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Statement of Senator Tom Harkin (D-IA) at the HELP Committee Hearing: “Building a Foundation of Fairness: 75 Years of the Minimum Wage”

*As Prepared for Delivery*

“Today marks the 75th anniversary of the signing of the Fair Labor Standards Act by President Franklin Roosevelt on June 25th, 1938.  The FLSA was a landmark achievement.  After years of struggle, this national law set a floor under wages, limited working hours by requiring overtime pay, and set out to eliminate child labor.  It was born out of the Great Depression, a time of falling wages, falling consumption, widespread unemployment, and pervasive poverty and hunger. 

“President Roosevelt and minimum wage proponents of the time knew that a fair minimum wage was a critical way to reverse these trends—to end the exploitation of workers, to reduce dependence on charity and public assistance, and to raise wages and consumption to help the economy.  Upon signing the Fair Labor Standards Act, FDR said, ‘Except perhaps for the Social Security Act, it is the most far-reaching, the most far-sighted program for the benefit of workers ever adopted here or in any other country.’

“The arguments against a minimum wage then were the same that we hear today:  that it would harm the economy, that it would hurt the people it was meant to help, and that it was antithetical to freedom and liberty.  One opponent, from the National Publishers Association, declared that the impacts of a minimum wage would be akin to the fall of Rome, and that the inevitable result would be ‘distress, misery and despair.’  A House member similarly predicted economic catastrophe: ‘This bill will squeeze the little businessman out of existence, encourage and foster monopoly, increase the cost of living to the consumer, and make it impossible for the farmers to employ labor, while destroying much of the domestic market for his products.’

“President Roosevelt had a strong response to these critics: he said, ‘Do not let any calamity-howling executive with an income of $1,000.00 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you…that a wage of $11.00 a week is going to have a disastrous effect on all American industry.’  And we know that he was right, and the economic catastrophes predicted by critics did not come to pass.

“Indeed, for decades after its passage, the minimum wage was an accepted and lauded national policy.  President Eisenhower proposed a raise himself.  Every President since FDR, excepting only Presidents Ford and Reagan, has signed an increase to the minimum wage.  Until recently, the debate has always been about how much to raise the wage, not whether to raise it at all.

“The protections of the minimum wage have also been expanded over the years, covering more and more occupations.  Today the FLSA covers 90 percent of the workforce.  Interestingly, while the law originally exempted occupations that were disproportionately held by women and people of color, today, these very workers disproportionately benefit from raises in the minimum wage. 

“And history shows us the important role that the minimum wage plays as a national standard in our economy.  For decades, the minimum wage was strong, setting a fair foundation for our economy.  The minimum wage lifted families out of poverty, reduced inequality, and kept low-wage workers’ wages in line with average wages.  It put money in the pockets of consumers, helping businesses and the economy to grow.  It helped stabilize the low-wage workforce, reducing turnover and saving businesses money in the process.  We will hear more today from our panel about the great contributions that the minimum wage has made to our economy and to America’s workers and their families.

“But as we celebrate the minimum wage, we must also recognize that it is no longer achieving its potential benefits, for workers or our economy.  Unfortunately, over the past several decades, the minimum wage has not kept up as the rest of the economy has moved forward.  As productivity has risen, the value of the minimum wage has fallen.  It has nearly a third less buying power than at its peak in 1968. 

“Workers cannot afford to live on the minimum wage, let alone support a family.  The wage today, $7.25 per hour, means only $15,000 per year for full time, year-round work.  Families with a full-time minimum wage breadwinner fall nearly 20 percent below the poverty line. 

“That simply shouldn’t happen.  In a nation as rich as ours, no one who works hard for a living should have to live in poverty, unable to put food on the table, or pay the electricity bill, or keep up with the rent.  We understood this fundamental moral truth in the past, but somehow we’ve forgotten it.

“That is why I have introduced the Fair Minimum Wage Act of 2013, to raise the minimum wage to $10.10 per hour—in three steps—and then to index the minimum wage to inflation.  This modest increase—which is well in line with previous increases throughout history—will give 30 million Americans a higher paycheck, including the parents of 18 million children.  We are fortunate today to have with us in the audience a group of workers who will directly benefit from a minimum wage increase.  They were at the White House this morning celebrating the FLSA and discussing the need to raise the minimum wage, and I’m so pleased they can be with us here this afternoon.  Thank you all for coming. 

“And, of course, we also have an extremely distinguished panel of witnesses here today, including our Acting Secretary of Labor, Seth Harris.  Today’s panelists will discuss the past, present, and future of the federal minimum wage, and the role that this important labor standard has played in helping workers, businesses, and our economy.  I look forward to our discussion.”