House republicans move towards $7.25 minimum wage

[BaronVonBigmeat]

http://news.yahoo.com/s/nm/20060727/pl_nm/congress_wage_dc

WASHINGTON (Reuters) - House Republicans worried about their political fate inched toward a vote on Thursday to raise the federal minimum wage for the first time in a decade, but Democrats called it an empty gesture.

Rep. Steven LaTourette (news, bio, voting record), an Ohio Republican active in the negotiations, said the deadlock over the wage hike had been broken.

"The vote to raise the minimum wage to $7.25 an hour over three years will be held tomorrow," he said.

A House leadership aide said a vote was likely, but no firm decision had been made.

The bill that will come before the U.S. House of Representatives will likely be coupled with a controversial small business health plan that could sink the initiative.

 

[BaronVonBigmeat]

Here's something from another forum concerning the history of the minimum wage, I'll just copy/paste it.

======================================================

United States
Franklin Delano Roosevelt helped legislate the first federal minimum wage in 1935. Shortly after, it was deemed unconstitutional by the Supreme Court. After FDR threatened to pack the court, the minimum wage came back with a vengeance in 1937. Historically, the South always had lower wages. This encouraged workers to move north and for industries to move south. By far, one of the biggest proponents of a federal national minimum wage was the textile industry in the North. The textile industry included both the plant owners and the textile worker’s union. They both had a shared interest in a federal minimum wage in order to protect themselves from Southern competition. I’ll let the politicians and union leaders speak for themselves.

Sidney Hillman, president of the Amalgamated Clothing Workers, an important CIO union, who was in charge of the organization drive in the textile industry, testified, however, that he wanted this power of the Board retained, since he believed that legislation should not stop at an $800 full-time yearly wage. He, moreover, declared that such higher rates would aid rather than hinder collective bargaining by protecting the high wage firms from undue wage cutting by competitors.

[...]

So far as the employers were concerned, the northern textile industry was definitely in favor of the bill, and opposed to the granting of any regional differentials. It welcomed a national scale as a means of protecting themselves against southern competition with lower wages.

-Former Senator Paul Douglas on the 1938 Fair Labor Standards Act*

We had to do something; we were losing all of our jobs to the south.

-Rep. John Dent of Pennsylvania*

Industries in New England that now operate on a forty-hour week...and pay reasonable minimum wages will not continue to be subject to competition in the trade markets with goods produced by industries that can undersell New England producers due to the fact that they are working their employees longer hours and paying lower wages.

-Senator Walsh (Mass.)*

We here in Massachusetts are deeply interested in having the pending wage and hour bill adopted by Congress during this session. As a Massachusetts Congressman I am sure you will realize how important it is for such Federal legislation to be adopted and for Massachusetts to have equal competition with other sections of the country, thus affording labor and industry of Massachusetts some degree of assurance that our present industries will not move out of the State.

-Governor Charles F. Hurley of Massachusetts to Representative Healey*

In 1955 the minimum wage was up for an increase. Representative Mack from Washington State said:

It is not fair that western producers of lumber, plywood, furniture, and other forest products who pay an average of $1.80 an hour must compete with the southern lumber, plywood and furniture manufacturers who pay an average wage of only about 86 cents an hour. This unjust differential can be remedied by requiring that southern manufacturers pay at least a minimum wage of $1 an hour.*

After the Civil War in the late 19th century, blacks made up a huge percentage of the workforce on Southern railroad. On some railroads blacks were 85-90 percent of the firemen, 27 percent of the brakemen, and 12 percent of the switchmen. The Brotherhood of Locomotive Firemen would not allow any blacks to join as members at that time. The union still had to deal with them when striking for higher wages as clearly portrayed in the following statement:

Everytime the firemen ask for an increase in wages or overtime due them, they are told by the superintendent, 'Why, I can get a Negro in your place for one dollar, while I'm paying you $1.50 per day.'+

By now you should see what their proposed solution to this problem was. The union called for a general strike in 1909 and one of its demands was the complete elimination of blacks from the payrolls. Instead of agreeing to this demand, the arbitration board instead ruled that blacks should be paid wages equal to their white counterparts. The union was extremely delighted with this decision! Why would such bigots endorse such a measure? We don’t need to speculate on what their motives are because they spelled it out clearly:

If this course of action is followed by the company and the incentive for employing the Negro thus removed, the strike will not have been in vain.+

Similarly, when Congress was testifying about the Davis-Bacon Act of 1931, the act that mandated the “prevailing wage” for some government contracted work, Congressman Miles C. Allgood stated:

That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country.+

 

[BaronVonBigmeat]

South Africa
Similar situations happened in South Africa. No need for much of a history lesson, the important thing to keep in mind is that deep racial tensions existed in South Africa. Their extent was so widespread that as recently as the 1980s, South Africa was openly defending its legal segregation system known as Apartheid.

