Fair Labor Standards Act

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Fair Labor Standards Act

United States 1938

Synopsis

The Wages and Hours Act, later known as the Fair Labor Standards Act (FLSA), was passed on 25 June 1938. The act made it the U.S. government's responsibility to set a minimum wage. Though the law set a relatively low initial minimum wage of 25 cents an hour, it provided for increases up to 40 cents an hour by 1945. The act also banned child labor in all businesses engaged in interstate commerce. It established a 44-hour workweek and mandated the 40-hour week by 23 October 1940. Beyond these minimum hours, the bill institutionalized overtime payments for additional hours worked. The law did not cover workers in the public sector or those in agriculture and service industries. As a result it favored workers employed in larger businesses and excluded large numbers of women and minorities.

President Franklin Delano Roosevelt considered the FLSA among the most important New Deal reforms, second only to the Social Security Act. More than any other New Deal legislation, the FLSA had its origins in the recognition that workers were also consumers. Advocates of the bill hoped to give workers the material conditions to consume enough to pull the nation out of the depression.

Timeline

1923: Conditions in Germany worsen as inflation skyrockets and France, attempting to collect on coal deliveries promised at Versailles, marches into the Ruhr basin.
1928: At the first Academy Awards ceremony, the best picture is the silent Wings.
1933: Newly inaugurated U.S. president Franklin D. Roosevelt launches the first phase of his New Deal to put depression-era America back to work.
1935: Second phase of New Deal begins with the introduction of social security, farm assistance, and housing and tax reform.
1938: Hitler's troops march into Austria, and Germany proclaims a political union between the two countries. Later that year, Britain and France, guided by the elder statesman Mussolini of Italy, agree at Munich to let the Germans take a portion of Czechoslovakia. (Germany will annex the remainder the following year.) After Munich, the die is cast: Hitler justifiably believes that if he moves to annex further territory in Europe, the Allies will not react.
1938: In an incident that pointedly illustrates the heightened tensions of the era, Orson Welles's radio broadcast of War of the Worlds causes massive panic in the United States. Despite disclaimers that the program is a mere dramatization, people believe that Martians actually have invaded Earth.
1941: Japanese bombing of Pearl Harbor on 7 December brings the United States into the war against the Axis. Combined with the attack on the Soviet Union, which makes Stalin an unlikely ally of the Western democracies, the events of 1941 will ultimately turn the tide of the war.
1943: To offset the costs of war, the U.S. government introduces income tax withholding—which it claims to be a temporary measure.
1948: Stalin places a blockade on areas of Berlin controlled by the United States, Great Britain, and France. The Allies respond with an airlift of supplies, which, like the blockade itself, lasts into late 1949.
1953: Korean War, a conflict with no clear victors, ends with an armistice establishing an uneasy peace between South Korea and North Korea.

Event and Its Context

Background

Organized labor had been advocating a shorter workweek since the mid-nineteenth century. Progressive Era reformers had sought increased government regulation of business. Several changes needed to take place before these policies could be addressed by Congress. First, the brutal conditions of the Great Depression raised sentiment against unregulated business. Second, the formation of the Congress of Industrial Organizations (CIO) and early New Deal legislation had brought a couple of million more workers into trade unions. Third, President Franklin Delano Roosevelt had received crucial support from organized labor in the 1936 election. Legislators took note; labor controlled a growing number of votes, especially in the cities of the nation's industrial core.

Other factors entered into the equation as well. The growth of interstate markets changed many employers' attitudes about federal wage legislation. Whereas earlier employers had resisted any government involvement in setting wages, by the 1930s employers in higher wage regions saw the minimum wage as a tool to prevent capital flight to lower wage regions. Industry and jobs would stop migrating south, they reasoned, when there was one national wage standard. Proponents saw the FLSA as one strategy by which to cut unemployment by reducing the number of hours worked by each individual worker.

Economists debated the potential effects of state intervention in business. Neoclassical economists believed that the market would lift the nation out of the depression without government involvement. In their view, government regulation would only delay recovery by raising the operating expenses of business and artificially inflating prices. Some reform economists saw things differently. A more rational economy regulated by the government would offer business both economies of scale and a more predictable climate. The higher wages would stimulate consumption, which would require increased production and ultimately help everybody.

