Minimum Wage Issues

Politics Behind The First Minimum Wage

The federal minimum wage law was enacted in 1938, in an attempt by Massachusetts politicians and textile workers to head off low-priced textile competition from Southern states, according to Burton W. Folsom Jr. of the Mackinac Public Policy Center. Southern industrialists called the minimum wage a tariff against high-quality Southern textiles -- which were beginning to give Northern mill owners competitive headaches.

Sixty years later, Massachusetts Sen. Ted Kennedy (D) is carrying on his state's tradition by pushing for yet another minimum wage increase. But many economists say such a hike now would have the same effect it had then: the destruction of jobs, particularly those of unskilled minorities.

  • When Washington, D.C., adopted a local minimum wage in early 1938, scores of maids and unskilled workers were immediately laid off by the city's hotels.

  • After the national minimum wage was raised from 75 cents to $1 an hour in 1956, non-white teen-age unemployment shot up during the next two years from 14 percent to 24 percent.

  • After the 1996 hike to $5.15 an hour, unemployment among black male teen-agers went from 37 percent to 41 percent.

  • The Labor Department estimates the 1996 increase resulted in the elimination of at least 20,000 jobs -- although the Employment Policies Institute puts the figure closer to 128,000.

Source: Burton W. Folsom Jr. (Mackinac Center for Public Policy), "The Minimum Wage's Disreputable Origins," Wall Street Journal, May 27, 1998.

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