One particular aspect of Apartheid was known as job reservations. This was a system whereby certain occupations and positions would be strictly reserved for whites only. One of the biggest hurdles in the way of full enforcement of this system were white industrialists. Employers and superintendents of the lucrative South African gold mines had a huge incentive to cheat on the job reservation system because black workers were so cheap to hire. As writer Lord Sidney H. Oliver noted:

The imported European Mine Worker found himself in a community whose traditional first principle was and is that the white man is an aristocrat, admitting the black no equality in Church or State, and doing no manual labour; that the black is an inferior species of animal and must be kept so. He taught the black to stope, to work machine drills and sharpen tools, and all the jobs of the mine, and took contracts for work which the black man did under his direction—at Kafir wages…. The mine manager, however, does not see white men and black men, he sees only grades of labor—and it is the technique of his training, from which he could not depart, to try to reduce his labor costs by the most economical blending of dear grades and cheap. He had the impiety to attempt to take the Kafir out of his traditional South African place and use him to backleg the white man. Why not? He is not a sociologist or a politician, he is a capitalist organizer of industry. South African racial tradition and trade union principles, therefore, invariably coalesce in demanding that the Kafir shall not be given such opportunity to improve his status.+

Not surprisingly, even the Mine Worker’s Union understood the concept of compensating difference:

The native is cheaper and he is employed for that reason throughout the country....One man gets 3s, and the employer says that he is doing as good for 3s as the white man for 20s He will obviously take the 3s man.+

During the early part of the 20th century, almost everyone saw the breakdown of the job reservation system. Blacks were gradually improving their skills and productivity and began to compete directly with white workers. White employment continued to decline as black employment increased. In 1925, the Mining Regulations Commission concluded that white employment in the mining sector had been reduced by a company policy of “maximizing profitability through making the most profitable possible utilisation of ultra-cheap forced labour at the expense of white labor.”+

As a means of countering this trend, one of the proposals was to legislate a minimum wage for all workers. Perhaps it’s possible that devout white supremacists suddenly had a change of heart and began to pursue and advocate policies to help black workers and the minimum wage was just one of them alongside “equal pay for equal work”. Anything is possible I guess, even if it happens to fly in the face of logic, reasoning and other evidence. The following passages are taken straight from Walter William’s book.

"Equal pay for equal work" became the rallying slogan of the white labor movement. Edward Roux writes that Keir Hardie--a British labor leader—was greeted with rotten eggs during his visit to South Africa in 1907 because he advocated equality between whites and Indians. "He was afterwards allowed to speak, however, when the workers found that he believed in 'equal pay for equal work' regardless of colour or creed."+

In 1925, a minimum wage was introduced under the Wage Bill. The Economic and Wage Commission of 1925 had this to say about it:

While definite exclusion of the Natives from the more remunerative fields of employment by law has not been urged upon us, the same result would follow a certain use of the powers of the Wage Board under the Wage Act of 1925, or of other wage-fixing legislation. The method would be to fix a minimum rate for an occupation or craft so high that no Native would likely to be employed. Even the exceptional Native whose efficiency would justify his employment at the high rate, would be excluded by the pressure of public opinion, which makes it difficult to retain a Native in an employment mainly reserved for Europeans.+

Another author wrote in support of the commission’s conclusion:

Neither the Industrial Conciliation Act nor the Wage Act permits differential rates to be laid down on the grounds of race. Consequentially, where Non-Europeans, in practice principally the Cape Coloured, are employed as artisans they are subject to the same statutory minimum rates as Europeans. Wage legislation of the type has tended to restrict the openings for the less capable workmen and particularly for Non-Europeans as they are prevented from offsetting lack of skill by accepting lower wage rates.+

In the 1930s, white workers approved of the Wage Board's efforts to extend statutory minimum wages to nonwhites. Dr. T. H. Boydell, the Labour party minister for posts and telegraphs, explained that whites were being ousted from jobs by "unfair competition," particularly from the Indians in Natal (city in South Africa). Boydell urged that employers be forced to pay to Indians the same wages that they were paying to whites.+

[The South African Nursing Association] condemn[ed] the low wages received by black nurses as "unfair" and as adversely affecting "the status and integrity of the nursing profession." Some branches of the nursing association--fearing that they will be priced out of the market--have gone so far as stating that their members (white nurses) would not accept a wage increase until the wages of black nurses are raised.+

A Brief Example from the Progressive Era

The secret history of the minimum wage

It's no surprise that progressives at the turn of the twentieth century supported minimum wages and restrictions on working hours and conditions. Isn't this what it means to be a progressive? Indeed, but what is more surprising is why the progressives advocated these laws. A first clue is that many advocated labor legislation "for women and for women only."