Precursors

The components of the FLSA had separate precursors. Although the notion of a shorter workweek had been a longstanding demand of labor, the notion of a federally regulated minimum wage standard came primarily from outside the labor movement. Calls for state regulation of child labor came originally from the labor movement but had been elaborated by Progressive Era reformers.

For the labor movement, the demand for a shorter workday had always been viewed as a way to decrease unemployment. By the 1840s workers in many skilled trades had won the 10-hour day. The National Labor Union began pushing for an 8-hour day in the 1860s. In 1868 Congress enacted an 8-hour day for federal employees. The 8-hour day became an early goal of the American Federation of Labor (AFL).

From the early twentieth century, the U.S. labor movement pushed several states to pass laws requiring that women and children be paid enough to provide for necessities. Men, presumably, were more likely to be protected by collective bargaining. Samuel Gompers and the early AFL were reluctant to support government regulation of matters that they felt were best resolved at the bargaining table.

William Green, president of the AFL, began promoting a shorter workweek as a means to end the Great Depression during the Hoover administration. The demand was aimed at employers, not regulators. Following AFL tradition, Green hoped to change social policy at the bargaining table rather than in the legislature.

Yet, in the mass-production unions that were to become the membership of the Committee for Industrial Organization (later the Congress of Industrial Organizations, or CIO), there was a growing consensus that legislative action might facilitate bargaining. Senator Hugo L. Black of Alabama and Representative William P. Connery of Massachusetts cosponsored a 30-hour week bill in 1932. They reintroduced the bill in 1933, 1935, and 1937, but never succeeded in getting it passed.

Upon his election, Roosevelt tried to promote recovery by raising wages and reducing hours with the National Industrial Recovery Act (NIRA). The National Industrial Recovery Act stated, "Employers shall comply with the maximum hours of labor, minimum rates of pay, and other conditions of employment, approved or prescribed by the President." These hours were initially defined as follows: most classes of workers were limited to 40 hours a week. Factory and mechanical workers and artisans were limited to 35 hours. Firms with two or fewer employees in towns of fewer than 2,500 residents were exempted as were professionals, executives earning more than $35 per week, employees on emergency maintenance and repair work, and highly skilled workers on continuous processes who would be paid at least time and a third overtime.

In May 1935 the Supreme Court declared that the NRA had exceeded the federal government's power to regulate interstate commerce in its Schechter vs. United States decision. With the NRA rendered powerless, the Roosevelt administration set out to create a labor standards bill that would give the federal government power to regulate work conditions by another means. Both the AFL and the CIO had issues with the bill that the Roosevelt administration proposed, but nevertheless it was introduced as the Black-Connery bill in 1937. The bill set no specific minimum wage or maximum hours. It proposed creation of a five-member committee to determine fair labor standards for each industry on a regional basis. It also proposed to exclude goods made by children or under oppressive conditions from interstate commerce.

The Black-Connery bill faced broad opposition. The AFL opposed making wages the subject of government policy, arguing that they should be determined by collective bargaining instead. After extensive debate, the AFL executive council agreed to support the bill if it was limited to industries without effective collective bargaining. President William L. Green ended up supporting the bill, but without the full support of his membership. CIO leaders John L. Lewis and Sidney Hillman supported the bill, though Hillman was not optimistic about it. He worried about the labor movement depending too heavily on the federal government. "Perhaps there is going to be a new law, fixing minimum wages and maximum hours, but we are not going to take a chance on it. We are going to forget about it and go ahead on our own."

Most businessmen preferred the free-market model and opposed state regulation. A few, chiefly those from larger companies, thought that standardized labor practices would provide them an advantage over smaller firms. Regional differences were as important as size. Northern businessmen more readily favored a minimum wage, hoping that it would stop the movement of industry to the lower wage region of the South. For this reason, southern Democrats opposed the law most.

The biggest question remained whether the Supreme Court would accept national regulation of local labor practices, even if they came through the Congress rather than the executive branch.

Passage of the Bill

In this atmosphere it was inevitable that the bill would be highly debated and amended in the Senate. By the time the Senate passed it, the Black-Connery bill did not provide conditions that would raise the purchasing power of the majority of workers. Instead, it raised the minimum standards of the most oppressed workers, provided they fell into the affected categories. At the legislated $16 a week minimum wage, a worker would still not earn the $1,200 a year required for subsistence living.

