Minimum Wage

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The movement to guarantee a minimum wage for any employed person (with certain exemptions) began with a debate over whether it was proper to interfere with the right of two adults, acting freely, to determine between themselves the rate at which one would pay the other for services rendered. After legislation in the Progressive Era first put minimum wage laws on the statute books, the Supreme Court ruled that minimum wage laws violated the due process provisions of the Fifth and Fourteenth amendments. This interpretation was specifically reversed in 1937. Since then, the question has changed from whether minimum wage laws were constitutional to whether they were prudent.

In discussing the repercussions of setting a minimum wage, Justice Sutherland commented in the majority opinion in Adkins v. Children`s Hospital in 1923 that it would logically open up the possibility of legislation to establish maximum wages, on the theory that allowing high wages would adversely affect those of limited means. William Howard Taft dissented and described such thinking as a non sequitor.

Sutherland was more mainstream in his criticism of the philosophy of the minimum wage, and his words sound modern in their thinking:

It forbids two parties having lawful capacity -- under penalties as to the employer -- to freely contract with one another in respect of the price for which one shall render service to the other in a purely private employment where both are willing, perhaps anxious, to agree, even though the consequence may be to oblige one to surrender a desirable engagement and the other to dispense with the services of a desirable employee.

The contrary opinion is that for the lowest earning members of the economy, a contract between them and a potential employer is in no sense between equals and the interest of society are not served by allowing it to take place below a certain minimum rate.