Drilling-Down On The Truth About Federal Minimum-Wage Legislation

Lost Horizons

 Guess what? There’s mass ignorance and legal fraud involved…

ONCE AGAIN, LIKE THE PERNICIOUS PERRENIAL THAT IT IS, the politicking for a “minimum wage” increase has resumed. Someone must have decided that the fed’s recent sustained intense monetary inflation (QE and other bailouts) has become inconveniently visible…  

Needless to say, in the short term a minimum wage increase will push low-productivity workers out of jobs and keep those not yet working from doing so. If everyone believes he HAS to pay $10.00 +$.75+$X to have a worker perform for an hour (the nominal minimum wage proposed plus the company’s share of FICA plus any [marginal] infrastructure expenses associated with having the worker, such as HR labor, tools and equipment, training, etc.), then any worker capable of producing only $10.75+X’s-worth of output (or less) will never have a job.

moneyCash_small Drilling-Down On The Truth About Federal Minimum-Wage Legislation

In effect, minimum-wage regimes bar a certain class of inexperienced or poorly-educated or physically or mentally handicapped people, who are therefore low-skilled and low-productivity, from being allowed to work. With typically twisted Washington spin, this is done in the name of compassion.

The truth is, minimum-wage laws exist precisely in order to exclude inexperienced, lower-value or lower-cost workers from the labor market on behalf of established workers, who otherwise would find their pay levels under downward pressure from the less-expensive competition. Established workers in Northern-state-based unions lobbied for the first of these laws in order to prevent migrating black workers from the South, foreign immigrants and teenagers all willing to work for lower pay from competing for existing jobs during the Great Depression.

KEEPING THE AVAILABLE LABOR SUPPLY FROM CLEARING THE MARKET is a harm to everyone, of course. It is even bad for the protected workers.

Inevitably, those kept from working become a welfare class and a burden of one sort or another on those who are allowed to work. Where previously low-productivity workers had simply adjusted their expectations and consumption to the reality of their ability to provide for themselves, and used their low-paid worktime to improve their skills and habits in order to rise in pay, they now are wards of the state. Their expectations are a political issue, and their needs are met not only without any contribution from them at all, but at the additional expense of an army of government bureaucrats administering their welfare.

Further, maintaining the sizable portion of society idled by minimum-wage laws requires a thicket of regulatory impositions against liberty. These, in turn, require the corruption of American principles of law and Constitutional limitations on the state necessary to permit them– a fit companion to the corruption of social comity, the erosion of the work ethic, and the assault on reason and everyone’s innate sense of right and wrong also necessary to facilitate this pustulent political sop to a rent-seeking special interest.

In short, minimum-wage laws are a massive wrong– morally, legally and practically. More, all of that is without even considering the direct adverse effects of the market’s unstoppable automatic efforts to clear itself despite the unnatural imposition.

Those clearing efforts take the form of a relentless upward ratcheting of price adjustments, which demand the production of ever-more currency to accommodate those adjustments. That production and the habits of practice and perception it encourages spawns a great oozing pit of moral hazard for certain players in the game, who catch on to their opportunities once the people have grown accustomed to inflation. Those concerned about the hazards of the federal reserve system and its fiat money (which should be everyone) need to understand that freedom from that monster and all its ills requires doing away with the political pretexts for its existence, among which is the minimum wage.

BUT ALL OF THAT IS MERELY BACKGROUND, because the real purpose of this commentary is to examine the legal realities of the federal minimum-wage. That exercise reveals minimum-wage-legislation to be a fragile house of cards staying upright only by virtue of ignorance, legal chicanery and judicial corruption, as is true of so much of today’s federal activity.

Here, in relevant part, is the enactment under which federal minimum wage limits are imposed:

29 U.S. Code § 206 – Minimum wage

(a) Employees engaged in commerce; home workers in Puerto Rico and Virgin Islands; employees in American Samoa; seamen on American vessels; agricultural employees Every employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the following rates: …

Sounds like this requirement is imposed on pretty much every business with a workforce, yes? Well “sounds like” here is no different than how “wages” as used in tax law “sounds like” ‘wages’ as used in common parlance. Let’s look at some definitions:

29 U.S. Code § 203 – Definitions

(b) “Commerce” means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.

(c) “State” means any State of the United States or the District of Columbia or any Territory or possession of the United States.

So, the “commerce” in which one must be engaged to be subject to the federal minimum wage law DOESN’T mean ‘commerce’ as normally defined. Instead, it means only “commerce among the several States or between any State and any place outside thereof”.

Now, even leaving aside the ACTUAL legal meaning of the “commerce among the several States” over which Congress has some authority (which we’ll get to presently), put your common-sense, grown-up hat on for a moment and ask yourself: Is your average McBurger franchisee engaging in “commerce among the several States” during the routine course of his business under any rational construction of this expression? Of course not.

The franchisee’s business has NOTHING to do with “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof”. He doesn’t ship goods across state lines– he ships them across his counter to a waiting customer.

The McBurger franchisee has no employees “engaged in commerce among the several States or between any State and any place outside thereof”. Nor any producing goods for such commerce, even if Congress could rationally look into the future to determine that any goods produced today actually end up travelling outside the state “in commerce”.

