share of its workforce; and of course, reinforced the ugly racial norms of the South by locking out
I. Understanding the Context of the FLSA
"The Great Depression put downward pressure on wages and prices, and the continued threat of deflation was understood as a problem in creating a sustained recovery. An early attempt to boost wages, the National Industrial Recovery Act, passed in 1933 was ruled unconstitutional in 1935. That Act included a wage setting mechanism to prevent the continued downward spiral in wages, and demand. Originally Southern Democrats argued for racially disparate wage standards but compromised to instead have regional and occupational standards that could have the effect of maintaining racial disparities. The Fair Labor Standards Act of 1938 was successful in addressing the Constitutional issues raised by the
"The Fair Labor Standards Act (FLSA), passed in
Congressional Votes to Raise the Minimum Wage
(Table omitted)
"Except for the minimum wage raises under Presidents Kennedy and
"It would be just as easy to suggest that since 1977, the minimum wage has become a contentious issue, and the old bi-partisan coalition aimed at insuring a decent wage for all workers has faded into a partisan battle. The Post World War II view of protecting the purchasing power of workers on a bipartisan basis, both through meaningful labor standards and protecting unions has been lost. An economy that use to deliver rising wages based on rising productivity has given way to stagnant wages and a growing gap between wages and productivity (Figure 1) and higher levels of unemployment (Figure 2).
(Figure 1 and 2 omitted)
"In revisiting how the minimum wage in the FLSA took shape, the preamble to the FLSA of 1938 tells us how
"The
"It is hereby declared to be the policy of this Act, through the exercise by
"
""Food is the most indispensable factor in the family budget. The average family spends about one-third of its income on food. This means about
"The study also pointed to understanding how a boost in the wages of those workers would translate into increased demand for clothing, and thus demand for textile workers.3 The close attention to wages that would boost workers to a standard of living to meet basic needs, explains why during the Post World War II consensus the federal minimum wage could support a family above poverty. It is only when the minimum wage became a partisan issue in the 1980s that the minimum wage lost its relationship to living standards (Figure 3). Since 1980, the once strong relationship between an expanding economy, falling unemployment and lower poverty levels became weak. Improvements in the living standards of lower income working families no longer comes from work, but from transfers, primarily through Medicaid and Medicare. The expansion of the 1980s made little progress on lowering poverty, as did the expansion from 2001 to 2008.
"The notable exception was the 1990s. The expansion since the Great Recession has only lowered poverty rates since record months of job growth were first reached in 2015 and five states raised their state minimum wage laws so for the first time ever, over half the states were above the federal
"Economic research suggests a significant portion of wage inequality that grew in the 1980s between earners at the bottom ten percent of the wage distribution and median wage earners was because the federal minimum wage was unchanged between 1981 and 1990.4 Further, declines in the purchasing power of the minimum wage are also significant in explaining the growth in overall income inequality, as measured by the Gini coefficient, a broad measure of income inequality.5
(Figure 3 omitted)
II. Issues in Passing the Federal Labor Standards Act
"A key issue argued in the hearings in 1937, was to address the proposal of regional variation in the minimum wage. The careful testimony of
""The prosperity of all American industry and commerce rests in the final analysis of the buying power of the masses and therefore we have a direct and selfish interest in the welfare of these people. Of course, it is difficult for men who are devoting every hour of their lives to the development of a private business to see clearly the relation between the prosperity of their own business and the prosperity of the Nation as a whole. .... Liberal-minded business leaders throughout the country believe in the principle of shorter hours and higher wages and while some years ago the number of such men was unfortunately too few, today their ranks are being augmented each week."6
"Johnson, as did others, questioned whether we had areas of low cost living, or areas of low wages. His view was the nation's economy could only be healthy by raising the wages and the living standards everywhere. His testimony was explicit about differences in his mills in the South and the North and how overall costs varied because of the quality of machines and the efficiency of management.
"Yet, a subtext in the discussion arguing for regional cost of living adjustments was open discussion of whether costs of living differed by race, as the concept of sub-minimums confused being low-income with low costs-of-living. Here was an exchange between BLS Commissioner Lubin and
"
"In the floor debate, Southern Democrats were clear on their fear that equal treatment of white and
""...organized Negro groups of the country are supporting [the FLSA] because it will . . . render easier the elimination and disappearance of racial and social distinctions, and . . . throw into the political field the determination of the standards and the customs which shall determine the relationship of our various groups of people in the South."8
"The initial proposal for the Fair Labor Standards Act followed the framework established by the NIRA. The NIRA allowed for wages to be set by occupation and region. The Civil Rights community feared the FLSA continuing that pattern by including regional and occupation, because the NRA wage codes repeatedly pushed back wages for Black workers.
"The frustration with the
"Yet,
"The Joint Hearings on the Fair Labor Standards Act heard testimony from
""I have had a deal of experience with the N. R. A. I have carefully studied its several hundred codes. I appeared at more than a hundred of its code hearings. I studied in the field the effects of scores of these codes on Negro workers; and I wish now briefly to give to this committee the benefit of that experience. In the period of N. R. A. code hearings Negro workers were helpless to defend themselves against demands made, especially by representatives of southern industry, for longer hours and lower wages for those occupations, industries, and geographical divisions of industries in which the predominant, labor supply was Negro. Unorganized and without perceptible collective-bargaining power, the Negro worker was soon singled out by pressure groups of employers as the legitimate victim for all manner of various differentials.
