Hofstra Labor and Employment Law Journal Volume 18 | Issue 1 Article 2 2000 Conceptions of Fairness and the Fair Labor Standards Act Seth D. Harris Follow this and additional works at: http://scholarlycommons.law.hofstra.edu/hlelj Part of the Law Commons Recommended Citation Harris, Seth D. (2000) "Conceptions of Fairness and the Fair Labor Standards Act," Hofstra Labor and Employment Law Journal: Vol. 18: Iss. 1, Article 2. Available at: http://scholarlycommons.law.hofstra.edu/hlelj/vol18/iss1/2 This document is brought to you for free and open access by Scholarly Commons at Hofstra Law. It has been accepted for inclusion in Hofstra Labor and Employment Law Journal by an authorized administrator of Scholarly Commons at Hofstra Law. For more information, please contact [email protected]. Harris: Conceptions of Fairness and the Fair Labor Standards Act ARTICLES CONCEPTIONS OF FAIRNESS AND THE FAIR LABOR STANDARDS ACT Seth D. Harris* I. INTRODUCTION Few observers would dispute the axiom that wealthier interests have greater bargaining power in the political market than poorer, unorganized interests. Given this disparity in political bargaining power, an objective observer would not expect statutes to be enacted that seem to benefit less powerful interests at the apparent expense of the more powerful. Yet, such statutes have been enacted. The Fair Labor Standards Act ("FLSA"),' the nation's minimum wage, maximum hours, and child labor law, is one such statute. This article uses the history of the debate over fairness in wages that culminated in enactment of the Fair Labor Standards Act as a case study that offers useful, if only preliminary, insights into this apparent power paradox. The Civil War's close signaled an end to an alliance of Northern laborers and their employers against the common enemy of slavery. After abolition, a strong belief rose among American workers and labor observers that fairness for workers meant more than the absence of slavery.2 The artisan who was the common "worker" from colonial * Associate Professor of Law, New York Law School. Former Counselor to the U.S. Secretary of Labor. B.S. 1983, Cornell University, School of Industrial and Labor Relations. J.D. 1990, New York University School of Law. I would like to thank Professors Charles Craver, Julius Getman, Roger Hartley, Michael Gold, Marc Linder, and Benjamin Mintz for their valuable comments on an earlier draft of this article. All errors are mine. I dedicate this article to Jonathan Harris the Elder, who taught me the power of history's lessons, and Jonathan Harris the Younger, who fills me with unlimited optimism for the future. 1. 29 U.S.C. §§ 201-219 (1994). 2. See LAWRENCE B. GuCKMAN, A LIVING WAGE: AMERICAN WORKERS AND THE MAKING 19 Published by Scholarly Commons at Hofstra Law, 2000 1 Hofstra Labor and Employment Law Journal, Vol. 18, Iss. 1 [2000], Art. 2 Hofstra Labor & Employment Law Journal Vol. 18:19 times until the Civil War controlled his means of production and reaped the full products of his labors.' His earnings reflected the quantity and quality of his products. Beginning from 1815 to 1850, however, one task after another was taken out of the home or artisan's shop and placed in the factory. Goods and services formerly produced by the family or independent artisans were moved into mass production. The wage laborer who replaced the artisan after the Civil War sold his time and yielded near-absolute control over his work to his employer. Earnings were the product of a wage deal imposed by the employer that set an hourly wage and multiplied it by work hours.4 From the demise of slavery through the passage of the Fair Labor Standards Act in 1938, participants in the debate over fairness in wages increasingly accepted the premise that individual workers had significantly less bargaining power in the labor market than employers. They also acknowledged the empirical evidence that, in some circumstances, employers used their superior bargaining power to drive workers' wages below the level of subsistence. Nonetheless, disagreements persisted over the normative question of what, if anything, should be done to remedy the subsistence wages that resulted from unequal bargaining power in the labor market. Accordingly, the question remains, how did it come to pass that government intervened to remedy exploitative wage deals that resulted from superior employer bargaining power in the labor market when employers' bargaining power in the political market exceeded that of low-wage, unskilled workers. The history of the debate over fairness in wages offers two answers. First, bargaining power is dynamic, not static. Both socio- economic crises and effective political advocacy by living wage proponents during the first two decades of the twentieth century sufficiently empowered the living wage movement to permit, first, passage of state minimum wage laws and, later, federal living wage regulations applicable to World War I's war industries. The living wage movement propounded two normative answers- that is, conceptions of fairness-that would remedy the ill effects of employers' superior bargaining power in the labor market. "Fairness is a Living Wage" ("Absolute Fairness"),5 would have dictated a substantive result. Government would require employers to pay each worker at least OF CONSUMER SocIETY 20-21 (1997). 