These slides are from my MBA 592 class at Wilkes University. I presented these to Dr. Jennifer Edmonds and other members of my class on 4/30/16.

1. Kenneth Moules
MBA 592
Dr. Jennifer Edmonds
April 30, 2016
An Analysis of the Federal
Minimum Wage

2. Why This Topic?
 Wanted to choose a topic with both established
data to analyze and current findings.
 2016 Presidential Election
 Relevancy is far-reaching
-Affects many more than simply minimum
wage earners
 Personal professional experience
-TJ Maxx/Workers United Labor Negotiations

3. What Will Be Covered
 History of the minimum wage
-Where and how it originated?
-How it has transformed over the years
 Arguments for raising the minimum wage
 Arguments against raising the minimum wage
 Political Influences on the issue
-Where do presidential candidates stand?
-Political parties influence on the issue
 Outcomes of government action

4. What is a Minimum Wage?
 The minimum wage is a base wage floor that protects workers
by guaranteeing a minimum amount a worker can be paid for
one hour’s work.
 Power lies with the Legislative branch of government
-States have grown increasingly powerful
-Local municipalities have power as well
 Employers are bound by law to follow subsequent legislation all
the way down to local government levels.
 Legislation with the highest wage applies at all times
 Last federal minimum wage hike was in 2007
-Three phase plan
-Last phase was completed in 2009

5. What Workers Are Protected?
 Full and part-time workers are eligible
 Law is designed to cover non-exempt employees and
establishes that this wage covers all hours worked
within a 40 hour work week
 Non-Exempt list
-Basic hourly employees
-Commission employees
-Employees who have dependence on
their current positions for
everyday life
 Separate legislation for overtime qualifications and
rules
 Employee records are vetted by IRS for employer
wage fraud

6. Who is Considered Exempt?
 There are a good number of job types/employees
that do not qualify for minimum wage protection.
 These employees still have basic protection for
standards and in some states, a limit on hours
worked per week.
 Computer professionals
-Earning at least $26/hour
 Internships/Externships/Medical School
residencies
 Farm Workers
-Exempt from both minimum wage and
child labor laws

7. Exempt Cont’d
 Seasonal Employees
 Executive and administrative assistants
 Workers with disabilities
 Homeworkers
-Self-Employed
 Companions for the elderly
 Newspaper delivery personnel
 Newspaper employees of limited circulation
papers
 Seaman on non-commercial vessels

8. Current Minimum Wage
Numbers
 Current minimum wage is $7.25/hour
-Currently in line with modern countries such
as the U.K. and Germany
 Trend nationally is to raise the minimum wage to over $10 an hour.
 26% of the workforce is currently making within $1 of the rate.
 Highest concentration of minimum wage workers is in the South and Southwest
 Ironically, many of the states leading the charge on wage reform have the least
amount of workers currently making such a low rate.
 Women and young people have risen in dependency on the minimum wage each
of the last 17 years.

9. Examples of Local Ordinances for
MW
 We have seen trends with traditionally more
progressive states such as California, Oregon,
and Washington enact state and local laws that
supersede the federal mandate.
 Some cities have begun making changes:
-Seattle up to $15/hour
-Portland up to $12.50/hour
-San Francisco soon to $12/hour
-Many other California cities such as San Jose, San
Bernadino, Santa Cruz, Sacramento, and Oakland
have all introduced legislation to raise their local wages
as well.
- https://www.youtube.com/watch?v=O8OSeyP9SB4

10. Adkins v. Children’s Hospital
1923
 Revolved around Washington D.C.’s decision to
implement a new minimum wage law for women and
children. These two groups were the most underpaid
at that time.
 Reached the Supreme Court in 1925
 Children’s Hospital was refusing to pay its nurses and
employees the new wages mandated by law.
 In a 5-3 decision, the Supreme Court struck down the
legislation as unconstitutional.
 According to Chief Justice Sutherland, the D. C.
minimum wage law, by contrast, was "an arbitrary
interference with the liberty of contract which no
government can legally justify in a free land."

