Order Code RL33401
CRS Report for Congress
Received through the CRS Web
The Fair Labor Standards Act:
Minimum Wage in the 109th Congress
Updated June 16, 2006
William G. Whittaker
Specialist in Labor Economics
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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The Fair Labor Standards Act:
Minimum Wage in the 109th Congress
Summary
The Fair Labor Standards Act (FLSA) is the primary federal statute in the fields
of minimum wage, overtime pay, child labor, and related subjects. In the 109th
Congress, legislation in a variety of forms has been introduced that would modify the
act in each of these areas, and that would extend the act’s minimum wage protections
to workers in the Commonwealth of the Northern Mariana Islands (CNMI).
This report deals only with the minimum wage aspects of the act. Other
components of the FLSA are considered in separate CRS products.
In 1938, following several decades of discussion and research in academic and
policy circles, Congress adopted the FLSA. The act is a living statute that Congress
has variously modified through the years in response to altered public policy and
workplace realities. It has undergone major amendment on eight separate occasions,
in addition to periodic less extensive adjustments.
Currently, the general minimum wage is $5.15 an hour, the last adjustment
having taken place in September 1997. There are, however, a number of specialized
minima: for example, a sub-minimum wage for youth, special calculation of the rate
as it affects tipped employees, and a reduced wage structure for persons with
disabilities. Through the past several Congresses, bills have been introduced that
would alter the minimum wage or change aspects of it. For example, in the 109th
Congress, see H.R. 1091, H.R. 2429, H.R. 2748, H.R. 3413, H.R. 3732, H.R. 4505,
H.R. 5368, H.R. 5550, S. 14, S. 846, S. 1062, and S. 2725, plus several floor
amendments that would similarly affect the minimum wage.
Through the years (from the initial enactment of the FLSA in 1938 up to 1996),
minimum wage legislation had been introduced and referred to the committees of
jurisdiction for analysis and, ultimately, for a possible report. It was regarded as a
singular piece of legislation. In 1996, the measure emerged as a rider to a more
general economic measure. Thus, some have asserted, it has now become traditional
(based upon the 1996 enactment) that an increase in the federal minimum wage
should be accompanied by general tax breaks and other similar considerations for
industry.
There are no time constraints (no expiration dates) built into the FLSA.
Congress is not required to take up wage/hour legislation at all — though social and
economic pressure (and other policy concerns) may render such action appropriate.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Minimum Wage: Background and Comment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General Policy Concerning the Minimum Wage . . . . . . . . . . . . . . . . . . . . . . 4
The Socio-Economic Context of Minimum Wage . . . . . . . . . . . . . . . . 6
What Do We Mean by Minimum Wage? . . . . . . . . . . . . . . . . . . . . . . . . 7
How Minimal Is Minimum? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
To Whom Should Not Less Than the Minimum Wage Be Paid? . . . . . . 9
Who Should Pay the Minimum Wage? . . . . . . . . . . . . . . . . . . . . . . . . 10
General Demographics of the Minimum Wage Workforce . . . . . . . . . . . . . 12
Who Are the Minimum Wage Workers? . . . . . . . . . . . . . . . . . . . . . . . 13
The Size of the Minimum Wage Workforce . . . . . . . . . . . . . . . . . . . . 14
Commonwealth of the Northern Mariana Islands (CNMI) . . . . . . . . . . . . . 17
Minimum Wage Legislation in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . 18
Establishing a Tradition? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Minimum Wage: The Issue of Indexing . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Proposals To Raise the Federal Minimum Wage . . . . . . . . . . . . . . . . . . . . . 20
Senate Floor Action in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . 20
Other Action Proposed During the 109th Congress . . . . . . . . . . . . . . . 22
Consideration of the Labor, Health and Human Services,
and Education Appropriations Bill (for 2007) . . . . . . . . . . . . . . . 24
Some Collateral Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Youth Sub-Minimum Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The ‘Tip Credit’ Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The Computer Services Professional Rate . . . . . . . . . . . . . . . . . . . . . . 27
The ‘Small Business’ Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Case of American Samoa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Health Care Concerns and the Issa Bill . . . . . . . . . . . . . . . . . . . . . . . . 29
List of Tables
Table 1. Federal Minimum Wage Rates, 1938-2006 . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Status of State Minimum Wage Rate (as of spring 2006) . . . . . . . . . . . 5
Table 3. Poverty Guidelines, All States and
the District of Columbia (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 4. Number and Percent of Workers Paid Hourly
at the Minimum Wage or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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The Fair Labor Standards Act:
Minimum Wage in the 109th Congress
The Fair Labor Standards Act (FLSA) of 1938, as amended, is the primary
federal statute in the area of minimum wages and certain related labor standards
issues: e.g., overtime pay and child labor.1 Various bills related to the FLSA have
been introduced in the 109th Congress. Thus far, none of these measures has been
enacted.
There are no expiration dates embedded within the FLSA, and thus, Congress
is under no obligation to act on amendments to the statute — though the declining
value of the minimum wage could provide an impetus for action. Were Congress to
take up minimum wage legislation, it could focus narrowly upon an increase in the
base rate: raising the floor above the current $5.15 per hour level. But, it could act
more expansively, dealing with a variety of minimum wage-related issues and,
perhaps, revising certain other aspects of the act such as its overtime pay or child
labor provisions.
Some, during recent years, have urged that changes in wage/hour standards
should be coupled with tax and other benefits for business. While such linkage
seems to have become a popular issue for discussion, there is no structural reason
to proceed in that manner. Broadening the scope of the FLSA legislation (including
overtime pay, child labor, and assorted other economic issues within a single
comprehensive bill) could reduce the likelihood that any measure in this area would
ultimately be adopted; but conversely, depending upon the overall content of such a
package, it could expand the measure’s appeal.2
Introduction
The FLSA is an umbrella statute that deals with a series of labor standards
issues. These fall, roughly, into three categories: first, minimum wage (Section 6 of
the act); second, overtime pay (Section 7); and, third, child labor (Section 12).
Section 3 of the act defines the concepts used throughout the statute and, thereby,
1 For a quick summary of current proposals relating to the FLSA, see CRS Report RL32901,
Minimum Wage, Overtime Pay, and Child Labor: Inventory of Proposals in the 109th
Congress to Amend the Fair Labor Standards Act, by William G. Whittaker.
2 Proponents and opponents of an increase in the minimum wage have, variously, discussed
the potential impact of such a approach — pro and con. Some view additional provisions
(for example, “comp time” or an expanded “small business exemption”) as an appropriate
strategy. Others regard such collateral measures as a poison pill intended to scuttle
minimum wage revisions.

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CRS-2
limits or qualifies its wage/hour and child labor provisions. Traditionally, Congress
has mandated broad general coverage and, then, has specified select groups or
categories of workers who are not to be covered by the act. Section 13 provides a
body of exemptions (or special treatment) for segments of industry and/or groups of
workers. In the latter areas, the Secretary of Labor has been granted wide interpretive
powers — though these have not been without limit.
While the act is often treated as an integrated unit, it can also be approached in
terms of its three general component parts — and of individual sub-units of each.
This report focuses narrowly upon the federal minimum wage. Other related issues
(e.g., child labor and overtime pay) are considered separately in other CRS products.3
Under the FLSA, Congress has established a basic minimum wage (since 1997,
$5.15 per hour) that must be paid to most covered workers. However, the level of
the wage floor may vary from one group of workers to another with various
exceptions and sub-minima built into the statute. Thus, the issue may be which
minimum wage rate is applicable and to which workers it should be applied.4
Through the past century, the minimum wage (alone or with other wage/hour
issues) has sparked partisan comment and assertion. The issue has not been solely
whether there is an appropriate federal role in wage/hour regulation (that continues
to be debated), but what that role ought to be. At what level should the minimum
wage be set? Should it be indexed? How broad should minimum wage coverage be?
And if there are exemptions (which there are), upon what foundation should they
rest? For example, should small firms be able to pay their workers at a lower rate
than large firms? Should wage rates be productivity-based or respond to the needs
and personal lifestyles of the workers involved? Might the wage floor depend upon
an employee’s nonwork status: e.g., whether the worker is the sole earner in a
family, a secondary earner, or a student? As under current law, should the rate vary
with the age of the worker — even where the work performed and productivity level
among workers may be comparable?5
3 See, for example, CRS Report RL31501, Child Labor in America: History, Policy and
Legislative Issues; and CRS Report RL31875, Compensatory Time vs. Cash Wages:
Amending the Fair Labor Standards Act? (the comp time issue has not reemerged as free
standing legislation in the 109th Congress), both by William G. Whittaker. See, also, CRS
Report RL30927, The Federal Minimum Wage: The Question of Indexation, by Gerald
Mayer, and CRS Report 98-278, The Gender Wage Gap and Pay Equity: Is Comparable
Worth the Next Step?, by Linda Levine.
4 Several aspects of minimum wage coverage may need to be taken into account. First:
Many states have state-mandated minimum wage standards. These may be roughly parallel
to the federal minimum wage: they need not be — and often are not. Second: Not all
workers are covered under the FLSA — nor under state wage/hour standards. These
coverage patterns (including patterns of exemption) need to be taken into account when
considering the potential impact of changes in federal wage/hour law. Third: Because of
variations in coverage (with extensive administrative rules governing implementation and
enforcement of wage/hour law), it may be perilous to suggest who is (or is not) covered by
the requirements of statute. Too many variables affect coverage to allow easy assessment.
5 Under current law, there are special rates for youth workers, for full-time students who
(continued...)