3. Seeid. at18. 4. See id. at 18-22. 5. See infra Part II. http://scholarlycommons.law.hofstra.edu/hlelj/vol18/iss1/2 2 Harris: Conceptions of Fairness and the Fair Labor Standards Act 2000] Conceptions of Fairness a wage sufficient to support a family. "Fairness' is Equality of Bargaining Power" ("Bargaining Fairness"),6 would have imposed a procedural remedy. Government would equalize workers' and employers' bargaining power and then provide a forum for "public bargaining" over wages and hours in hopes that subsistence wages would result. The goal of Absolute Fairness-a living wage-became the moral lodestar of the movement for minimum wage laws in the United States, although its means for achieving the goal never succeeded in the political market. But several states enacted "public bargaining" laws based on the conception of Bargaining Fairness prior to the enactment of the FLSA. These public bargaining laws sought to redress unequal bargaining power in the labor market by removing minimum-wage- setting from the labor market and putting it in a public administrative forum. These laws assured that workers and employers had equal power and an equal opportunity to be heard in the setting of minimum wages. Also, public bargaining laws removed minimum-wage-setting from the political market and effectively immunized it from the influence of comparatively more powerful interest groups. The history of the debate over fairness in wages suggests a second answer to the question of how statutes seemingly designed to benefit disempowered interests become law. Laws that appear to be intended for the benefit of workers may principally operate by conferring a benefit on employers or, perhaps more likely, one group of employers at the expense of another. The crisis wrought by the Great Depression of 1929 appeared to swing sufficient bargaining power to workers and their representatives to create the opportunity for national legislation premised on Bargaining Fairness. In some respects, the National Industrial Recovery Act was a bargaining fairness law.7 But the failure of that law, along with sharp divisions in the movements that purported to speak for working families, kept Congress from enacting a "public bargaining" statute that would survive. Rather, the FLSA ultimately enacted in 1938 sought to redress substandard wages as a means to remedy the underconsumption which President Franklin D. Roosevelt and his allies believed sparked and prolonged the Depression. Fixing a uniform, national wage floor and maximum work week limited employers' ability to use labor cost- 6. See infra Part II.B. 7. See infra Part V.B. Published by Scholarly Commons at Hofstra Law, 2000 3 Hofstra Labor and Employment Law Journal, Vol. 18, Iss. 1 [2000], Art. 2 Hofstra Labor & Employment Law Journal Vol. 18:19 cutting as a means to gain a price advantage in increasingly national product markets. Regulating labor markets through the FLSA became a device for assuring fair competition in product markets and a hedge against the Depression. "Fairness is Fair Competition" ("Competitive Fairness"), would prohibit some low wages and excessive hours as a means to fairness between employers, not as a means to fairness for workers disadvantaged in the labor market by inferior bargaining power. The FLSA codified this conception of Competitive Fairness. While workers benefited and continue to benefit from the FLSA's protection, the FLSA was principally designed to preserve capitalism by protecting employers from themselves and each other. Congress enacted a FLSA premised on Competitive Fairness rather than Bargaining Fairness, at least in part, because the political bargaining power that worker advocates wielded as a result of the Depression was impaired by a long-standing split between the living wage movement and the labor movement.' The living wage movement was a middle-class assemblage of academics, social workers, Catholic theologians, and other reformers who trusted in government intervention to strengthen workers' position in labor markets. Because the living wage movement depended on the political process for its success, it had no choice but to appeal to the forces that dominated the economy. As a result, they argued that a living wage best served society's larger economic goals, not workers alone. But the American Federation of Labor ("AFL") and important forces within the Committee on Industrial Organizations ("CIO") had been thwarted and harassed by the government such that they could not reconcile themselves to the idea that government would be a neutral mechanism for assuring fairness to workers. Organized labor held vigorously to the superiority of private collective bargaining over "public bargaining" as the remedy for unequal bargaining power in the labor market.9 8.