June 25, 2013
President Roosevelt signed the Fair Labor Standards Act (FLSA) into law 75 years ago today. The FLSA outlawed child labor, guaranteed a minimum wage, enshrined the 40 hour workweek into law, and required a time-and-a-half cash premium for overtime work.
Passing the FLSA was an historic milestone on America’s journey towards becoming a more just and civilized society. But the FLSA was also a key factor in the explosion of the American middle class and the reduction of economic inequality after the Second World War.
The FLSA was a landmark expression of the groundbreaking idea that we all do better when we all do better. When America raises wages for all workers, the middle class thrives and robust consumer spending drives a virtuous circle of broadly shared prosperity. It was a fantastically successful idea.
But the FLSA is not a monument where we lay a wreath every year. It is a living promise that must be constantly redeemed.
Most urgently, we need to restore the buying power of the minimum wage. If the minimum wage had kept pace with inflation since 1969, it would be $10.59. If it had kept up with productivity growth, it would be $18.72.
Sen. Tom Harkin and Rep. George Miller have introduced legislation that would raise the federal minimum wage from $7.25 to $10.10 and index it to inflation. Their bill would increase economic output by $33 billion over the course of three years, and this increased economic activity would create 140,000 new jobs over the same period.
Another urgent task is to end the exclusion of home care workers from the FLSA’s minimum wage and overtime protections. The Labor Department has proposed new rules that would raise wages and improve working conditions for workers who provide in-home care and services to the elderly disabled, but these protections have been bottled up by opposition from industry.
More generally, it is increasingly common for businesses to deny minimum wage and overtime protections to their employees by misclassifying them as “independent contractors.” And it has become far too easy for firms to deny overtime protection to relatively low-level employees by claiming they are “executive” or “administrative” management who are not covered by the overtime law.
Addressing these rampant abuses must be part of a larger effort to address America’s growing alarming wage crisis. For the past several years, inflation-adjusted wages have been stagnant or falling for the vast majority of American workers. This wage crisis is an important reason why the U.S. economy has been stuck in the doldrums, and it deserves our full attention.