11. West Coast Hotel Company v.
Parrish 1937
 Instrumental in its disagreement with the Adkins case.
 West Coast Hotel Company was challenging the state of Washington’s
new mandate that women receive a fair wage.
 Many assumed the case would follow in line with that of the Adkins case
a decade earlier.
 In a major surprise, the Supreme Court of Washington ruled against the
hotel company.
 However, in Parrish v. WCHC, the Court, on a 5–4 vote, rejected the
freedom of contract doctrine. Chief Justice Charles Evans Hughes
noted that the Constitution does not refer to freedom of contract.
Rather, it proscribes deprivation of liberty without due process of law.
Hughes pointed out that freedom is not absolute. Moreover, "the liberty
safeguarded is liberty in a social organization which requires the
protection of law against the evils which menace the health, safety,

12. Origins of the Law
 The minimum wage was established by the Fair
Labor Standards Act of 1938.
 During this time of economic boom, many
employees were working long hours, for
extremely low wages, and in terrible conditions.
 Franklin D. Roosevelt
-Voice for the Issue
 First wage was set at $.25/hour and the work
week was established at 44 hours/week.
 This is where we see the first resemblance of the
definition of a worker. Legislation also abolished
cruel child labor.

13. Portal-To-Portal Act 1947
 First act to establish what “time at work” is considered
 However, this is groundbreaking legislation that threw the
first wrench into the FLSA.
 “Out” clauses were now established for employers who
were found to violate the minimum wage. This was very
common in this time period without true accounting and
reporting practices of today.
 Established the “Good Faith” clause where employers
could argue, some successfully, that the misjudgment was
in good faith and
 Also established a statute of limitations of two years for
any possible violations of the FLSA.

14. Equal Pay Act of 1963
 First legislation to establish gender equality under the
FLSA.
 Although women were a much smaller part of the
workforce, many of the subsequent gender/wage
legislations to follow were built off of this act.
 Also the first legislation to establish penalties for
violators.
-Large fines to corporations
-Restitution to victims which could include
punitive damages
-Possibility of regular government
check0ins with prior violators
-Estaablished the Dept. of Labor as the
chief investigative body, with
support from the IRS and Dept. of

15. Age Discrimination in Employment
Act 1967
 Built off of the same framework as the gender equality
legislation.
 The Age Discrimination in Employment Act of 1967 (ADEA)
protects individuals who are 40 years of age or older from
employment discrimination based on age. The ADEA’s
protections apply to both employees and job applicants.
Under the ADEA, it is unlawful to discriminate against a
person because of his/her age with respect to any term,
condition or privilege of employment, including hiring,
firing, promotion, layoff, compensation, benefits, job
assignments and training. It is also unlawful to retaliate
against an individual for opposing employment practices
that discriminate based on age or for filing an age
discrimination charge, testifying or participating in any way
in an investigation, proceeding or litigation under the
ADEA. The ADEA applies to employers with 20 or more
employees, including state and local governments. It also
applies to employment agencies and labor organizations,
as well as to the federal government

16. Fair Minimum Wage Act of
2007
 Even though it is nearly ten years old, this is the
most recent minimum wage legislation at the
federal level.
 Introduced by Congressman George Miller (D-
CA). He stated, “This is a simple up-or-down vote
on whether or not we as Congress believe the
poorest people in America deserve a raise.”
 Bill received 315 votes in the House.
 Raised minimum wage from $5.15 to $7.25.
 Three-phased plan to raise wages in three cycles
ending in 2009.
 No new legislation appears to be on the horizon.

17. Trends and Statistics Over
Time
 In terms of who currently makes a minimum
wage rate, the list seems to revolve around four
groups:
-Disproportionately young: 50.4% are ages
16 to 24; 24% are teenagers (ages 16 to
19).
-Mostly (77%) white; nearly half are white
women.
-Largely part-time workers (64% of the total).
-Service Industry
 Minorities make up a large percentage, most
notably in the age group of 16-24.
 Latinos are the largest race classification growing

18. Types of Jobs Mostly Covered by
MW

19. MW Chart Over Time

20. Current MW Statistics (2013)

21. Arguments in Favor of Raising the
MW
 Major push in recent years to raise the wage.
 Mainly supported by Democrats at the federal,
state, and local levels.
 Current presidential candidate Bernie Sanders
has been one of the staunchest proponents of
such legislation.
 The argument sis support of a wage hike,
predominantly center around these core
arguments:
-An overall strengthening of the Economy
-Raising poverty levels
-Public Health Argument
-Increased worker productivity

