The first minimum wage law in the United States was passed by Massachusetts in 1912. The movement grew rapidly, and by 1921 more than a dozen additional states had adopted minimum wage laws. In some states the law applies only to specified industries; in others it covers all occupations. In some states the law covers only the employment of women, but in most cases the principle of the minimum wage applies to women and minors under eighteen, or even twenty-one years of age. In some foreign countries the minimum wage is also extended to the labor of men, but in the United States men are everywhere exempted from the operation of such laws.
206. ARGUMENTS IN FAVOR OF THE MINIMUM WAGE.—The champions of the principle of the minimum wage advance a number of arguments in its favor. It is contended that no industry is socially desirable if it cannot pay a living wage, for when wages fall below a certain minimum, poverty, ill-health, and vice are natural results. When laborers are themselves unable to improve their economic position, it is said, it becomes the duty of the state to guarantee them a living wage. Another argument in favor of the minimum wage is that it not only eliminates considerable poverty, but it makes possible a healthier and more contented labor force. It is claimed that strikes and social unrest are partially eliminated by the minimum wage.
207. ARGUMENTS AGAINST THE MINIMUM WAGE.—In spite of the rapid spread of minimum wage legislation in this country, the principle has met with considerable opposition. It is claimed by some that where poverty is due to bad personal habits, the mere payment of a higher wage will not abolish poverty. It is also urged that because of price changes, and because of differing concepts of a standard of living, it is difficult to determine what is really a living wage. Some employers maintain that the minimum wage is contrary to economic law, since it forces the payment of a wage which the laborer often does not earn. The compulsory nature of the minimum wage is also opposed on the grounds that it constitutes an undue interference with individual rights. [Footnote: Formerly an important argument against the minimum wage was this: There are large numbers of people who cannot earn the minimum wage, and because employers will tend not to employ them, such persons will have to be supported by charity. The force of this argument is reduced, however, by the fact that most minimum wage laws now make special provision for the part-time employment of such persons.]
208. THE RISKS OF INDUSTRY.—In spite of the fact that most States now have detailed laws providing for the guarding of machinery and the supervision of dangerous occupations, a half million persons are injured or killed annually in industrial employments in the United States. A considerable amount of ill-health is traceable to working with drugs and acids. Continued work in dusty mills and shops, as well as long exposure to the excessively dry or excessively moist atmosphere required by certain manufacturing processes, also give rise to "occupational" diseases. Old age frequently brings poverty and distress, in spite of a life of hard work. Lastly, the laborer runs the risk of unemployment.
209. THE PRINCIPLE OF SOCIAL INSURANCE.—As a general rule, laborers do not voluntarily insure themselves against illness, unemployment, accident, or old age. This is partly because they lack the necessary funds, and partly because they lack the foresight necessary for such action. If, therefore, the risks of industry are adequately to be insured against, the initiative must be taken by some one other than the laborer. As a result of this situation, there has developed the principle of social insurance. Social insurance, as distinguished from insurance by trade unions or private agencies, is compulsory, and is administered, or at least supervised, by the state or Federal authorities.
From the standpoint of the community, social insurance may be justified on four grounds. First, the risks of industry are largely beyond the control of the individual workman, and hence he ought not to be held wholly responsible for the penalties which industry may inflict upon him. Second, the community gets the benefit of the laborer's efforts, and thus ought to feel morally obligated to safeguard his employment. Third, an injury to the laborer restricts the productivity of the community by crippling or removing one of its productive agents. Fourth, compulsory insurance is a social necessity, for where nothing has been laid aside for a rainy day, the interruption of earnings subjects the laborer and his family to hardship and disaster. Wisely administered social insurance prevents a great deal of poverty and distress which would otherwise constitute an added burden upon charitable organizations.
210. INSURANCE AGAINST ACCIDENT.—Accident insurance has been a feature of social insurance programs in Germany, France, and Great Britain for almost a half century, but in this country it was not until 1910 that compulsory insurance against industrial accidents began to be effective. Since 1910, however, the movement has grown rapidly, and at the present time the majority of the states provide for compensation to workmen for accidents sustained in connection with their work. Formerly our courts quite generally held that when a workman could be shown to have suffered an accident because of "personal negligence," the injured person was not entitled to compensation. Under the accident insurance laws of most states it is now held, however, that the personal negligence of the injured workman does not forfeit his right to receive compensation.
In most states the cost of accident insurance is borne primarily by the employer.
211. INSURANCE AGAINST SICKNESS. [Footnote: Sometimes known as health insurance.]—Compulsory sickness insurance has been highly developed in several European countries, but so far we have left insurance of this type to private effort. The question is attracting considerable attention in this country, however, and it is believed that this form of social insurance will soon be provided for by state law. In 1914 the American Association for Labor Legislation outlined a model sickness insurance law. Such a law would provide a sickness benefit for a number of weeks, arrange for medical care, and, in case of death, pay a funeral benefit. The cost of such insurance would be divided equally between workmen and employer, while the state would bear the cost of administering the law. This cost would be considerable, because illness may be feigned, and hence there would have to be more careful supervision than in the case of accident insurance.
212. INSURANCE AGAINST OLD AGE.—Compulsory insurance against old age is an important feature of social insurance systems in European countries, but it is very little known in the United States. We are familiar with the Federal pensioning of military veterans, and with local pensions for firemen and policemen, as well as with state and local pensions for teachers. Such insurance does not, however, touch the question of aged employees in industrial pursuits. Trade unions sometimes provide a measure of old age insurance for their members, but the proportion of workmen affected by this practice is very small.