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CRS-3
Minimum Wage: Background and Comment
When the FLSA was enacted in 1938, its coverage was largely limited to
industrial workers engaged in interstate commerce. Retail, service, and agricultural
workers, generally, were not protected — nor were persons employed by state and
local governments. On eight separate occasions through the years (see Table 1), the
act has undergone general amendment, which has normally included language
dealing with overtime pay and/or child labor, as well as with modification of the
wage floor. On numerous occasions, the FLSA has been subject to more narrowly
focused single purpose amendment.
Table 1. Federal Minimum Wage Rates, 1938-2006
Public law
Effective date
Rate
P.L. 75-718 (Enacted June 25, 1938)
October 1938
$0.25
October 1939
0.30
October 1945
0.40
P.L. 81-393 (Enacted October 26, 1949)
January 1950
0.75
P.L. 84-381 (Enacted August 12, 1955)
March 1956
1.00
P.L. 87-30 (Enacted May 5, 1961)
September 1961
1.15
September 1963
1.25
P.L. 89-601 (Enacted September 23, 1966)
February 1967
1.40
February 1968
1.60
P.L. 93-259 (Enacted April 8, 1974)
May 1974
2.00
January 1975
2.10
January 1976
2.30
P.L. 95-151 (Enacted November 1, 1977)
January 1978
2.65
January 1979
2.90
January 1980
3.10
January 1981
3.35
P.L. 101-157 (Enacted November 17, 1989)
April 1990
3.80
April 1991
4.25
P.L. 104-188 (Enacted August 20, 1996)
October 1996
4.75
September 1997
5.15
With the original enactment, Congress was feeling its way: i.e., learning how
to deal with constitutional impediments to federal involvement in private sector labor
standards regulation. Coverage patterns during the 1940s and 1950s remained
relatively flat, with only minor adjustment. Then, in the 1960s and 1970s, there was
5 (...continued)
work no more than part-time, for disabled persons, and for others. That these rates (except
nominally for the disabled) are related to productivity may not be entirely clear.

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CRS-4
substantial expansion of coverage with intermittent increases in the level of the
minimum wage. Since 1977, change has been restricted largely to increases in the
basic wage rate and modification of existing FLSA provisions. Amendment has
often been contentious, conditioned by economic considerations and political
compromise.6 Generally, expansion of coverage has been opposed by employers and
supported by workers — reflecting, in the short term, who benefits from an increase
in the minimum wage and upon whom the costs fall.
The basic federal minimum wage rate is statutory and will remain at its current
level until Congress takes specific action to alter it. Again, Congress has no specific
obligation to revisit the minimum wage and thus may not do so. However, over the
long term, congressional inaction could have the effect of repeal through attrition.
Fewer and fewer workers would likely earn the minimum wage (its value having
been reduced through inflation), and the requirement, eventually, could become
relatively meaningless. Conversely, Congress could index the minimum rate,
assuring a constant real value without further congressional intervention.
Some states have a minimum wage requirement that is higher than the FLSA
requirement. Where that is the case, the higher standard normally prevails. (See
Table 2.) In addition, the minimum wage for American Samoa is set through a
commission appointed by the U.S. Secretary of Labor, and has been, generally, lower
than the otherwise applicable federal rate under the FLSA. In the Commonwealth of
the Northern Mariana Islands (CNMI), the insular government currently exercises
authority with respect to wage standards — an issue of ongoing contention.
General Policy Concerning the Minimum Wage
For the past century, the minimum wage has been a focus of public policy
discussion. Advocates for each side in the debate — academicians (notably,
economists), policy analysts, and persons from the media — have argued with great
vigor. Although the literature is extensive, the result is by no means definitive.
FLSA historian Willis J. Nordlund, writing in the late 1990s, observes that
... one would presume that enough was known about the program to formulate
a defensible strategy depicting effects of program change. This is not the case.
There is no more agreement about these effects today than there was at the
program’s inception [with passage of the FLSA] fifty years ago.7
6 See Congressional Record 30, 1937, p. 7876. More generally, see CRS Report 89-568,
The Fair Labor Standards Act: Analysis of Economic Issues in the Debates of 1937-1938,
by William G. Whittaker (out of print but available from the author).
7 Willis J. Norlund, The Quest for a Living Wage: The History of the Federal Minimum
Wage Program (Westport, Conn.: Greenwood Press, 1997), p. xvii.

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CRS-5
Table 2. Status of State Minimum Wage Rate
(as of spring 2006)
Jurisdictions with minimum wage rates higher than the federal FLSA
Alaska ($7.15)
Illinois ($6.50)
Oregon ($7.50)
California ($6.75)
Maine ($6.50)
Rhode Island ($7.10)
Connecticut ($7.40)
Maryland ($6.15)
Vermont ($7.25)
Delaware ($6.15)
Massachusetts ($6.75)
Washington ($7.63)
District of Columbia
Minnesota ($6.15)
Wisconsin ($5.70)
($7.00)
Florida ($6.40)
New Jersey ($6.15)
Hawaii ($6.75)
New York ($6.75)
Jurisdictions with minimum wage rates at the same level as the federal FLSA
($5.15)
Arkansas
Missouri
Oklahoma
Colorado
Montana
Pennsylvania
Georgia
Nebraska
Puerto Rico
Guam
Nevada
South Dakota
Idaho
New Hampshire
Texas
Indiana
New Mexico
Utah
Iowa
North Carolina
Virginia
Kentucky
North Dakota
West Virginia
Michigan
Ohio Wyoming
Jurisdictions with minimum wage rates less than the federal FLSA
American Samoab
Kansas ($2.65)
Virgin Islands ($4.65)
(administered)
Jurisdictions with no state minimum wage requirement
Alabama Louisiana
South
Carolina
Arizona
Mississippi
Tennessee
Source: U.S. Department of Labor, Wage and Hour Division, Employment Standards Administration,
[http://www.dol.gov/esa/minwage/america.htm], Apr. 3, 2006.
a. Coverage patterns vary from one jurisdiction to another. Some jurisdictions have a structured
minimum wage system (i.e., different rates for various industries, sizes of firms, etc.). The table
refers to the highest standard applicable under the law of the jurisdiction. In some jurisdictions,
the rate (but not necessarily the pattern of coverage) is linked to the federal FLSA.
b. For American Samoa, the minimum wage rate is set administratively, and varies from one industry
to another at rates lower than the federal minimum wage.

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The available data and analysis, it would seem, are fragile and often contradictory.
Still, critics and proponents of a minimum wage floor continue to praise and to
critique the concept in unusually strong and, often, unqualified terms.
Few questions in the continuing debate are new. They are raised with little
agreement concerning basic concepts. Many of the assumptions are implicit: not
fully enunciated and, perhaps, not even recognized. Minimum wage debate, perhaps
more than other economic issues, may have a psychological component, reflecting
community values and fears. There continues to be an outpouring of minimum wage
literature — some of it analytical but much of it political advocacy.
The Socio-Economic Context of Minimum Wage. The minimum wage
is often presented as a mechanism through which to assist the working poor: usually
a non-union worker with few skills and little bargaining power.8 Some advocates of
a minimum wage view it not only as socially useful but, also, as economically useful:
promoting socio-economic equity; providing a floor under wages; stimulating
demand for goods and services; expanding employment; and, with other measures,
bolstering the general economy.
Some critics of the minimum wage, conversely, have viewed it as an inefficient
approach to income redistribution — and an unjustified intrusion into the operation
of the free market. They contend that minimum wage increases have an inflationary
impact, restructure employment patterns, may reduce aggregate employment, and
impose an unnecessary burden upon employers and consumers. Such critics often
view the wage floor as economically harmful, especially for the unskilled and new
workforce entrants who, critics say, may be priced out of the job market.
Economists and policy analysts continue to disagree about the impact of changes
in the minimum wage and about what the effects of the minimum wage have been.
The issues are both socio-economic and ideological, and have changed little since the
debates of 1937-1938.9
8 Concerning early interest in the minimum wage, see Lawrence B. Glickman, A Living
Wage: American Workers and the Making of Consumer Society (Ithaca, Cornell University
Press, 1997); George E. Paulsen, A Living Wage for the Forgotten Man: The Quest for Fair
Labor Standards, 1933-1941 (Selinsgrove, PA, Susquehanna University Press, 1996);
David A. Moss, Socializing Security: Progressive-Era Economists and the Origins of
American Social Policy (Cambridge, Harvard University Press, l996); and Jerold L.
Waltman, The Politics of the Minimum Wage (Urbana, University of Illinois Press, 2000).
In her study, Civilizing Capitalism: The National Consumers’ League, Women’s Activism,
and Labor Standards in the New Deal Era (Chapel Hill: The University of North Carolina
Press, 2000), Landon R. Y. Storrs discusses both the origins of minimum wage legislation
and the socio-economic/reform context from which the federal legislation emerged.
9 See, for example “New Minimum Wage Research: A Symposium,” Industrial and Labor
Relations Review, Oct. 1992, pp. 3-99; “The Minimum Wage: Some New Evidence” (a
symposium) Journal of Labor Research, winter 2002, pp. 1-67; David Card and Alan B.
Krueger, Myth and Measurement: The New Economics of the Minimum Wage (Princeton:
Princeton University Press, 1995); and Oren M. Levin-Waldman, The Case of the Minimum
Wage: Competing Policy Models (Albany: State University of New York Press, 2001).