22. Overall Strengthening of the
Economy
 This aspect has been very much trumpeted by Barack
Obama and his administration.
 “Of course, nothing helps families make ends meet like
higher wages…and to everyone in this Congress who still
refuses to raise the minimum wage, I say this: If you truly
believe you could work full-time and support a family on
less than $15,000 a year, go try it. If not, vote to give
millions of the hardest-working people in America a raise”
(SOTU, 2015)
 “At the federal level, the Obama Administration has
expressed support for the Raise the Wage Act proposed by
Senator Murray and Representative Scott, which would
increase the minimum wage to $12 by 2020. The President
has also taken action to raise wages for workers on all new
federal contracts to $10.10 or higher. Raising the minimum
wage nationwide will increase earnings for millions of
workers, and support the local economies where they live,
work and spend their earnings” (WhiteHouse.gov)
 Lowers poverty levels and wanes people off of government

23. Public Health Argument
 Based on the premise that low wage earners don’t have an opportunity
to seek adequate living conditions or adequate preemptive medical
care.
 Studies have show that those earning less than $10.00/hour have a
56% higher chance of dying before the age of 65 than those who earn a
wage of $13.00/hour.
 “The relationship between health and income is not just about individual
access to medical care, but how income affects a range of opportunities
for health. Communities of residents with higher incomes are likely to
have better recreational amenities, housing stock, food access, and
schools, and tend to be safer – all of which impact health. Income is
also associated with other factors that create the opportunity to be
healthy, such as employment opportunities, reduced environmental
contamination, and greater transportation options. Health improves
with increasing income, and the impacts of a rise in income are greatest
for those at the lowest end of the wage scale. Moving from the lowest
income level to the next lowest provides the largest percentage increase
in life expectancy and health status. In other words, a family living on
minimum wage realizes greater health benefits from an increase in
salary than a middle-class family receiving the same raise” (Dept. of
Health Spokesperson, 2012).

24. Human Impact Partners 2014
Health Study
 Study was to forecast potential outcomes of raising the California minimum wage
to $13/hour by 2017.
 Major Findings:
-Californians in families whose income increased as a result of the higher
minimum wage would be more likely to be born healthier, develop stronger
bodies and brains, and suffer from fewer chronic diseases as adults and
into old age.
-Fewer Californians would live in poverty, ensuring that they would get enough to
eat. Fewer would be forced to live in the unhealthy environments of
substandard housing and poor neighborhoods. More Californians would
have adequate health care and access to health insurance.
-More of California’s children would be well prepared for school and achieve
more in school, which In itself leads to healthier adult lives. Children would
miss fewer school days.
-Fewer people would smoke. In California, adults in families in poverty are 50%
more likely to smoke than those in families earning more than three times the
poverty level.
-More would exercise regularly and fewer would be obese or overweight. In
California, teens in families living below the poverty level are 2.5 times as
likely to be overweight or obese as teens in families whose incomes are at
least three times the poverty level.
-Fewer Californians would suffer from emotional and psychological problems,
such as depression and poor self-esteem. Families who live in poverty
are over twice as likely to face serious psychological distress and to

25. Increased Worker Productivity
 Basically equates to an incentive program built
into an hourly wage.
 Helps solve the question of how to motivate lower
wage earners for increased productivity.

26. Gazette & Leddy Study
 Behavioral study of worker incentive-based
production
 Two groups of data entry workers where one group
was told they were getting a $1 raise for their great
performance, with the ability to earn an extra $1/hour
if the company hit some time of unspecified goal. The
other group was given a $2 raise right off the bat and
was told it was simply a new company policy.
 Which group do you think had higher, and longer
durations, of increased productivity moving forward?
 This study helped illustrate that workers truly
appreciate being incentivized and will work harder
and longer when they feel appreciated.

27. Arguments Against Raising the
MW
 This main premise is supported by most, but not
all of economists.
 Many will argue that the foundation of Capitalism
is a free market system, and government
interference halts growth.
 Traditionally conservative politicians are against
raising the wage. Their main argument focuses
around the belief that a wage hike will actually
hurt those it is intended to help.
 Employer manipulation

28. Large Unemployment Rise
 One fear is that employer backlash could have a
devastating affect on our country’s job market.
-2014 CNN poll showed that 37% of small
businesses said they would have plans
to cut, or severely limit the amount of
hours employees are scheduled.
 Fast food workers of New Jersey & Pennsylvania
-Neumark & Wascher vs. Card & Kreuger
-Fast food workers were given mandatory raises
with an interest in seeing how the
company’s reacted.
-Updated study, using employer records, show
that job elasticity reached -2.4 with a 4.6%
decrease in the amount of workers those
companies hired as compared to the
average, for those months, in previous years.