Minimal as its requirements were, the bill still met with heavy resistance in the South, where it would have actually raised the standards the most. Southern Democrats felt that preserving their region's lower wages was the best way to keep their momentum toward industrialization.

As the bill passed the Senate in greatly amended form, Representative Connery died, leaving it to face the House without its strongest supporter. The committee began debating the exact wage and hour formula. AFL president Green urged the committee toward a lower minimum wage to keep wages a subject for collective bargaining rather than federal policy.

As the Congress debated the bill, American public opinion increasingly grew to favor federal standards for wages and hours. The CIO criticized both the Roosevelt administration and the AFL for the failure to pass the bill. The Democratic Party faced growing criticism for its inability to get the bill passed and create the conditions to end the depression. The 1937 legislative session ended without decisive action.

Early in 1938 Roosevelt redoubled his efforts to get the bill passed. He worked on several fronts at once, lobbying congressmen and appealing directly to public opinion. Labor Secretary Frances Perkins organized a national committee of leaders of business, industry, and labor to support the bill. In an effort to overcome southern opposition, the Labor Department drafted two different versions of the bill. One created national standards; the second proposed a lower minimum wage for the South. After extensive amendment, the bill passed the house by a vote of 314 to 77.

This sent the bill back to the Senate, where it was once again amended. Geographic differentials were not written into the final bill, but the time frame for reaching the 40 hour and 40 cent formula was extended. The compromise bill provided for a Wage and Hour Division of the Labor Department to oversee its implementation and gave that division a good deal of flexibility in enforcement.

Finally, on 27 June 1938 Roosevelt signed the Fair Labor Standards Act. The law did not serve its original goal of providing workers enough buying power to end the depression. It did, however, clearly establish a role for the federal government as regulator of employment practices.

Analysis of the Bill

The FLSA was an intricate piece of social legislation that represented an attempt to balance competing interests and solve many problems. It was created to exceed any existing local law.

Key Players

Black, Hugo L. (1886-1971): Black was Democratic senator from Alabama from 1926 until President Franklin Roosevelt appointed him to the Supreme Court in 1937. Despite a strong belief in federal economic intervention, Black consistently argued that local southern customs should be allowed to continue. During his controversial confirmation hearing, he admitted to being a former member of the Ku Klux Klan but argued that he could be fair to all Americans. Eventually, Black became a defender of civil rights and the first amendment.

Connery, William P. (1888-1937): Democratic representative from Massachusetts from 1923 to 1937, Connery served as chair of the House Labor Committee from the 72nd through 75th congresses.

Green, William L. (1873-1952): President of the American Federation of Labor (AFL) from 1924 to 1952, Green, like John L. Lewis, came from the United Mine Workers of America (UMWA). Interested in cooperation between labor and management, Green looked to government policy changes to secure a better future for labor. He was a Roosevelt appointee to the Labor Advisory Counsel of the National Recovery Administration.

Hillman, Sidney (1887-1946): Hillman participated in the1905 revolution in Russia before migrating to New York and becoming a garment worker. In 1914 he became president of the Amalgamated Clothing Workers of America (ACWA), which he served until his death. Originally a member of the Socialist Party, he became an active Democrat.

Lewis, John L. (1880-1969): A mine worker from Illinois, Lewis became head of the UMWA in 1920. He resigned from his position as AFL vice president in 1935 to concentrate on building the Committee for Industrial Organization. Striving to "organize the unorganized," Lewis became one of the most recognized figures in the country. Lewis retired as UMWA president in 1960.

Perkins, Frances (1880-1965): Perkins joined the National Consumers' League as a student at Mount Holyoke College. After a stint as a settlement house worker, she studied economics and sociology at the University of Pennsylvania and began a career in social research. She headed the Committee on Safety of the City of New York, which was formed to investigate factory conditions following the Triangle Shirtwaist Factory fire, and she subsequently became a member of the Industrial Commission of the State of New York. Roosevelt appointed her as secretary of labor, in part because she had reform credentials but no connections with organized labor. She became a symbol of government intervention in the economy to many businessmen and was frequently red-baited. She remained secretary of labor until 1945 and later wrote a memoir of her years with Roosevelt entitled The Roosevelt I Knew.

Roosevelt, Franklin Delano (1882-1945): Roosevelt was president of the United States from 1933 to 1945 and governor of New York as a Democrat from 1928 until his election as president.