Smith: What’s the right thing to do about the minimum wage?

Photo by Nicole Lunger
The minimum hourly wage has been hotly contested in recent weeks in Kansas City and St. Louis.| Nicole Lunger/Missouri Business Alert

What’s the right thing to do about the minimum wage?

Both city governments in Kansas City and St. Louis have been wrestling with the issue, trying to determine what’s the best way to make sure that citizens earn a living wage in their cities.

The federal minimum wage is $7.25, meaning that’s the lowest a worker can be paid in America. But many states, such as California and New York, have higher minimum wages, meaning employers must pay $9 an hour and $8.75 in those states, respectively.

But others see things differently. Two states – Georgia and Wyoming – have minimum wages below the federal rate, according to the U.S. Department of Labor. Five states – Louisiana, Alabama Mississippi, Tennessee and South Carolina – have no minimum wage.

So what is the right approach?

Some history courtesy of the U.S. Department of Labor: The minimum wage was created in 1938 through the Fair Labor Standards Act. Among other things, the national wage was set at 25 cents an hour ($11 weekly), child labor was banned and the work week was limited to 44 hours.

The road to this point was hard. The Supreme Court had agreed –with a one-vote margin – to uphold federal child labor laws. Before that, the District of Columbia had tried to set a separate wage for women, but that also was overturned by a one-vote majority of the Court, according to the Department of Labor.

On the signing of the Fair Labor Act, according to President Franklin Roosevelt’s historical papers, the president said: “Do not let any calamity-howling executive with an income of $1,000 a day tell you that a wage of $11 a week is going to have a disastrous effect on all American industry.”

I have been on both sides of this issue – as a worker and as a manager.

As a worker, I belonged to a union and held a manual labor job in a tire finishing facility. We made tires for cars and trucks, and we had great benefits and pay – all because of union and company negotiations.

But the work was backbreaking. I knew if I continued at the plant after college, I’d make a fair amount of money but would be physically beat by age 40. Too, there were parts of the plant that I felt were unsafe.

In tire finishing, we had a wheel that rotated tires around at a very fast speed. My job was to take a very sharp knife – think of a well-honed German butcher blade – and cut the excess rubber off of the new tires by hand.

I was doing this job one day and happened to sneeze. The tire caught the blade, ripped it from my hand and shot the knife back at me at a speed that did not allow me to get away. Luckily, the knife missed me by less than an inch, sticking deeply in a wooden wall behind me.

I complained to management about my work station, but was told to go back to work. I took the issue up with my union steward, and the machine was shut down.

On the management side, I watched many managers fight with union leaders over wages and benefits and saw the toll that it took on them. I saw both unions and management misbehave and act with honor.

But I learned this from the best of the money managers: The way to win the pay battle is to offer wages and benefits that exceed what’s expected in the industry. In the end, he said, you’ll save money, time and aggravation.

But I’ve also learned everyone – even corporate pirates – believe they’ve earned every cent in their pocket. Too many look at their companies as their adversary and not their partner in making a living.

To this, I’ve found that a raise is usually appreciated for about ten minutes if management is poor. A good wage means nothing unless there’s a corporate atmosphere that lifts the lives of its workers.

Randall Smith

Randall D. Smith is the Donald W. Reynolds Chair in Business Journalism at the Missouri School of Journalism and is the founder of Missouri Business Alert.

He can be reached at



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