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What did FDR Mean by a "Living Wage"?

FDR on a dime

FDR's "Living Wage" and the Fight for 15: Analyzing the Original Intent of Minimum Wage

History repeats itself; or at least President Joseph R. Biden hopes that it will. After taking executive action to mandate a $15 per hour minimum wage for all federal contract workers, President Biden now hopes to coax Congress into passing a national minimum wage of $15 per hour. Speaking before a joint session of Congress for the first time, President Biden lobbied for the minimum wage increase saying, "Nobody working 40 hours a week should be living below the poverty line." It is a sentiment Biden has argued for years, although its origins in the White House began long before he ascended to the nation's highest office. Both his actions and rhetoric mirror those of President Franklin Delano Roosevelt (FDR) more than eight decades ago.

Among his other ambitious New Deal initiatives, government programs that sought to help the United States recover from the economic disaster of the Great Depression, FDR fervently pushed for the establishment of a national minimum wage. After congressional legislation that would allow the President to establish a national minimum wage was blocked by the Supreme Court in 1935, President Roosevelt sought to increase the wages of federal contract workers as the first step towards a national minimum wage. The 1936 Public Contracts Act allowed Roosevelt's administration to establish a "prevailing minimum wage" that all federal contractors had to abide by. He hoped that increasing the wages of federal contract workers would put pressure on private-sector competitors to match these wages for their employees. Then, a narrow, surprise decision by the Supreme Court in 1937 that upheld a state minimum wage law provided FDR the opportunity to renew the fight for a nationwide federal minimum wage, which was ultimately implemented in the 1938 Fair Labor Standards Act.

FDR's successful fight for the establishment of the minimum wage in the 1930s was as bitterly contested as today's debate over whether to raise the minimum wage as high as $15 per hour. Arguments about the economic effects of a higher federal minimum wage permeate the national discourse. Proponents argue that, according to the Congressional Budget Office, a $15 per hour minimum wage could lift as many as 900,000 Americans out of poverty, while opponents retort that the same report shows another 1.4 million Americans would lose their jobs as a result. This debate over the economic impacts of a change in the minimum wage quickly gets mired in cyclical squabbles over projections about effects on inflation, wealth distribution, purchasing power, investment, reduced work hours, labor automation, etc. Certainly, these are all worthy subjects of discussion, and it is vital that consideration is given to the tradeoffs they represent. However, the reason agreement on the minimum wage level feels hopelessly elusive is not because of insufficient economic analysis.

An honest evaluation of the arguments put forward by the two mainstream sides of the contemporary minimum wage debate reveals that, in general, both are genuinely concerned with the financial wellbeing of the average American. Otherwise, the debates over the economic effects of increasing the minimum wage on businesses and workers would be meaningless. The reason these debates fail to bring about consensus, despite similar objectives on each side, is that they leap right over the beating heart of this issue: the purpose of the federal minimum wage. Without clear agreement or disagreement on what the minimum wage is actually supposed to do, it becomes fruitless to debate whether the expected economic effects lean in favor of or against raising the minimum wage or give an indication as to what wage level it should be set at.

The closest the present discourse has come to unpacking this question is the back-and-forth debate over whether or not the minimum wage is supposed to be a "living wage." The phrase "living wage" and the surrounding debate harkens back to FDR's original declarations about what he intended the minimum wage to be. The simplest way to understand what President Roosevelt believed about the necessity of a minimum wage is to read his own public arguments in favor of passing the federal minimum wage.

Before his presidency began, Roosevelt was deeply concerned with what he saw as the diminishing purchasing power of the "forgotten man," low-income farm and factory workers who were economically devastated by the Great Depression. Among other labor policy proposals like the standard forty-hour workweek, Roosevelt sought to restore this purchasing power through increased wages, which he hoped would spur additional spending and economic growth to help cover the increased cost of labor. Ultimately, he hoped to mandate that all workers would be paid "living wages" as described in his 1933 speech on the National Industrial Recovery Act, "It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By 'business' I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white-collar class as well as the men in overalls; and by living wages, I mean more than a bare subsistence level-I mean the wages of decent living." [emphasis added]

Roosevelt pressed on with the concept of a "living wage" in exchange for a forty-hour workweek as the means to increase the purchasing power of the industrial worker and farmer until the passage of the 1938 Fair Labor Standards Act. Upon sending the bill to Congress on May 24, 1937, he urged Congress in his famous speech, "A Fair Day's Pay for a Fair Day's Work," saying,

Today, you and I are pledged to take further steps to reduce the lag in the purchasing power of industrial workers and to strengthen and stabilize the markets for the farmers' products... Our nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work... All but the hopelessly reactionary will agree that to conserve our primary resources of manpower, government must have some control over maximum hours, minimum wages, the evil of child labor and the exploitation of unorganized labor.

