Possible Indexation of the Federal Minimum Wage: Evolution of Legislative Activity (CRS Report for Congress)
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| Release Date |
Revised Feb. 29, 2008 |
| Report Number |
RL33791 |
| Report Type |
Report |
| Authors |
William G. Whittaker, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Indexation of the minimum wage (linking the minimum wage to an outside economic variable) in a variety of forms has been a subject of discussion at least since the early years of the 20th century. When early proponents of a wage floor began to consider the matter as public policy within the United States, they established a series of state wage boards. These boards were given the authority to fix a reasonable rate below which most workers were not permitted to be paid. The powers of the boards varied from one state to the next and, where they were reasonably effective, there was the constant fear that the courts would intervene and overturn whatever authority the boards may have had.
The boards wrestled with a variety of methods for setting the minimum wage. Some made surveys of the cost-of-living for low-wage employees and tried to render a measure of equality between such costs (however defined) and income derived from work. But surveys proved difficult and, gradually, a reliance developed upon governmental agencies. It was not necessarily a neat fit, and questions remained.
In 1938, largely moving beyond the state boards, Congress passed the Fair Labor Standards Act (the FLSA). The act established the federal minimum at 25 cents an hour for those relatively few workers actually covered. Since 1938, Congress has revisited the act in a sporadic fashion. The result, through the years, has been a series of gradual expansions of the act and some variation in wage ratesâbut, generally, since the 1960s, a downward spiral in the real value of the minimum wage has set in. During the Reagan era, no new increases were made, and only two (the 1989 and 1996 amendments) have been made in subsequent years.
At present, at least five states (Missouri, Montana, Oregon, Vermont, and Washington) index their state minimum wage standards. In several other states, the issue has recently been considered. In the 110th Congress, two bills dealing with indexation have been introduced: H.R. 4637 (Al Green) and S. 2514 (Clinton). The issue was not dealt with in the general minimum wage legislation (H.R. 2206, P.L. 110-28), enacted in early 2007.
Following a preliminary introduction of the topic, this report reviews the several relatively distinct periods during which indexation, in one form or another, was before the Congress. This report will be updated if conditions warrant.