"In some 670 N. R. A. codes four major types of differentials were created. The first was the occupational differential established in the cotton textile code. Outside crews and cleaners were first denied the benefits of a minimum-wage or maximum-hours provision and later, after much pressure, granted a wage of
"The next type of differential adopted in N. R. A. codes was that of the geographical differential. The fallacious reasoning was that it cost less to live in the South. But an examination of N. R. A. codes reveals the blunt fact that this differential was used primarily to deny benefits of minimum wages to Negro workers. First of all, the dividing line between the North and South varied from code to code, depending on the geographical location of the industry and the number of Negro workers employed in any particular area. In the fertilizer industry 94 percent of the labor supply is Negro. The
"You referred,
"In these facts there rests a warning. Poverty is a highly contagious disease. Once you permit employer-pressure groups to secure exemptions and differentials affecting half a million Negro workers, you will find that the very exploitative conditions you hope to cure by this bill will not be cured. Instead, the growing impoverishment of Negro workers will be the ugly cancer preventing the improvement of the lot of a much larger number of white workers."21
"Davis feared the lobbying power of those who relied on Black labor to extend exemptions. Perhaps the most blatant were the several voices heard by the Joint Committee Hearing on the Fair Labor Standards Act from the turpentine industry. From the 1880s, the turpentine industry was notorious for its use of forced labor and the violation of peonage laws. Several federal investigations led to convictions of turpentine mill camp owners for violation of peonage laws.22 Of course, all members of the committee were not naive to the reputation of that industry as we can see from this exchange:
"
"Davis echoed sentiments from the Black community overall, that too much of the
""We suggest that there be no geographical or sectional wage differentials or no employee class differentials based on race or color."24
"In the final version of the bill, the
"In
III. A Lasting Impact of Disparate Racial Impact from lack of Labor Protection
"Those who argue that the issue of excluding agricultural workers should not be viewed from a racial lens point to the fact that while roughly 65% of African Americans were excluded by the Social Security Act, African Americans actually comprised only about 23% of the agricultural and domestic workforce that was excluded from benefits.25 The odd issue here is that more Whites had to suffer a loss of
"When
"The impact of closing that gap was swift and significant. There were close to 9.1 million Americans who gained protection under the FLSA by the 1966 Amendment, about 21 percent of the American workforce.28 Under the 1966 amendments, nearly one third of Black workers finally gained protection from the FLSA, compared to 18 percent of whites. Because a disproportionate share of
"Estimates based on the differential impact of the 1966 Amendments by industry and wage levels within industry done by economists
"In practical terms, the poverty rate for
"As with the estimate of the gaps in
IV. The Work Ahead
"We can consider the initial disparities, perhaps as the price paid to move the policies forward. In the end,
"But, there is remaining the compromise made in the 1966 Amendments to extend coverage to restaurant workers that enshrined a lower and separate minimum wage for "tipped" workers. While concerns over racial fairness defeated regional wage differences in 1938, it came at the cost of excluding large numbers of
"
"The American people have sensed the unjust nature of firms paying lowing wages. Americans have spoken loudly. Some have done so through ballot initiatives to boost their state or local minimum wage, and others have done so through their state legislators and city councils. Most states have now set their minimum wages above the federal minimum wage, acting ahead of
"Unfortunately, an ugly reality remains. Because just about half of
"New research has shown that the computer age and Amazon and ushered in a swift movement to national pricing. The effect of online shopping is that Walmart and Amazon compete in cyberspace and move prices quickly to be competitive with each other. But, most notably, Walmart does not have different prices for different regions of the country. And, the prices shown online reflect in-store pricing. There is little justification going forward for the case of regional living conditions justifying low wages.34
"As in 1966, raising the minimum wage to reach
"A large part of what is tearing America apart is a lack of understanding amongst us. When policies make the playing field uneven, unfortunately workers cannot always see why outcomes from hard work are so different. People who make less can be demonized to appear lazy. The inability of some workers to "play by the rules" and work hard to get ahead sets those who do succeed against those who fail. Yet, the disturbing truth is that not everyone plays by the same rules. At this time, it is important for
"The call for fairness remains valid. The need to return to our broader shared values that work must pay, and workers be rewarded for their efforts must be lifted. The Raise the Wage Act (H.R. 582) is legislation that puts America back on its path that playing by the rules and working hard is what we champion. So, this legislation, ending the tipped wage differential and without a sub-$15 an hour regional minimum is something the
To view the figures, click here: https://edlabor.house.gov/download/dr-william-spriggs
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Footnotes:
1
2 Act of
3 Statement of
4.
5.
(Figure 4 omitted)
6 Statement of
7 FAIR LABOR STANDARDS ACT JOINT HEARINGS, P. 349
8 Congressional Record, 75th Cong., 2nd sess., 1937, 82:442 (appendix) as quoted by Farhang and Katznelson, supra at note 1.
9. Editorial, Social Security--For White Folk, 42 CRISIS 80 (1935;
10. Id.
11. Id. at 104-06.
12. Id. at 99.
13. Id. at 125; see also
14.
15
16. Economic Security Act: Hearings on H.R. 4120 Before the H. Comm. on Ways and Means, 74th Cong. 108 (1935).
17.
18. Perea, supra, note 9 at 112-13.
19. Id.
20. Editorial, Social Security--For White Folk, 42 CRISIS 80 (1935).
21 FAIR LABOR STANDARDS ACT JOINT HEARING, p. 571-574.
22
23 FAIR LABOR STANDARDS JOINT HEARING, p. 1036-1037.
24 FAIR LABOR STANDARDS ACT JOINT HEARING, p. 865
25. DeWitt, supra note 13, at 53.
26. Id.
27.
28 Expansion of Minimum Wage Law Approved, CQ ALMANAC, 1966, https://library.cqpress.com/cqalmanac/document.php?id=cqal66-1300503
29
30 Premilla Nadasen Citizenship Rights, Domestic Work, and the Fair Labor Standards Act J. OF POLICY HIST. 24 (
31
32
33
34
35 Statement of
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