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CRS-7
What Do We Mean by Minimum Wage? When people speak of a
minimum wage, they often speak in terms of “a livable wage” or “a decent wage” or
“a fair wage,” or suggest that the working poor ought to be able to live “in reasonable
comfort” and enjoy economic “dignity.” Early in the century, it was common to
speak of a “living, family, saving wage.” But when individuals use such terms, is
there any reasonable assurance of a consistent meaning?
In statute, the minimum wage is clearly defined: $5.15 per hour for most (but
not all) covered workers. The FLSA does not translate that dollar amount into social
or human terms. Is $5.15 an hour actually a “livable wage” — and livable by whose
standard? Does “reasonable comfort,” for example, mean safe and adequate shelter
with modest amenities? How are “safe” and “adequate” and “modest” defined?
If one thinks in terms of a “family” wage, how should the family be structured?
Should both spouses engage in paid work? Should one spouse reside at home: his
or her companion earning the livelihood for the family? Might there be children in
the household? If so, how many: two or four or six? See, for example, the
calculations in Table 3.
Some may view “minimum” as the lowest wage an individual will accept (a
“reservation wage”) or the highest amount an employer is willing to pay. Some urge
repeal of a legislated wage floor altogether — and define the “minimum” as whatever
rates are set by supply and demand in a free market economy: i.e., a “market wage.”
How Minimal Is Minimum? Minimum wage debates contain frequent
references to the “poverty level” for a family of two or three or more. If Congress
intends the minimum wage to be set at a level high enough to move a family out of
poverty (as some suggest), then some measurement of family size and of total
household income is necessary in assessing the adequacy of the FLSA minima. If,
instead, the minimum wage is productivity-based (i.e., resting upon the contribution
of the worker), then family size and non-wage income (support, for example, from
other household members or through sources of income not related to the individual’s
employment) would seem irrelevant.10
Under current law, a minimum wage worker employed full-time and full-year
(40 hours per week for 52 weeks at $5.15) would earn $10,712. A full-time worker,
under age 20 and paid at the statutorily permissible sub-minimum rate ($4.25 per
hour), could earn $8,840 — for the same hours of work and for performing the same
duties. After 90 consecutive days with an individual employer, however, his or her
sub-minimum rate would ordinarily increase to $5.15 an hour.11 These amounts are
10 Some may argue that basing a wage rate on the productivity of the worker may be, itself,
misleading since in large measure, worker productivity is based upon the skills of
management and upon management-controlled elements such as work organization,
availability of appropriate equipment, morale, ambience, and other similar factors.
11 This suggests some of the problems in calculating minimum wage earnings. While a
worker under age 20 can be paid $4.25 per hour through the first 90 consecutive days with
any employer, his wage after 90 days would have to be increased to the full $5.15 per hour
(continued...)

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prior to any deductions and exclusive of any fringe benefits. Table 3 sets forth the
level of income regarded as a poverty threshold, at various family sizes, for eligibility
for certain federal assistance programs. The extent to which the poverty guidelines
are realistic can be, and has been, debated. The guidelines have no direct connection
with the federal minimum wage, but they are frequently cited in discussions of the
minimum wage and are used by some analysts as a measure of the adequacy of the
wage floor.
Table 3. Poverty Guidelines,
All States and the District of Columbia (2006)
Poverty guideline
Size of family unit
States and District of Columbia
Alaska
Hawaii
1
$9,800
$12,250
$11,270
2
13,200
16,500
15,180
3
16,600
20,750
19,090
4
20,000
25,000
23,000
5
23,400
29,250
26,910
6
26,800
33,500
30,820
7
30,200
37,750
34,730
8
33,600
42,000
38,640
Source: U.S. Department of Health and Human Services, “Annual Update of the HHS Poverty
Guidelines,” 71 Federal Register 3848-3849, Jan. 24, 2006.
Note: For family units with more than eight members, add $3,400 for each additional member. For
Alaska, add $4,250, and for Hawaii, add $3,910. Poverty guidelines are not defined for Puerto Rico,
the Virgin Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, or
other U.S.-related insular jurisdictions.
Since much minimum wage work is also part-time and/or part-year, estimating
actual annual income for minimum wage workers may be problematic. Some
workers, normally earning the minimum wage, find, either through their own designs
(school and sports, for example) or through the absence of minimum wage-type
work, that their year-long income may fall substantially below an annualized figure.
Similarly, choosing a wage rate that will comport with the work patterns of minimum
wage earners and still provide “a living wage” may prove daunting. Further, while
11 (...continued)
— unless he moved on to a second, third, or fourth employer, or dropped out of work for
a period of time and broke the “consecutive” days pattern. Were he a full-time student
working no more than part-time, he could be subject to a different sub-minimum wage
option. Were he partially disabled and employed under Department of Labor (DOL)
certification, he could be paid at any rate found to be commensurate with his productivity
— however low that might be.

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CRS-9
some minimum wage work may provide a fringe benefit component, such fringes are
often not available until a worker has been engaged for a minimal period of time (a
period that a minimum wage worker quite possibly cannot reach). Minimum wage
work often provides only cash income and little more. Under present law, the
concept of a minimum wage is limited to a cash wage.
To Whom Should Not Less Than the Minimum Wage Be Paid?
FLSA minimum wage requirements have always been subject to exceptions,
sometimes excluding from coverage those likely to be the most poorly paid workers.
Upon what basis has Congress included — or excluded — workers from minimum
wage protection under the FLSA?12
When a Member of Congress (or that body collectively through legislation)
speaks of the “minimum wage worker,” to whom is reference made? Is the minimum
wage worker viewed as a single individual? A parent? A single parent? The sole
economic support for a family? A teenager? Is the FLSA minimum intended to be
a wage floor for all workers, urban and rural — for employees only of large firms, or
for those employed by small businesses as well? Should any non-work or
non-productivity factors be taken into account when setting the wage floor — for
example, age (a youth or senior citizen), student status, or family size? Whom does
a legislator have in mind when setting the federal minimum wage at, for example,
$5.15 per hour? Is that mental image consistent with the demographic reality of the
minimum wage workforce?
Various social and demographic distinctions have been cited to justify minimum
wage rate differentials. For example, the FLSA, under certain conditions, allows a
full-time student “employed in a retail or service establishment, agriculture, or the
institution of higher education that such student attends” to be paid a lower minimum
wage than that required for a non-student (even for equal work) — so long as the
student works only “part-time” (defined by the statute). The wage level, here, may
be conditioned less upon productivity than upon how the worker spends his off-duty
hours: i.e., that he is a student and is enrolled in academic course work. If he drops
out of school but keeps his job, the law requires that his hourly rate of pay be raised
to at least the full applicable minimum. Similarly, even while remaining an
employed full-time student, if his hours of work increase to more than part-time, he
must be paid at the full applicable minimum rate. Applicability of the student sub-
minimum rate (Section 14(b)) is dependent upon maintenance of full-time student
status and not more than part-time employment. What is the rationale for paying a
part-time worker less, on a per-hour basis (here, a sub-minimum rate), than a full-
time worker — even for the same work performed under the same conditions and
equally well? What assumptions about “need” and “productivity” are implicitly built
into the student sub-minimum wage option — and are these assumptions valid?
Some may argue that this wage structure creates an incentive for young persons
to leave school or to shift their primary focus from study to work. The rationale for
sub-minimum wage treatment, however, is that it may offset the problems young
12 See, for example, discussion during the 1938 debate on the original FLSA. Congressional
Record, June 14, 1938, p. 9257.

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CRS-10
persons have in finding work that will match their academic schedules: i.e., making
them cheaper and, thus, more attractive to employ.
It can be argued that younger persons, by definition, are less experienced and,
therefore, less productive than “prime age” adults. This conclusion, however, may
not be valid for minimum wage-type work and, indeed, an argument can be made that
for low-skilled entry-level positions, young persons may be more productive: i.e.,
more vigorous, more nearly satisfied with such routine activity. What criteria should
be taken into account with respect to the elderly (who may be less — or more —
productive in minimum wage-type work) or the disabled?
Should minimum wages be needs-based or productivity-based? If a worker has
an affluent spouse (or parents), should he (or she) be payable at a sub-minimum rate
because his (or her) combined family income is relatively high? Should one who
spends his wages on luxury items (designer clothes, CDs, beer and pizza) be paid at
a lower rate than one who spends his earnings on tuition, baby formula — or for
food, rent, or transportation? If needs-based, then should the minimum wage be
pegged to family size: the more children, the higher the minimum wage rate? Are
such distinctions useful or workable and do they lend themselves to public policy
formulations?
Who Should Pay the Minimum Wage? How the minimum wage worker
is defined and the intent of Congress in establishing/maintaining a federal minimum
wage are critical to consideration of by whom the minimum wage ought to be paid.
Speaking Generally. Is the minimum wage intended to be sufficient to
sustain a worker (however defined by Congress): i.e., a single person without
dependents or a sole breadwinner for a family? If so, should an employer be
obligated to pay a wage of at least the amount needed to sustain the worker (and,
where applicable, his or her dependents) — an amount that could, presumably, be
affected by the assumptions built into the definition of a minimum wage worker?13
If a productivity-based minimum wage is not sufficient to sustain a worker (and
his or her dependents, if any), then by whom (if anyone) should the deficiency be
made up? Should it be paid by the employer who directly benefits by paying low
wages (through utilizing the services of a low-wage workforce) — and, indirectly,
by the consumer of the goods and services such low-wage workers provide —
through an increase in the minimum wage rate? Or should the difference between
one’s wage and one’s need be subsidized by the taxpayer?
The Minimum Wage -v.- the EITC. In 1975, Congress established the
Earned Income Tax Credit (EITC), which, as amended, provides a tax credit to
certain low-wage workers. Beginning as a relatively small program (about 6.2
13 Since workers compete with each other in the labor market, paying a needs-based rate
could encourage an employer to hire single persons without dependents and, thus, to keep
labor costs (wages) low: to avoid hiring persons who are married with children. Similarly,
youth workers, paid at a sub-minimum rate, are often thought to be, potentially, economic
substitutes for older workers who must be paid a full minimum scale.