Progressives, including Richard Ely, Louis Brandeis, Felix Frankfurter, the Webbs in England etc., were interested not in protecting women but in protecting men and the race. Their goal was to get women back into the home, where they belonged, instead of abandoning their eugenic duties and competing with men for work.

Unlike today's progressives, the originals understood that minimum wages for women would put women out of work - that was the point and the more unemployment of women the better!

Much more on the secret history of the minimum wage in Tim Leonard's paper, Protecting Family and Race: The Progressive Case for Regulating Women's Work.

http://www.marginalrevolution.com/marginalrevolution/2005/10/the_secret_hist.html

One Further Illustration
The Wall Street Journal recently reported that Wal-Mart CEO Lee Scott "called on Congress to consider raising the minimum wage."

Perhaps Mr. Scott suddenly started caring for workers and wanted to help them. His justification for raising the minimum wage is that it would give Wal-Mart customers more money to spend. That's just crap, Mr. Scott is a businessman and I'm certain he fully understands the laws of supply and demand. The Wall Street Journal was gracious enough to include this one passage.

Though Wal-Mart pays above the current $5.15 per hour minimum wage--the average hourly wage among its 1.3 million U.S. workers is just under $10 per hour--some of its smaller competitors don't pay as much. As a result, a boost in the minimum wage could pressure the profitability of Wal-Mart competitors.

Baptists and Bootleggers
Regarding pretty much any piece of legislation, there are always Baptists and Bootleggers. Baptists support prohibition out of moral principle. Bootleggers also support prohibition as a means of boosting the demand for their services. The Baptists regarding the minimum wage are the people that truly believe the hypothesis that a minimum wage increases unskilled worker's income. The Bootleggers are labor unions and companies that do not utilize unskilled labor.

For anyone out there that truly cares about helping the poor, I'm genuinely imploring you to truly think very very carefully about whatever proposals that might come along. There is virtually no evidence that a minimum wage actually helps poor people and a mountain of empirical evidence to the contrary.

Sources:

* A Public Choice View Of The Minimum Wage by Thomas Rustici (1985)
+ [ame=http://www.amazon.com/gp/product/027593179X/102-0678173-4652116?redirect=true]South Africa's War Against Capitalism[/ame] by Walter Williams (1989)

 

[Bullypulpit]

http://news.yahoo.com/s/nm/20060727/pl_nm/congress_wage_dc

WASHINGTON (Reuters) - House Republicans worried about their political fate inched toward a vote on Thursday to raise the federal minimum wage for the first time in a decade, but Democrats called it an empty gesture.

Rep. Steven LaTourette (news, bio, voting record), an Ohio Republican active in the negotiations, said the deadlock over the wage hike had been broken.

"The vote to raise the minimum wage to $7.25 an hour over three years will be held tomorrow," he said.

A House leadership aide said a vote was likely, but no firm decision had been made.

The bill that will come before the U.S. House of Representatives will likely be coupled with a controversial small business health plan that could sink the initiative.

Hidden within that bill is an amendment to remove requirements for overtime pay. So you can be worked like a dog and not get any overtime. What a bunch of hypocrites.

 

[5stringJeff]

Ridiculous. I hope the bill goes down in flames. And when the hell did Republicans start advocating for a higher minimum wage?!?

 

[jillian]

Ridiculous. I hope the bill goes down in flames. And when the hell did Republicans start advocating for a higher minimum wage?!?

They started advocating for a higher minimum wage when they looked at their poll numbers.

 

[dilloduck]

They started advocating for a higher minimum wage when they looked at their poll numbers.

No--they wanna pass the bill it is attached to. But what the hell--politicians are politicians. They all wanna be reelected.

 

[5stringJeff]

They started advocating for a higher minimum wage when they looked at their poll numbers.

Idiots, all. They must not realize that minimum wage hikes actually deter businesses from hiring minimum wage laborers, and that we are likely to see increased unemployment as a result.