The passage of this act cemented FDR's labor rights legacy with the establishment of the forty-hour standard workweek, the abolishment of child labor, and the creation of the twenty-five cents-per-hour federal minimum wage.

Contrary to what some opponents of the "living wage" minimum wage may argue today, there is no question FDR intended for the minimum wage to support the wages of fully employed adult men and women working in professional trades, not merely teenagers working part-time jobs or those in entry-level positions. He believed it would be an important economic driver to help the economy recover by increasing the purchasing power of a substantial portion of the adult workforce.

While the question of whether FDR meant for the minimum wage to serve as a "living wage" at the inception of the federal minimum wage can be reasonably answered, that does not resolve the debate over how the minimum wage should be applied today.

First, the very definition of what constitutes "decent living" supported by a "living wage" comes into question. Certainly, today's standard of living in the United States differs from that of the early post-depression era with all the modern comforts that a near-century of progress has brought about. What's more, in FDR's 1933 speech cited above, and other speeches given around that time, the context shows that his call for "living wages" is specifically put forward as a contrast to what he calls "starvation wages."

In full context, he says,

In my Inaugural, I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages, I mean more than a bare subsistence level-I mean the wages of decent living. Throughout industry, the change from starvation wages and starvation employment to living wages and sustained employment can, in large part, be made by an industrial covenant to which all employers shall subscribe. [emphasis added]

The context demonstrates that his description of "living wages" and "decent living" is only that which rises above starvation and "bare subsistence."

As others have rightly pointed out, the twenty-five-cent minimum wage passed at the time only amounted to the equivalent of a $4.54 per hour minimum wage is 2019 dollars. This wage is enough to avoid starvation but would obviously fall short of the kind of lifestyle proponents of a $15 per hour minimum wage advocate for today. Furthermore, President Roosevelt was operating in a time when federal welfare benefits for needs like housing and food were nearly non-existent compared to today. Though rare, starvation was a very real possibility for those with little work or low-paying jobs and malnutrition was common. The minimum wage at the time would help fill a role that is fulfilled in large part by welfare programs today. Roosevelt himself was bewildered that any major business owner could be opposed to such a low wage, unless for the sake of greed. What FDR was fighting for was the prevention of purely exploitive wages that did not allow workers to feed themselves properly even when working full-time.

President Roosevelt believed in an expansive understanding of positive rights, including the right to a job, food, housing, healthcare, and education as outlined in his famous "Second Bill of Rights" speech before Congress. Despite his sincere belief in the rights of individuals to have all these things and more, FDR only mustered up a minimum wage amounting to 30% of the $15 per hour rate debated today. It becomes difficult, then, to argue that Roosevelt viewed the minimum wage as the sole mechanism for achieving these rights and the lifestyle they describe. Rather, it seems that the minimum wage was only intended to serve as the bare minimum for what society would deem an acceptable wage to avoid the exploitation of vulnerable workers and to ensure that no working person would starve in the United States. This is further evidenced by the fact that FDR continued to propose a rash of other economic programs during the New Deal era and that he touted the minimum wage as a means to spur further economic activity. In other words, the minimum wage was used as one tool among many to address the economic plight of Americans.

In short, both sides of the "living wage" and "Fight for 15" debate find merit in the history of the intended purpose of the federal minimum wage. And yet, both also overstep that merit. Those who argue that it was always intended to support a "living wage" for full-time workers are correct, while those who believe it should only support part-time jobs for young workers or temporary entry-level positions offer an entirely separate, modern alternative to the original purpose. On the other hand, those who argue that the minimum wage must provide for the lifestyle of a modern American family irrespective of other economic considerations or government welfare programs are arguing for a wage level that far exceeds the one passed under FDR.

An alternative view that respects both the history of the minimum wage and the economic differences between life in America in the early 1930s and today suggests that the minimum wage should be used in tandem with other policies, including flexible localized minimum wages, to address economic hardship. While the federal minimum wage can provide a base expectation for wages, it is a simple, blunt instrument that cannot address the complexity of regional and circumstantial employment considerations throughout the country by itself. Instead, it should be treated as the simplistic but important economic tool that it is, and it should be raised and lowered in consideration of the purchasing power it provides and the many other federal, state, and local policies that administer further contextualized economic support.

This approach is on good footing with both history and modernity alike. FDR was only able to initiate the federal minimum wage as a response to the Supreme Court's affirmation of a state-level minimum wage. President Biden, a proponent of the $15 per hour minimum wage, has himself acknowledged the success of setting minimum wages at the local and state level.

Although a historical understanding of the original intent of the minimum wage and parsing of the phrase "living wage" will not determine what the minimum wage should be set at today, this information can be immensely helpful in pushing the conversation forward by clarifying what the minimum wage meant when it was established and what society believes it should achieve today. FDR believed the minimum wage should provide a "living wage," but it is for Americans today to determine what that wage should be.