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CRS-11
million recipients), it has since expanded, with various additions, to about 22.1
million tax filers (2003). To qualify, a family must reside in the United States
(unless absent for military duty). While oriented toward persons with children, some
childless adults may also qualify. But the program can also be complex and has
been, historically, subject to significant over-claims (or, on some occasions, perhaps,
under-claims) of benefits.14
Some laud the EITC for helping “to lift ... working families above the poverty
threshold and to provide a greater work incentive to low-income workers.”15 But the
EITC can also be viewed as a wage supplement, not only for workers but also for
low-wage employers who may continue to pay low wages to their workers and profit
from utilization of such low-wage employees while tax revenues (through the credit
mechanism or through other public subsidies) assist their workers in meeting basic
living costs. Thus, arguably, the routine cost of doing business is shifted from the
individual employer to the general taxpayer. Similarly, the EITC can be viewed as
a subsidy to the consumers of the goods and services produced by low-wage workers.
Conversely, some argue, the EITC affords firms that operate on a slim margin
an opportunity to remain in business and to provide employment, even if at low
wages. However, the EITC is conditional upon the low earnings of the worker, not
the marginal profitability of the employer. It makes no distinction between
businesses (employers) that are struggling economically and those that are doing
well. Speaking generally, some view the EITC as a supplement to the minimum
wage, predicated upon the needs of a worker rather than upon his productivity;
others, as a substitute for future minimum wage increases. Employer/business
acceptance of the EITC and hostility toward the minimum wage may reflect an
economic reality: with the EITC, the taxpayer subsidizes the employer’s wage costs;
with the minimum wage, those costs fall directly upon the employer or
businessperson and indirectly upon the consumer.
Small Businesses. The FLSA’s small business exemption allows certain
qualifying employers to be exempt from the FLSA minimum wage requirements. In
general (though the exemption is complex), this could include firms “whose annual
gross volume of business done” is less than $500,000, though individual employees
of such firms, engaged in interstate commerce, may be covered individually. In
addition, the act contains numerous more narrowly focused exemptions.
Over time, there has been pressure from the small business community to
expand its exemption. Proponents have argued that small firms may be adversely
affected — or even driven out of business — by having to pay their workers the
minimum wage. However, some may argue that no test of profitability has been
proposed with respect to firms benefitting from the small business exemption: it is
14 “A childless adult must be at least 25 years of age, but not more than 64 years of age to
be eligible for the EITC, and cannot be claimed as a dependent on another person’s tax
return.” See CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview,
and CRS Report RS21477, The Earned Income Tax Credit (EITC): Policy and Legislative
Issues, both by Christine Scott.
15 Bureau of National Affairs, Daily Labor Report, Aug. 23, 1993, p. A10.

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CRS-12
enjoyed by prosperous and struggling businesses alike. But, where small businesses
are free from a minimum wage obligation, the question remains: How will workers
employed by small businesses sustain themselves and, where applicable, their
families? Further, what are the implications of a “small business exemption” with
respect to competition between small firms and mid-sized or larger firms?
Needs of the Minimum Wage Worker. Much of the debate over increasing
the minimum wage has focused upon the low-wage worker. Does he (or she) really
need the increased income? Is he productive enough to justify (to earn) a higher
minimum wage? Does he have other sources of income: for example, a working
spouse or an employed parent? How will the worker spend his earnings: for
essentials or for luxuries? In short, is he (or she) merely working for pin money?16
Comparable issues have not been raised about business. Does the small
businessperson really need the increased profits from employing low-wage (sub-
minimum wage) workers? Could he (or she) reasonably pay a higher wage? When
assertions are made with respect to the limited resources of an enterprise, should a
means test be prescribed for such employers?
General Demographics of the Minimum Wage Workforce
Data concerning the minimum wage workforce are difficult to develop with
precision. Not everyone is covered by the minimum wage. Some low-wage workers
may be paid at or below the federal minimum wage; but because of exemptions built
into the statute, they may not be affected by the changes that Congress may make.
In such cases, their pay may continue (at whatever levels) without being influenced
by Congressional action. Conversely, some employers may choose to pay the
statutory minimum because it is a convenient and generally recognized basic rate for
low-wage employment — even where their workers may not be subject to the act’s
minimum wage provisions.
In addition, persons employed at or below the federal minimum wage may
change jobs (and economic status) with some frequency, moving into and out of
work in response to non-work-related factors: school, pregnancy or, perhaps, a
change in marital status. Some workers may be multiple jobholders.17
Not all workers covered under the FLSA are covered in precisely the same way.
Thus, statistical data in this area may be somewhat imprecise and we may, often, be
speaking of the low-wage worker rather than the minimum wage worker covered
under the FLSA.
16 The term, pin money, historically, was frequently used with respect to women’s wages:
i.e., to provide a little something extra but not for the essentials of a household.
Increasingly, the term is now used, mostly disparagingly, with respect to youth workers who
have various alternative sources of income and do not really need to be employed — or who
are doing so as a lark.
17 Surveys of income may collect information only with respect to a worker’s main job.

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CRS-13
Who Are the Minimum Wage Workers? In 2005, about 1.882 million
workers, paid at hourly rates, earned at or below the federal minimum wage of $5.15
per hour: about 479,000 were paid at the minimum rate and about 1.403 million
were paid below the minimum.18 These are workers who are 16 years of age or older.
In absolute numbers, according to data provided by the Bureau of Labor
Statistics (BLS), persons working at or below the minimum are about as likely to be
adults as youth (see the discussion below), more likely to be female than male, and
more likely to be white than of another race. Further, persons working at or below
the minimum wage are more likely to be working part-time than full-time.
Critics of the minimum wage often point to a minimum wage worker who is a
young person, working for “pin money” and being supported by a suburban
middle-class family. Conversely, proponents of a higher minimum often view the
low-wage workforce as largely adult and, thus, suggestive of more serious needs.
Statistics can be used to support either interpretation. If, for example, using
2005 data, one defines a youth as someone between 16 and 19 years of age, then
about 26.1% of workers, paid hourly at or below the minimum wage, are youths and
about 73.9% are adults. If one’s definition is more expansive, defining youth as
between 16 and 24 years of age, then about 53.3% of persons earning at or below the
minimum wage are youths and only 46.7% are adults. Thus, even with an expansive
definition of youth (16 to 24 years of age), close to half of the minimum wage/sub-
minimum wage workforce is 25 years of age or over.19
For minimum wage type work, the two demographic groups may well be in
competition, with youth workers readily substitutable for older workers and with
younger workers having an employment advantage. Even where covered by
minimum wage requirements, youth workers may often, legally, be hired at a sub-
minimum wage — and, often, at hours of work (fragmented part-time employment)
that could not sustain a family or even a single adult.20
Among hourly workers, paid at or below the general minimum rate, about
65.6% were women and about 34.4% men. Although the data are imprecise because
18 About 75.6 million workers, out of a civilian noninstitutional workforce of around 150
million, were paid hourly rates in 2005.
19 It is difficult to assess needs, in the context of minimum wage work; but one might
speculate that persons who continue to be employed in very low-paying jobs, over time, may
have a pressing need for the income earned.
20 In addition to their legally allowable lower wage rate, other arguments can be made for
the competitive advantages of youth workers. They may have more energy than older
workers and may be more flexible. They are normally short-term employees who do not
join unions, do not vest in pension programs, do not earn vacation benefits, and are less
likely to be ill or suffer job-related strains that one might associate with long-term
employment or age. Conversely, the argument can be made that they are less disciplined,
have fewer skills (though few skills are required for minimum wage-type work), are less
dependable, and may be less acclimated to the culture of the world of work.

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CRS-14
of definitional questions with respect to race and ethnicity, it is clear that the majority
of workers earning at or below the federal minimum wage are white.21
In 2005, about 59.8% of workers at and below the minimum wage were
employed on a part-time basis; about 39.9% were full-time. Some 71.1% of part-
time workers were female. (Some statistical variation may result from a small
number of multiple jobholders.) Low-wage employment may tend to be less stable
than more highly compensated employment, with workers suffering involuntary
joblessness or moving in and out of the labor force because of discouragement,
quitting to seek better wages and working conditions, or for other personal reasons.
Full-time employment is not synonymous with full-year employment. Estimating
the annual income of minimum wage workers may be problematic since many full-
time minimum wage workers may not be employed on a full-year basis. There may
be periods when they are not working (or not working at the minimum wage).
Beyond uncertainties about combinations of part-time or full-time, part-year or
full-year employment, one must recall that the minimum wage is a cash wage. Fringe
benefits earned by a minimum wage worker are likely to be less than those of more
highly paid persons, widening the gap between the economic well-being of the
minimum wage worker and others. On the other hand, minimum wage workers may
have other sources of income.22
The Size of the Minimum Wage Workforce. In 2005, as noted above,
there were roughly 1.882 million workers, paid at hourly rates, who earned at or
below the federal minimum wage of $5.15 per hour. They constituted only about
2.5% of hourly paid workers from an aggregate of about 75.6 million hourly paid
workers. This figure constitutes the smallest percentage of persons earning at or
below the minimum wage in the United States in recent times.23 (See Table 4). An
important question is: Why?
21 BLS divides the low-wage workforce into “white,” “black,” and “Asian” within the
context of race and provides a separate classification of “Hispanic or Latino.” The various
shadings of color are becoming increasingly difficult to categorize. Concerning this
classification, see Mary Bowler, et al., “Revisions to the Current Population Survey
Effective January 2003,” Employment and Earnings, Feb. 2003, pp. 4-7, and 14.
22 Data, here, have been drawn from unpublished sources provided by the U.S. Bureau of
Labor Statistics. The bureau has used information drawn from the Current Population
Survey (CPS), provided by the U.S. Census Bureau.
23 The early history of the FLSA was marked by a relatively sparse coverage which, through
the 1960s and 1970s, was generally broadened giving the act, roughly, its present form.

