On the 'Blue Eagle'

In the intersection of the political and economic spheres, the debate over minimum wage has long been stuck in a cycle of costs and benefits. Opponents of minimum wage laws point out the disruptions in the labor market, imposing a price floor for potentially low skill jobs. Minimum wage supporters argue that it benefits the worker, allowing them to earn a higher wage (and thus spend more) than they would have been able to in the unregulated labor market. However, understanding the history of minimum wage in the United States can give a better sense of why minimum wage laws might suspend a Constitutional right and how political maneuvering ultimately pushed the law into power.

In the early stages of minimum wage, there was a long history of both the state and federal governments attempting to pass laws to specify working conditions and provide a standard of pay. However, each of these movements were struck down by the judicial system, often the Supreme Court of the United States, on the grounds that it violated Article I, section 10 of the Constitution: freedom of contract. Court cases such as Hammer v. Dagenhart (1918), Adkins v. Children's Hospital (1923), and Morehead v. New York (1936) all established a precedent of the legal system to not allow the government to interfere with labor negotiations.

New Deal legislation also attempted to establish voluntary minimum wage based on American Patriotism. The National Industrial Recovery Act allowed employers to take part in the "Blue Eagle" program:

Signers agreed to a workweek between 35 and 40 hours and a minimum wage of $12 o $15 a week and undertook, with some exceptions, not to employ youths under 16 years of age. Employers who signed the agreement displayed a "badge of honor," a blue eagle over the motto "We do our part." Patriotic Americans were expected to buy only from "Blue Eagle" business concerns.

While employers signed more than 2.3 million of these agreements, covering 16.3 million employees, the National Industrial Recovery Act was ultimately gutted because of a 1935 Supreme Court ruling on a "sick chicken" decision: nothing that ultimately had to do with voluntary employment programs.

President Franklin Roosevelt, who was a large backer of the New Deal legislation, did not end his push for minimum wage when the NIRA was struck down. Using his recent re-election as momentum, he issued a "court packing" plan, in which he would be able to expand the Supreme Court up to 15 Justices, ensuring a liberal majority. While this legislation did not ever come up for Congressional vote, it's looming pressure seemed to have an impact on New Deal and minimum wage controversy. This tipping point occurred in West Coast Hotel v. Parrish, where the Supreme Court ruled for the first time that the state's imposition of minimum wage laws were constitutional under the fourteenth amendment. This cleared the way for the imposition of the Federal Fair Labor Standards Act in 1938, which established a standard forty hour work week, the right to overtime wage, minor employment standards, and a minimum wage.