Even under the fraudulently expansive definition of “commerce” found in the Fair Labor Standards Act (FLSA) then, the franchisee manifestly isn’t so engaged, and isn’t subject to the federal minimum wage. Nor is the owner of a gas station, or a drugstore, or most any other typical American business. McBurger “corporate” might have some employees “engaged in commerce” or “producing goods for commerce” (along with many who are not), but McBurger down the street certainly has none.

BUT THAT’S NOT THE END OF THE STORY, because as I mentioned, the definition of “commerce” in the FLSA is NOT the actual definition of the “commerce” over which the federal government has authority. The FLSA is actually a gratuitous distortion of the clause in the US Constitution delegating a certain very limited and specialized authority to Congress over goods crossing state lines in order to prevent burdens from being laid upon such exports or imports.

Here is the text of the clause:

“The Congress shall have power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes;”

Article 1, section 8, clause 3, United States Constitution

Pretty simple words. Did you know that although for 140 years or so no one noticed anything in them but what they plainly say, today they are deemed as the authority for federal gun-control measures, the drug war, federal control over “wetlands”, Obamacare impositions and of course, minimum wage laws, among much else?

James Madison, in Federalist 42, explained that the chief reason for the Commerce Clause was: “[T]he relief of the States which import and export through other States, from the improper contributions levied on them by the latter”– that is, the prevention of one State imposing tariffs on articles crossing their borders. In a 1791 letter to George Washington commenting on the proposed creation of a central bank, Thomas Jefferson explains the limits of the Commerce Clause authority as follows: “[T]he power given to Congress by the Constitution does not extend to the internal regulation of the commerce of a State, (that is to say of the commerce between citizen and citizen,) which remain exclusively with its own legislature; but to its external commerce only, that is to say, its commerce with another State, or with foreign nations, or with the Indian tribes.”

 From these declarations by the author of the Declaration of Independence and the Father of the Constitution, and from the plain words of the clause itself, do we find support for the notion that the commerce clause authorizes the federal government to impose “minimum wage” limits on American businesspeople? (Or that it authorizes the federal government to subject you to a punitive tax in order to force you to become a customer of a health-insurance industry whose services you do not want, because otherwise a federal scheme to finance insurance for other people with your money will fail? How about for drug prohibition; or control over all purported wetlands; or gun control measures?) Clearly not.

Furthermore, the Constitution speaks to the Commerce Clause meaning elsewhere, specifically prohibiting the federal government from imposing any burden on goods crossing state lines:

“No Tax or Duty shall be laid on Articles exported from any State.”

Article 1, section 9, clause 5, United States Constitution

This language by no means limits itself to exports to places outside the several States entirely, and while it refers only to taxes, it clearly indicates the intent of the Framers to prohibit an imposition on exports by, or for the purposes of, the federal government. Probably the only reason the Framers weren’t more comprehensive in this prohibitory language is because they couldn’t imagine the plain language of the Commerce Clause being so egregiously misrepresented as to be made the basis for a boatload of federal aggrandizements as is the case today.

 As Madison explained, the Commerce Clause is to prevent states from imposing trade-inhibiting burdens on each other’s exports. Plainly, the “no tax or duty” clause is to prevent any such burdens from being imposed by the federal government. A minimum wage imposition is a burden, the obvious effect of which is to encumber and discourage interstate commerce.

 In fact, the Supreme Court firmly, even vehemently, agreed with all that I have just pointed out in a series of cases in the first third of the Twentieth Century. The court steadily and consistently ruled federal minimum wage laws and similar measures improperly invoking the Commerce Clause authority to be unconstitutional, and NOT what the clause authorizes.

But in 1937 the court suddenly reversed itself after FDR threatened to “pack” its bench with three additional justices (all of whom would obviously be chosen for having Roosevelt’s “view” of the clause). In the 77 since then, federal courts have upheld the legality of pretty nearly every distortion of Commerce Clause authority imagined by Congress.

 So, does this mean that Madison, Jefferson, the unthreatened Supreme Court and your own eyes and reason are wrong about the Commerce Clause? Or that the clause now somehow means something different, whatever it might once have meant?

 Maybe. But consider this: Maybe the recent spate of Leviathan-favoring rulings mean that the federal courts have simply chosen to cravenly or corruptly disregard the law, and hope that you will be so conditioned to respect “official pronouncements” that you will imagine one of the first two possibilities are true without further thought (or are so apathetic or so cowed as to pretend one of them are true, and quietly let the rule of law become the rule of the “interpreters”)?

 Your call.

For my part, I say not.

I say that everyone should respond to every post they see anywhere arguing for a minimum wage increase, or sitting on the fence about the subject, with the link to this article.

I say everyone being pressured or prosecuted over a federal minimum wage issue, or a drug issue, or a gun-control issue or a wetlands issue or an Obamacare issue should use the points of reasoning and historical fact made in this article as their defense.

And I say that everyone should beat down the doors of their representatives and demand support for this proposed Twenty-Eighth Amendment to the United States Constitution:

“The power of Congress to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes shall be exercised solely for the purpose and to the effect of ensuring that such commerce is unhindered and unburdened by any restrictions, prohibitions or charges imposed from any quarter or by any authority, other than such tariffs on foreign imports as are elsewhere provided for herein.”