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CRS-15
Table 4. Number and Percent of Workers
Paid Hourly at the Minimum Wage or Less
Workers paid hourly rates
Total paid the minimum wage or less
Year
Number in thousands
As a percentage of hourly paid workers
1979*
6,913
13.4
1980*
7,773
15.1
1981*
7,824
15.1
1982
6,496
12.8
1983
6,338
12.2
1984
5,963
11.0
1985
5,538
9.9
1986
5,060
8.8
1987
4,697
7.9
1988
3,927
6.5
1989
3,162
5.1
1990*
3,228
5.1
1991*
5,283
8.4
1992
4,921
7.7
1993
4,332
6.7
1994
4,127
6.2
1995
3,655
5.3
1996*
3,724
5.4
1997*
4,754
6.7
1998
4,427
6.2
1999
3,340
4.6
2000
2,710
3.7
2001
2,238
3.1
2002
2,168
3.0
2003
2,100
2.9
2004
2,003
2.7
2005
1,882
2.5
Source: United States Bureau of Labor Statistics.
* Years in which a legislated change in the federal minimum wage took effect.
This numerical decline is not necessarily indicative of improved economic status
for the low-wage worker. Rather, it may be that, as the value of the statutory
minimum shrinks in terms of constant dollars, fewer workers are employed at or

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CRS-16
below the rate reflected in the reduced value of the statutory minimum. Nor does this
imply that the economic status of those who have moved to a rate a little in excess
of the statutory minimum has improved: i.e., those who are above the statutory
minimum but who are still low-wage workers. Rather, their wage may have kept
pace with inflationary pressures while the statutory minimum did not — suggesting
little or no actual change of economic status.
In policy terms, this would appear to have several implications. If the statutory
minimum wage remains at its current level while the general wage level rises because
of inflation and/or productivity improvements, the number of minimum wage
workers could reasonably be expected to experience a further decline. Fewer and
fewer people could be expected to be employed at the low wage level — even though
their economic condition may not have improved. Thus, were Congress to take no
action with respect to the minimum wage, allowing its value to continue to decline,
the size of the minimum wage workforce could reasonably be expected to decline
until it virtually disappears. This would not mean that the low-wage workforce had
shrunk, but merely that an increasingly large number of such persons would be
employed at wages above the declining real value of the statutorily defined
minimum.
Under this scenario (which is generally consistent with the trajectory of
legislated increases in the statutory minimum wage since its peak year, 1968), the
minimum wage would have been effectively repealed by attrition.24 In that context,
an argument might be made that since so few would actually be employed at rates at
or below the statutory minimum (its relative value notwithstanding), the problem of
the working poor could be handled through other more narrowly targeted means —
possibly through transfers of income rather than through strictly work-related
earnings. This, however, may run counter to public policy that income from work
is generally preferable to transfers or entitlements that must be financed through
taxation.
Finally, as noted on Table 2, state minimum wage rates have, in some respects,
moved in to fill the gap of a declining federal minimum wage. However, such
considerations have been uneven. Eighteen states and the District of Columbia have
rates higher than the federal standard, but most of these are on the West Coast and
in New England. Illinois, Delaware, Maryland, the District of Columbia, and Florida
provide exceptions — and, even here, Florida might not be classified as a traditional
Southern state. Speaking generally, the Midwest and the Old South have either gone
along with the federal rate (they would have had little choice since the federal rate,
if the standard is higher, takes precedent over a state rate), or they have simply stood
apart. To the extent that there is a disparity in earnings, this might be viewed by some
as contributing to a certain fracturing of the national economy with relative levels of
wealth and of poverty among America’s workers.
24 See CRS Report RS20040, Inflation and the Real Minimum Wage: Fact Sheet, by Brian
W. Cashell.

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Commonwealth of the Northern Mariana Islands (CNMI)
In the mid-1970s, the CNMI entered into a quasi-autonomous relationship with
the United States. By the Commonwealth agreement, regulation of overtime pay,
under the FLSA, is enforced by DOL — but the minimum wage is governed by
CNMI law. The CNMI also controls its own immigration policy. Finally, the CNMI
is regarded as within the U.S. customs area. The result has been the development of
industries based upon low wages and alien contract labor, the product of which
carries a “Made in America” label and competes with other American-made goods.25
Through the past decade, human rights and labor standards in the CNMI have
been the subject of DOL investigations, congressional hearings, and proposed
legislation. In the 105th Congress, the Committee on Energy and Natural Resources
voted to report legislation co-sponsored by Senators Daniel Akaka (D-Hawaii) and
Frank Murkowski (R-Alaska) that would, inter alia, have created a U.S.-controlled
insular minimum wage structure.26 The legislation died at the close of the 105th
Congress, but the CNMI issue was the subject of further hearings by the Committee
during the 106th Congress. Several general minimum wage proposals of the 106th
Congress included language that would have brought the CNMI wage floor into
conformity with that of the states, had they been adopted.
In the 107th and 108th Congresses, there was continuing interest in the CNMI,
with a number of bills introduced that would have extended FLSA minimum wage
protection for workers employed in the insular jurisdiction. Normally, these
proposals would have phased in the full national rate through a series of incremental
steps. In related action, on June 5, 2001, the Senate Committee on Energy and
Natural Resources reported legislation to amend immigration law as it applies to the
CNMI under the Covenant of Association between the Islands and the United States.
(See S.Rept. 107-28.) The bill died at the close of the 107th Congress.
The issue of minimum wage protection for workers in the CNMI, in part
because of the alleged concentration of sweatshop industry in the islands, remains on
the wage/hour agenda of the 109th Congress. (See the legislative section of this
report, below.)
25 See CRS Report RL30235, Minimum Wage in the Territories and Possessions of the
United States: Application of the Fair Labor Standards Act, by William G. Whittaker.
26 U.S. Congress, Senate Committee on Energy and Natural Resources, Northern Mariana
Islands Covenant Implementation Act, report to accompany S. 1275, 105th Cong., 2nd sess.,
S.Rept. 105-201.

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CRS-18
Minimum Wage Legislation in the 109th Congress
Early in the 109th Congress, various proposals were introduced that would have
raised the federal minimum wage and/or made other changes in the FLSA. Some
were single-issue proposals; others were part of broader legislative packages.
Establishing a Tradition?
The original FLSA proposals of 1937-1938 were in the form of freestanding
legislation: focusing narrowly upon labor standards but covering the entire field of
wage/hour and child labor protections. As a procedural matter, the next seven rounds
of minimum wage increases (1949, 1955, 1961, 1966, 1974, 1977, and 1989), though
each provided for other changes in the FLSA itself, took the form of freestanding
legislation. Non-FLSA or non-wage/hour issues were not addressed as part of a
package with minimum wage and related concerns. Any “trade-off” to assist
employers in dealing with the impact of wage/hour enactments (for example, the “tip
credit” or youth/student sub-minimum wage provisions) were considered within the
context of wage/hour legislation per se.
In 1996, minimum wage and related FLSA amendments were brought to the
floor in the House as an amendment to a broad package of non-wage/hour proposals
mostly associated with tax matters of interest to industry. Indeed, the FLSA was a
relatively small part of the overall package. While some components of the
wage/hour portion of the bill had been the subject of hearings during the 104th
Congress, others had not been — nor had the body of FLSA-related provisions been
considered by committee as a unit. During the spring and summer of 1996, the joint
minimum wage/tax revision measure moved through Congress, and was signed by
President Clinton on August 20, 1996 (P.L. 104-188).27
When minimum wage legislation came to the floor during the 106th Congress,
it largely followed the 1996 pattern. It combined tax revisions in behalf of the
business community with changes in the FLSA — including an increase in the
minimum wage.28 By this point, the two issues — a minimum wage increase for low-
paid workers and tax breaks for employers (whether or not they employed workers
paid at the minimum wage) — had become linked in policy terms: i.e., that the
former could not go forward, it seemed, without the latter.
27 See CRS Issue Brief IB95091, The Minimum Wage: An Overview of Issues Before the
104th Congress, by William G. Whittaker (archived, but available from the author). See also
Alissa J. Rubin, “Congress Clears Wage Increase with Tax Breaks for Business,”
Congressional Quarterly, Aug. 3, 1996, pp. 2175-2177; and Julie Kosterlitz, “A Bounty For
Business,” National Journal, Oct. 26, 1996, pp. 2289-2292.
28 In the Senate, minimum wage increases had been included in H.R. 833, as amended, the
Bankruptcy Reform Act of 1999; in the House, it was part of H.R. 3081, the “Small
Business Tax Fairness Act of 2000.” Though each chamber passed a version of the
minimum wage legislation, the proposals died at the close of the 106th Congress. See CRS
Report RL30690, Minimum Wage and Related Issues Before the 106th Congress: A Status
Report, by William G. Whittaker (archived, but available from the author).