29. Teenage Joblessness

30. Cost To Employers
 Many small business are very fearful of this.
 Besides the increase in pay, employees will pay increased taxes
and employer increased matching and employer deductions.
Most employers have a “burden” — that is, costs in addition to
payroll — of 28%. These costs include matching the social
security contribution, state disability, unemployment and a host of
others. As hourly wages increase, so does the dollar amount of
the burden.
 San Francisco example:
-Former rate was $10/hour, plus $2.80 of burden on the
employer.
-With a plan in place to get up to $15/hour by 2020, the
burden will then go to $4.20/hour.. That is a $6.40 rise an
HOUR for employers.
 Employers will now offer less in benefits to make up the
difference.
 Manufacturing and assembly will be hit the hardest. Two areas
where minimum wage workers make a living.

31. Overall Economy Health
 Potential for higher inflation numbers
-Does the value of the dollar decrease if
productivity does not climb at the
same rate?
 Does raising the minimum wage truly help low
earning workers, women, and minorities.
-If groups who have higher unemployment
numbers aren’t able to find work, does it
actually help them?
 Small business growth will come to a standstill.
 Do wages actually bring people out of “poverty”,
or does it simply redefine a new poverty level?
 Will jobs stay in the U.S.?

32. Political Factors
 Election years tend to not get much government
action accomplished.
 Our federal and state governments are very
divided by numbers and ideology. The chances
of getting something accomplished in that
environment are remote at best.

33. Republican Candidates For
President
 The party as a whole is not interested in a pure wage hike.
Conservative politicians and economists are against it.
 Big business lobbying will be hounding Republicans to halt any type of
potential action.
 Ted Cruz
-Purely against a wage increase.
- “The undeniable reality, the undeniable truth, is if the President
succeeded in raising the minimum wage it would cost jobs for
the most vulnerable. The people who have been hurt by this Obama
economy would be hurt worse with the minimum wage proposal before
this body. In 2013 the President in his State of the Union address
proposed raising the minimum wage to $9.00. Now a year later the
request has magically changed to $10.10. The only reason (there’s no
economic justification) the only reason is politics. And I suppose if
the approval ratings of democratic members of this body continue to fall
in another month we’ll see a proposal for $15.00 an hour and then
maybe $20.00 or $25.00 an hour. But I think the American people
are tired of empty political show votes. The nonpartisan
congressional budget office says that raising the minimum wage could
cost a loss of 500,000 to 1 million jobs.”

34. Donald Trump
 A unique opinion on the issue as a businessman
-Nearly 19% of Trump employees earn a
minimum wage rate.
 Was at one time a proponent of raising the wage, as
recently as 2007.
 At the most recent debate, Trump emphatically said
he would not raise the minimum wage. He believes
that raising the wage would only entice more low
earning jobs and deter employers from keeping jobs
in the U.S.
 He has cited his belief that jobs will vacate the U.S.,
who already has higher costs of labor compared to
other competing countries.

35. Hillary Clinton
 Although vague in her answers in debates,
Secretary Clinton will most likely continue the
policy of President Obama.
 Increase to $12/hour
-Higher than Obama’s current plan
 Increase subsidies for corporations to keep jobs
in the U.S.
 Clinton has come out in support of Gavin
Newsome and his fight for a $15/hour in
SanFrancisco.
 She has cited a study by Paul Krugman, a
Sanders supporter, who believes a $15/hour

36. Bernie Sanders
 The biggest proponent by far in Washington D.C.
 The only candidate who has tried to introduce legislation on the
Senate floor about this very issue.
 Sanders has said he would like to see a wage increase
incrementally, and that the $15/hour model is one that is enticing
to him.
 “It is a national disgrace that millions of full-time workers are
living in poverty and millions more are forced to work two or
three jobs just to pay their bills. In the year 2015, a job must lift
workers out of poverty, not keep them in it. The current federal
minimum wage of $7.25 an hour is a starvation wage and must
be raised to a living wage.”
 Traditionally cites the example he used in a Senate Finance
committee hearing in 2013. Sanders help up a chart showing
the year by year rise in CEO compensation, next to a chart for
minimum wage earners.
 Has come under scrutiny on the issue of late
-Sanders Senate Intern Program

37. Where Do We Go From Here?
 Very little chance of new legislation being
presented prior to Obama leaving office.
 Very much dependent on Presidential and
Congressional 2016 races.
 States and municipalities will be moving forward
with higher wages. New Jersey and Colorado are
planning to move forward with legislation with the
next Congress.
 Increasingly younger workforce
-Will they vote for higher wages?
 In the end, its about us, THE PEOPLE!!!

38. Thank You
Any questions or comments?