 

[Mr. P]

A method to our madness there is…

Yeah see, John Q Public, we voted and passed higher wages for you. You now make more money (and we have more to tax). Now gee, things are turning down a bit. Higher prices more unemployment, but we can fix that, just vote us in and everything will be fine, we promise.

Hey John Q, we did MAKE employers give you more money right? We can fix this believe us….

*MORONS*

 

[jillian]

What's moronic is voting for the jerks when their policy has never been worker-friendly just because they change their stripes pre-midterm elections.

Despite the protestations of the more conservative among us, raising the minimum wage has never resulted in the types of problems which are always predicted. Last time the minimum wage was increased, we had great prosperity and low unemployment.

 

[Mr. P]

What's moronic is voting for the jerks when their policy has never been worker-friendly just because they change their stripes pre-midterm elections.

Despite the protestations of the more conservative among us, raising the minimum wage has never resulted in the types of problems which are always predicted. Last time the minimum wage was increased, we had great prosperity and low unemployment.

Link please to that info.

 

[Hobbit]

I'd like to see where in the Constitution the federal government has the right to interfere with the ability of an employee to negotiate a wage with his employers. Setting price limits on any commodity, be it labor, gasoline, or whatever, interferes with capitalism and causes far more problems than it solves. Raising the minimum wage will lead to high unemployment among high school and college students, as well as those fresh out of high school who have yet to build a career. It will also raise the price of nearly all goods across the board, as the employees in retail and manufacturing are the ones making less than $7.25/hr. It will also spurn inflation, as both wages and prices increase, meaning that that $7.25 will soon be worth no more than the $5.15 minimum wage now. Minimum wage is just a bad idea.

 

[MtnBiker]

Why are they wasting their time with $7.25 an hour?

Let's advocate the minimum to be $25.00 an hour!

 

[BaronVonBigmeat]

Despite the protestations of the more conservative among us, raising the minimum wage has never resulted in the types of problems which are always predicted.

That's somewhat true, but that's because they didn't go over the market price of unskilled labor by much. ie, if the true market wage for a burger-flipper is $5 and you set the minimum wage at $5.25, then you may not see massive job losses. You also won't see any significant benefit to the remaining workers. Set it to a real "living wage", say $12/hour, and you'll see problems. The market price of basic labor at Wal-Mart, Home Depot, etc. and especially in big cities is already at $7+, so if this passes you might not see much happen. Rural areas with lower living costs and wages would be effected more.

 

[Redhots]

This is one of those issues that I think should be left up to the states to decide.

$5.15/hr in Ohio does not have the same purchasing power (in that state) as $5.15/hr in California, New York, Florida, or North Dakota.

 

[Redhots]

And lets not forget about what happened to the UK after they made the mistake of putting a minimum wage into effect back in 1999.













The number of jobs grew.

 

[BaronVonBigmeat]

Perhaps, but there are plenty of other factors you could use to explain that. Lower taxes? Fewer hiring regulations? Lower interest rates? Unfortunately, we can't hit the rewind button and see what would have happened if we had changed only one single law.




Wow, what's up with the new smilies? They are gay as hell.

 

[CockySOB]

This is one of those issues that I think should be left up to the states to decide.

$5.15/hr in Ohio does not have the same purchasing power (in that state) as $5.15/hr in California, New York, Florida, or North Dakota.

Agreed. In fact, the Federal minimum wage should only account for the lowest cost of living in the nation, and not the highest. The responsibility belongs in the states to determine what the appropriate minimum wage laws for that state are, and if the residents of a given state think it should be higher than the prevailing Federal minimum wage, so be it - for their state.

Here's an intersting link from the US Dept. of Labor regarding the various state laws involving minimum wage, including pertinent regulations regarding overtime.

 

[CockySOB]

For the record, I'd rather see the Federal minimum wage get a regular, albeit small, increase than to watch the jackasses in Congress get their regular pay hikes.

Just saying....

 

[elephant]

For Mr. P:

I believe Card and Krueger in Myth and Measurement make a good argument about the positive effects of the minimum wage. They go through many older studies of the impacts of minimum wage and conduct their own research on recent changes in minimum wage laws.

In the end I would describe the results as questionable (but that is just my opinion. Some economists strongly support this work while others have done work discrediting it), but it does put into question the standard stylized model that says raising minimum wage will decrease employment.

Their work points out where the traditional supply and demand model ignores some supply side effects, signaling and matching, and efficiency effects that may be more important to the final equilibrium than previously believed.