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CRS-19
Linkage, although a tradition only since the 104th Congress (1996) and used
only during that one occasion, has appeared to become a frequently accepted focus
of the minimum wage debate during succeeding Congresses. “We came to the table,”
observed Representative Rick Lazio (R-NY), “with the realization that a wage
increase was fair but we also came to the table with a desire to protect the small
business people who will end up bearing the direct burden of any wage increase that
we pass here today.”29 Senator Don Nickles (R-OK) concluded, looking ahead to the
107th Congress: “It kind of fits, frankly, to do it as a part of the tax package next
year.”30 Some may argue that, in practice, linkage is a matter of fairness and equity
with respect to those who are called upon to fund an increased minimum wage.
Not all observers concurred. Amy Borrus, writing in Business Week, termed the
tax/minimum wage bill “a monument to legislative logrolling,” stating that “its
veneer of virtue made it the perfect vehicle for a tax-break extravaganza.”31
Representative Charles Rangel (D-NY) seemed to sum up the views of critics of
linkage: “We should not be forced to bribe the wealthy in our society in order to
secure a simple dollar more per hour for the poorest working American families.”32
Thus, some may argue, that proposals to raise the minimum wage have become, in
practice, a vehicle for legislating economic benefits for employers and others in
higher income brackets.33 The notion continues into the 109th Congress.
Minimum Wage: The Issue of Indexing
Varying through the years, the minimum wage reached its peak in 1968 in real
(inflation-adjusted) terms and has, since then, declined in constant value. “In January
2006,” states CRS analyst Brian W. Cashell, “it would need to have been increased
to $9.05 to equal the purchasing power of the statutory minimum wage in February
1968.”34
29 Congressional Record, Mar. 9, 2000, p. H860.
30 Bureau of National Affairs, Daily Labor Report, Dec. 6, 2000, p. A12.
31 Amy Borrus, “Why Business Isn’t Bucking This Minimum-Wage Hike,” Business Week,
Nov. 1, 1999, p. 55. Borrus added, “And that’s how lobbyists managed to squeeze
maximum benefits for their clients out of the minimum-wage measure.”
32 Bureau of National Affairs, Daily Labor Report, Mar. 9, 2000, p. A8.
33 In general, see Bureau of National Affairs, Daily Labor Report, Apr. 25, 2001, pp. A6-A7;
and Juliet Eilperin, “Business Seeks Tax Breaks in Wage Bill: Pay Raise is Viewed as Best
Chance at Cuts,” The Washington Post, May 14, 2001, pp. A1 and A12. In an article,
“Business Coalition Holds Firm for Bush Tax Cut Package,” Congress Daily, Apr. 19, 2001,
reporters Stephen Norton and Charlie Mitchell state that trade association and business
supporters of the Bush Administration’s tax package have shown “remarkable discipline in
resisting the urge to press for inclusion of their own pet items” in the tax package, “mindful
of assurances from GOP leaders that there will be a ‘second bite at the apple’ for business-
specific provisions next year or even later this year — possibly paired with a bill to raise the
minimum wage.”
34 CRS Report RS20040, Inflation and the Real Minimum Wage: Fact Sheet, by Brian W.
Cashell. As noted here, the current minimum wage level ($5.15 per hour) can be reduced,
(continued...)

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CRS-20
During the initial debates on wage/hour legislation in 1937-1938, it was
suggested that a reasonable rate (for that period) would have been 40 cents an hour
and a 40-hour work week. Under prolonged objections from southern industrialists,
the operative figures were dropped to 25 cents per hour and to a 44-hour work week
— in each instance to be raised or lowered according to statute. Thus, Congress
avoided dealing with a regional option and southern industrialists also avoided
stricter standards.
Because the minimum wage under the FLSA is set in statute, it remains at a
fixed level, without regard for changes in the general economy, until Congress alters
it through legislation. Failure of the minimum wage to maintain parity with the cost
of living has been a continuing concern. Some have questioned whether the
minimum wage floor should remain at a fixed point, subject to action by Congress.
They suggest it might usefully be indexed to reflect changes in the cost of living (or
shifts in other economic variables), thus providing a more regular pattern of increase.
On the other side, some contend that there really isn’t a need for a federal minimum
wage at all.
Indexation was discussed during the last century as an approach to wage
stability — but was rejected. It was last a subject of extensive congressional debate
during consideration of the 1977 FLSA amendments — but was, once again, rejected,
the Congress seemingly preferring the current method of direct legislative action.35
Several states — notably, Oregon, Washington, and Vermont — have experimented
with minimum wage indexation in recent years.36
To reach the 1968 level (in current dollars), as suggested above, the federal
minimum wage would need to be approximately $9.05. The most expansive
proposal, now before the Congress, would set the minimum wage at $7.50 per hour
— to go into effect October 1, 2009.
Proposals To Raise the Federal Minimum Wage
The general federal minimum wage is set in statute at $5.15 per hour: a cash
wage that does not take into account fringe benefits. Various provisions of law
permit payment at a lower rate.
Senate Floor Action in the 109th Congress. On two occasions thus far
during the 109th Congress, minimum wage legislation was before the Senate. On
34 (...continued)
under various segments of the law, to lower rates — including a special reduced wage for
disabled workers predicated upon their individual capabilities but with no fixed standard.
35 See H.R. 2812 (107th Congress), introduced by Representative Bernard Sanders (I-VT),
which discusses indexation.
36 See CRS Report RL30927, The Federal Minimum Wage: The Issue of Indexation, by
Gerald Mayer.

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CRS-21
each occasion, the measure was defeated — though not always, it seems, on
substance.37
The Kennedy/Santorum Debate. During debate on the “Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005” (S. 256), minimum wage emerged
twice.
First, on March 3, 2005, Senator Edward Kennedy proposed an amendment
(S.Amdt. 44) that would have raised the minimum wage, in steps, to $7.25 an hour
beginning 24 months (and 60 days) after enactment of the legislation. In addition,
the Kennedy proposal would have applied the federal minimum wage, in steps, to the
Commonwealth of the Northern Mariana Islands.38 The proposal by Senator
Kennedy was defeated by a vote of 46 ayes to 49 nays on March 7, 2005.39 He
indicated that the debate would continue as other bills moved forward.
Second, on March 7, 2005, in connection with the amendments by Senator
Kennedy, Senator Rick Santorum introduced a more far-reaching proposal (S.Amdt.
128). It would have: (a) raised the minimum wage to $6.25 an hour, in steps, to have
full effect 18 months after enactment; (b) created a program of compensatory time
as an alternative to ordinary overtime pay; (c) created an enhanced small business
exemption; (d) altered the tip credit under the FLSA; and (e) provided a range of
unrelated tax and other incentives for business. The Santorum proposal was defeated
(38 yeas to 61 nays) on March 7, 2005.40
The Kennedy/Enzi Debate. On October 18, 2005, Senator Kennedy
reintroduced legislation that would have raised the minimum wage. On this
occasion, however, the Senator’s proposal would have called for an increase in the
minimum wage in two steps, to $5.70 and to $6.25, respectively — as had been
proposed by Senator Santorum during the earlier debate. At this juncture, Senator
Michael Enzi entered a separate proposal that would have provided for a number of
changes: flexible schedules, an alteration of the tip credit, and revision of various
accounting provisions — among other items. The proposals were debated at length.
As the matter came to a vote, Senator Christopher Bond raised a point of order that
an increase in the minimum wage that Senator Kennedy was advancing would be in
violation of the Congressional Budget Act of 1974 as an “unfunded mandate.” In
turn, Senator Kennedy raised a similar point of order on the Enzi amendment. As a
result, each proposal was defeated — not on its substance but, rather, on a point of
order.41
37 For a quick summary of minimum wage legislation (and that affecting overtime pay and
child labor), see CRS Report RL32901, Minimum Wage, Overtime Pay, and Child Labor:
Inventory of Proposals in the 109th Congress to Amend the Fair Labor Standards Act, by
William G. Whittaker.
38 Congressional Record, Mar. 3, 2005, pp. S1979-S1980.
39 Congressional Record, Mar. 7, 2005, p. S2132.
40 Ibid., pp. S2132-S2133.
41 See Congressional Record, Oct. 18, 2005, pp. S11469-S11470, and Oct. 19, 2005, pp.
(continued...)

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CRS-22
Other Action Proposed During the 109th Congress. Additional
minimum wage legislation in the 109th Congress has emerged in a variety of forms:
sometimes, as an independent free-standing bill; on other occasions, as part of more
general legislation.
The Stabenow Proposal. Senator Debbie Stabenow, on January 24, 2005,
introduced S. 14, a composite infrastructure and jobs bill, part of which would
increase the minimum wage to $7.25. The minimum wage component would begin
to take effect 60 days after enactment and be phased in over two years. The bill
would also reverse actions taken (2003-2004) on overtime payment for certain
workers categorized as executive, administrative, or professional.42 The bill was
referred to the Committee on Finance.
The English Proposal. Representative Phil English, on March 3, 2005,
introduced H.R. 1091, a bill (a) to increase the minimum wage, in steps, to $6.50
beginning October 1, 2008, and to expand the pattern of exemption to eliminate
employers with nine or fewer employees; (b) to allow for an altered small business
exemption under the act; and (c) to provide assorted incentives intended to stimulate
the growth of business. The bill was referred to the Committee on Ways and Means
and to the Committee on Education and the Workforce.
See, also, H.R. 5368, a composite bill that provides for small business tax
incentives and would raise the federal minimum wage, in steps, to not less than $7.50
an hour beginning October 1, 2009. At the same time, H.R. 5368 would increase the
small business exemption from $500,000 (its current rate) to $1 million by
September 30, 2008. The bill would also exempt employers with fewer than 10
employees from minimum wage protection. The bill was introduced by
Representative English (with Representatives Simmons and Weldon of
Pennsylvania), and was referred to the Committees on Ways and Means and
Education and the Workforce.43
The Durbin Proposal. Under the date of April 19, 2005, Senator Durbin
introduced S. 846, a bill to increase the federal minimum wage, in steps, to $7.25 per
hour beginning 24 months and 60 days after enactment. The bill also deals with
overtime pay under Section 13(a)(1) of the act, and expresses the sense of the Senate,
among other things, for “strong support for multiemployer defined benefit pension
plans.” The bill was placed on the Senate Legislative Calendar under General Orders
(Calendar No. 80).
41 (...continued)
S11547-S11548. See also Daily Labor Report, Oct. 19, 2005, p. A10 and Oct. 20, 2005, p.
A15. One industry spokesperson opined: “... if an increase [in the minimum wage]
appeared inevitable, one way of softening the impact would be to include some pro-business
measures in the bill — like a corresponding increase in the deductibility of business meals.”
See Nation’s Restaurant News, Sept. 26, 2005, p. 77.
42 See CRS Report RL32088, The Fair Labor Standards Act: A Historical Sketch of the
Overtime Pay Requirements of Section 13(a)(1), by William G. Whittaker.
43 H.R. 5368 was introduced on May 11, 2006. The summary, above, is drawn from a “pre-
publication” edition of the bill, on line as of May 15, 2006.

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CRS-23
The Kennedy/Miller Proposals. On May 18, 2005, Senator Kennedy and
Representative George Miller introduced bills that would raise the federal minimum
wage to $7.25 per hour (over a period of years) and would amend treatment of the
minimum wage in the Commonwealth of the Northern Mariana Islands (S. 1062 and
H.R. 2429, respectively). The Miller bill was referred to the House committee on
Education and the Workforce and, on June 22, 2005, was referred to the
Subcommittee on Workforce Protections. The Kennedy proposal was placed on the
Senate Legislative Calendar under General Orders (Calendar No. 109).
The Andrews Proposal. Representative Robert Andrews, on June 7, 2005,
proposed the “Camp Safety Act of 2005.” The bill (H.R. 2748) would “condition the
minimum-wage-exempt status of organized camps under the Fair Labor Standards
Act of 1938 on compliance with certain safety standards....” The bill was referred to
the House Committee on Education and the Workforce and, on June 11, to the
Subcommittee on Workforce Protections.
The Boehlert Proposal. Representative Sherwood Boehlert, on July 25,
2005, introduced the “Minimum Wage Competitiveness Act of 2005.” The Boehlert
bill (H.R. 3413) would increase the federal minimum wage, in steps, to $7.15 an hour
beginning on January 1, 2007. The bill also includes a provision raising the
minimum wage of the CNMI in steps until it reaches the federal minimum wage.
Referred to the House Committee on Education and the Workforce, the bill was
referred to the Subcommittee on Workforce Protections.
The Clinton Proposal. On May 4, 2006, Senator Clinton introduced S. 2725,
titled the “Standing with Minimum Wage Earners Act of 2006.” The bill would
increase the federal minimum wage to $7.25 per hour, in steps, beginning 24 months
and 60 days after enactment. In addition, the bill provides that subsequent changes
in the minimum wage “shall be automatically increased for the year involved by a
percentage equal to the percentage by which the annual rate of pay for Members of
Congress” is increased under “the Legislative Reorganization Act of 1946 (2 U.S.C.
31).” The bill was referred to the Committee on Health, Education, Labor, and
Pensions.
The Miller CNMI Proposals. On June 7, 2006, Representative George
Miller, with others, introduced a new proposal, the “United States-Commonwealth
of the Northern Marianas Human Dignity Act” (H.R. 5550).
When, during the mid-1970s, the CNMI entered into a quasi-autonomous
relationship with the United States, the islanders retained certain rights or
responsibilities. For example, goods produced in the islands were allowed to be
shipped under the designation of “Made in America.” Since the islanders also
controlled immigration policy and the minimum wage (overtime was the
responsibility of the DOL in Washington), their industries enjoyed a major advantage
of foreign labor employed at low costs.
It has been suggested, by some, that the islands have gradually become
sweatshops, making use of labor from China and the south Pacific states but with
little concern for labor standards or labor laws. Others have viewed the islands as an
indicator of how a free enterprise system could and should work — being free from

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CRS-24
artificial constraints. Through a number of years, insular affairs have been the
subject of hearings before committees of the Congress — with an ample record
established, though with some disagreement as to its implications.
With H.R. 5550, there would be a restructuring of the U.S.-Insular relationship.
At the end of the Covenant between the Marianas and the United States, certain
additional items would be added. Inter alia:
(a) The bill would restrict the use of the term, “Made in America,” unless
certain conditions had been met. Each individual “providing direct labor in
production of such product,” must have been paid a wage “equal to or greater
than” the minimum wage under the FLSA. The product was “produced or
manufactured in compliance with all Federal laws relating to labor rights and
working conditions....” None of the workers would be employed “under
conditions of indentured servitude.”44
(b) The minimum wage provisions of the FLSA shall apply to the
Commonwealth. However, there would be a series of step increases to bring the
insular minimum up to the otherwise applicable federal rate — which rate shall
be reached about the end of the first decade of the twenty-first century.
Thereafter, the insular rate shall be equal to the federal rate.
(c) Duty-free and quota-free status will not apply unless (1) federal labor
standards are met, (2) indentured workers are not employed in the manufacture
of the product, and (3) the Commissioner of Customs has certified that the
islands are not being used as an illegal trans-shipment point.
(d) The Immigration and Nationality Act shall apply to the Northern
Mariana Islands as though it were a state of the union. The Secretary of
Homeland Security shall, under specified constraints, be permitted to adjust the
immigration status of certain insular workers.
(e) Special protections are afforded to persons engaged in contracts for the
construction of “public buildings and public works” — setting wage and related
standards.
(f) A program of technical assistance would be included.
(g) Various reports are mandated.
The Miller bill (H.R. 5550) was referred to the Committee on Resources and, in
addition, to the Committee on Ways and Means.
Consideration of the Labor, Health and Human Services, and
Education Appropriations Bill (for 2007). During consideration of the
Departments of Labor, Health and Human Services, and Education (for 2007) on
44 Indentured servitude is defined as including “all labor for which an alien worker is in the
Commonwealth ... solely by virtue of an employment contract with a specific and sole
employer or ‘master’ who is in control of the duration of the stay of the indentured alien
worker in the Commonwealth.... If the worker displeases the employer/master, the contract
is terminated and the employee must leave the Commonwealth....”

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CRS-25
June 13, 2006, by the Appropriations Committee, an amendment was offered by
Representative Steny Hoyer that would increase the federal minimum wage to “not
less than $5.85 an hour beginning on January 1, 2007, not less than $6.55 an hour
beginning on January 1, 2008, and not less than $7.25 an hour beginning on January
1, 2009.” The Hoyer amendment was approved in committee by a vote of 32 yeas
to 27 nays and, thereafter, the measure was approved by a voice vote.45
The measure (with the Hoyer amendment) will still require floor consideration.
Representative Howard P. “Buck” McKeon, Chairman of the House Education and
Labor Committee, was quoted as suggesting that he would like to see a point of order
raised against the amendment if it comes to the floor.46 The minimum wage
amendment, the Bureau of National Affairs’s Daily Labor Report notes, “is outside
the jurisdiction of the Appropriations Committee,” which could make it “subject to
a point of order under House rules.”47
Some Collateral Issues
Although not always thought of as part of the minimum wage debate, there are
other issues that do play an intricate role in consideration of minimum wage-related
issues. Certain of these are discussed below.
The Youth Sub-Minimum Wage. During the 1960s and 1970s (as retail
and service industries — major employers of youth workers — were brought under
the FLSA), the issue of a youth sub-minimum wage became extremely active.
Proponents of the concept (most notably from the hotel and restaurant industries —
but from other segments of the economy as well) urged that youth workers be paid
at a rate lower than the standard minimum wage, regardless of experience or the
quality of work they performed. In each case and after heated debate (this came up
through several years), the issue was defeated.
Through a number of years after adoption of the 1977 FLSA amendments, no
further adjustments were made in the federal minimum wage. When George H. W.
Bush became President in 1989, he agreed to sign a new minimum wage increase if,
among other things, it included a general sub-minimum wage for workers beginning
new employment. However, in the form adopted by the Congress, the President
vetoed the measure. Following an extended period of reconsideration, Congress
presented the President with a new bill, which he did sign — and which contained
a sub-minimum wage for youth.48
The new program, as it related to youth employment, was divided into two parts,
and focused upon youth not having “attained the age of 20 years.” The first part
covered a 90-day period at the sub-minimum wage with no conditions beyond those
45 Bureau of National Affairs, Daily Labor Report, June 14, 2006, p. AA1,
46 Ibid.
47 Bureau of National Affairs, Daily Labor Report, June 16, 2006, p. A11.
48 See “Minimum-Wage Impasse Finally Ended,” Congressional Quarterly: Almanac, 101st
Congress, 1st Session, 1989. Congressional Quarterly Inc., 1990, pp. 333-340.

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CRS-26
imposed by the employer and the willingness of the worker to accept the work. The
second part was more complex. It involved an additional 90-day period, but included
a training wage component. At the close of the 180-day period, a regular minimum
wage or more would be required for the employee. The program was experimental,
to begin on April 1, 1990, and to end on April 1, 1993. At the end of the trial period,
the Secretary of Labor was to provide Congress with an assessment. As it turned out,
almost no one used the program and it was not extended.49
Three years passed. In 1996, minimum wage legislation came up as a floor
amendment to an industry-oriented bill — with a sub-minimum wage for youth as
one of its provisions. Following floor debate and approval in the House, the measure
was forwarded to the Senate. Negotiations continued in the Senate and, ultimately,
the measure was passed with the sub-minimum wage in place — the bill
subsequently being signed into law by President William Clinton (P.L. 104-188).50
As enacted, the bill would allow an employer to pay a youth (under 20 years of age)
a sub-minimum wage of $4.25 per hour through the first 90 consecutive days of
employment with an employer.
Having set forth a youth sub-minimum rate, Congress then raised the general
minimum rate to $5.15 an hour — but without linking the youth worker option to the
new standard. Unless Congress takes specific action to increase the youth rate, it will
remain at $4.25 per hour even if the general minimum wage is raised. Legislatively,
the youth rate is a separate issue from the general wage floor.51
The ‘Tip Credit’ Provision. During the 1960s and 1970s, the FLSA was
progressively expanded to provide protection for retail and service employees. Some
of these workers were “tipped employees” and their employers argued, successfully,
that since they were given tips by the public, they (the employers) ought not to be
responsible for paying such tipped employees a full minimum wage. Through the
years, the level of the so-called tip credit (the value of tip income received by tipped
employees that an employer could count toward his or her minimum wage obligation)
has varied.
49 P.L. 101-157, Section 6: training wage. See U.S. Department of Labor, Employment
Standards Administration, Wage and Hour Division, Report to the Congress on the Training
Wage Provisions of the Fair Labor Standard Act Amendments of 1989 from the Secretary
of Labor, Robert B. Reich, Apr. 21, 1993, 24 pp.; and Kevin G. Salwen, “Subminimum
Wage of $3.62 an Hour Is on Deathbed but Draws Few Mourners,” The Wall Street Journal,
Mar. 12, 1993, p. A4.
50 When signing the new minimum wage bill, President Clinton observed, “I should note that
I disagree with certain provisions added to the minimum wage title of the Act, such as the
provision creating a new sub-minimum wage for young people and the one denying
increased cash wages to most employees who rely on tips for part of their income. Still,
those defects do not obscure the central accomplishment of this Act — securing the first
minimum wage increase since 1991.” See Public Papers of the Presidents of the United
States: William J. Clinton, Book II, 1996. Washington: United States Government Printing
Office, 1998, p. 1317.
51 See “Congress Clears Wage Increase With Tax Break for Business,” Congressional
Quarterly: Almanac, 104thCongress, 2nd Session, 1996. Congressional Quarterly Inc., 1997,
pp. 7-3 to 7-9.

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Under the 1996 FLSA amendments, Congress provided a tip credit at 50% of
the regular minimum wage (i.e., $2.13 an hour) — based upon the $4.25 per hour
general minimum wage as it was then in effect. So long as an employee received tip
income on a regular basis sufficient to reach the statutory minimum wage, when
combined with an employer contribution of $2.13 per hour, the employer had no
further minimum wage obligation. (The credit deals only with the amount to be paid
by the employer of a tipped employee.) Thereafter, the tipped employee would
receive — either in a combination of tips and cash wages or cash wages alone where
there were insufficient tips — an amount sufficient to reach the full minimum wage.
Then, Congress increased the federal minimum wage, in steps, to $5.15 per hour.52
In the 1996 FLSA amendments, Congress was working from a minimum wage
floor of $4.25 per hour. Thus, $2.13 per hour (one half of the minimum wage) was
set as the new base rate for employers. When Congress increased the federal
minimum, in steps, to $5.15 per hour, the threshold income for tipped employees
remained at $2.13 per hour. The minimum cash wage ($5.15 per hour) and the tip
credit provision ($2.13 per hour) are not linked. They do not increase in tandem.53
The Computer Services Professional Rate. Beginning in the 1960s,
pressure increased to have certain computer services workers defined
administratively by the Department of Labor as “professional” and, therefore, exempt
under Section 13(a)(1) of the FLSA from the standard minimum wage and overtime
pay protection. When the Department seemed to demur, Congress (in 1990) enacted
legislation directing the Secretary to develop regulations that would permit such an
exemption if, among other criteria, “such employees are paid on an hourly basis” at
a rate that is “at least 6½ times greater than the applicable minimum wage” (P.L.
101-583). The Department proceeded as directed, developing a regulation under
Section 13(a)(1) and justifying the exemption on the professional character of the
targeted personnel.
Under the 1996 FLSA amendments, Congress directly amended the act with
Section 13(a)(17) to exempt the targeted computer services workers where, among
other qualifying criteria, they are paid “on an hourly basis ... at a rate of not less than
$27.63 an hour” (P.L. 104-188). While $27.63 was 6½ times the then applicable
minimum wage of $4.25 per hour prior to the 1996 FLSA amendments, the wage
requirement for exemption was set at a specific dollar amount. Then, Congress
raised the minimum wage. The computer services threshold wage and the general
minimum wage were no longer linked. Specific action by Congress is required to
alter the threshold.54
52 For a discussion of the tip credit, see CRS Report RL33348, The Tip Credit Provisions
of the Fair Labor Standards Act, by William G. Whittaker.
53 See also H.R. 3732, introduced on Sept. 13, 2005, and referred to the Committee on
Education and the Workforce, Subcommittee on Workforce Protections: the “Minimum
Wage Fairness Act of 2005.” The bill calls for a restructuring of the current tip credit
system.
54 See CRS Report RL30537, Computer Services Personnel: Overtime Pay under the Fair
Labor Standards Act, by William G. Whittaker. Regulatory changes, proposed (and now
(continued...)

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The ‘Small Business’ Exemption. Since enactment of the FLSA in 1938,
Congress has attempted, variously, to exempt certain small businesses from coverage
under the act. Ultimately, Congress instituted a dollar volume test for exemption,
though the level of that test has been changed through the years.
In 1989, the threshold for the small business exemption was $362,500 in terms
of annual sales. Congress, as part of the 1989 FLSA amendments (P.L. 101-157),
increased the threshold to $500,000 — and made certain other adjustments in the
statute. With enactment, the amendments were turned over to the Department of
Labor for implementation. At that juncture, the Department ruled that there were, in
effect, two standards. On the one hand, a person — employed by a firm with
proceeds of less than $500,000 — could be exempt unless he were personally
engaged in interstate commerce. If he were involved in interstate commerce, then he
would be covered by minimum wages and overtime pay as an individual under the
FLSA. Some argued that the department’s ruling did not adhere to the intent of
Congress. Others held that the ruling was, indeed, the correct interpretation of
congressional intent. In any case, an employer, henceforth, would need to be
absolutely certain that the work engaged in by his or her employee could not be
classified as interstate commerce — thus, rendering the worker FLSA-covered.
The small business threshold, however interpreted, is set at a specific dollar
amount, requiring direct action by Congress to alter it. The provision is not directly
affected by any change in the general minimum wage.55
The Case of American Samoa. American Samoa was acquired by the
United States as a result of the Spanish-American War (1898), supplemented by a
series of treaties.
When enacted in 1938, the FLSA applied (or seemed to apply) to Samoa as it
did to the states of the Union. However, the wage/hour statute does not appear to
have been immediately enforced. During the early 1950s, the tuna canning industry
became Samoa’s major private sector employer. When it appeared that the industry
would be required to pay its workers the national minimum wage (though its
economy was somewhat different from that of the mainland), the industry appealed
to Congress to write an exception into the act. Following hearings, the FLSA was
amended. An industry committee structure was created under which an appropriate
minimum wage for the island group would be developed administratively.56
54 (...continued)
implemented) by the Department of Labor with respect to Section 13(a)(1) could affect
workers in the computer services industry. See CRS Report RL32088, The Fair Labor
Standards Act: A Historical Sketch of the Overtime Pay Requirements of Section 13(a)(1),
by William G. Whittaker.
55 See CRS Issue Brief IB90082, The Federal Minimum Wage: Changes Made by the 101st
Congress and Their Implications, by William G. Whittaker. (Archived, but available from
the author.)
56 P.L. 84-1023. See also U.S. Congress, Senate Committee on Labor and Public Welfare,
Amending the Fair Labor Standards Act of 1938, hearings, 84th Cong., 2nd sess., May 8, 1956
(continued...)

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CRS-29
The industry committee structure was intended, it appears, to have been an
interim measure while the insular economy progressed toward mainland standards.
Half a century later, the system remains in place. The minimum wage for American
Samoa continues to be set administratively. It is independent from any change in the
general minimum wage rate under the FLSA.57
Health Care Concerns and the Issa Bill. On December 13, 2005,
Representative Issa proposed linking the minimum wage, both federal and state, with
certain aspects of health care legislation. The bill, H.R. 4505 (the “Health Care
Incentive Act”), was referred to the Committee on Education and the Workforce, and
to the Subcommittee on Workforce Protections.
Under the Issa bill, the Secretary of Labor would be directed to promulgate a
rule “requiring” that any employer engaged in interstate commerce where “Federal
or State law” establishes a minimum wage “at a rate that is higher than the minimum
wage required by section 6(a) of the Fair Labor Standards Act of 1938 ... as in effect
on September 1, 1997” (i.e., $5.15 per hour) would “... be permitted, in accordance
with regulations promulgated by the Secretary, to count the value of creditable health
care benefits provided by such employer to an employee in determining the wage
such employer is required to pay an employee.” The Secretary “shall include a
contribution to a health saving account or similar account” in determining creditable
benefits, and shall determine a formula for “a minimum value of such benefits.”
Finally, the bill provides the following: “In no case shall the credit permitted by the
rule promulgated under this section exceed the difference between the minimum
wage under section 6(a) [in effect on September 1, 1997] ... and the wage rate
otherwise applicable.”
Under the Issa proposal, the wage floor would be $5.15 per hour (the rate
payable under section 6(a) of the FLSA on September 1, 1997). Any amount above
that level, whether under state or federal law, could be payable in the form of
creditable benefits — to be defined by the Secretary of Labor but to include “a
contribution to a health savings account or similar account.” The credit for health
care benefits could be substituted for any future increase in the cash minimum wage.
Thus, in effect, the minimum wage could be capped at $5.15 per hour — depending
upon how the benefit package is assessed by the Secretary, the value that is assigned
to it, and whether it is fully utilized.
crsphpgw
56 (...continued)
(Washington: GPO, 1956).
57 See CRS Report RL30235, Minimum Wages in the Territories and Possessions of the
United States: Application of the Fair Labor Standards Act, by William G. Whittaker. The
Samoan minimum wage is calculated on an industry-by-industry basis, but is generally lower
than that which applies on Guam or in the States.

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