ABSTRACT
The United States has long had a wage policy of sorts, albeit in putative form. The earliest form of wage policy was slavery, and not unlike the feudalistic structure it was to be found in continental Europe. In its most extreme and egregious form, slavery was chattel slavery, characteristic of the plantation economy of the South. In its less extreme form, slavery existed in the form of indentures, which were negotiated contracts between employees, usually immigrants who couldn’t afford passage, and employers who agreed to pay their passage in exchange for labor. These indentures were no doubt the precursor to the wage labor system that we have today. What is important is that whatever form wage policy has assumed, it has generally been tailor made to the specific form of economic structure characteristic of a particular time period. Even a contractual arrangement assumed a government function, as it implied a need for some type of enforcement mechanism. At a minimum, the government was responsible for enforcing the contract, and it often did so to the point that workers failing to live up to the terms of the contract could find themselves in jail for breach of contract. These labor agreements also appeared to favor the property rights of employers over those of employees, to the extent that employees had any. The concept of free labor, arising during the industrial period still assumed a role for government in enforcing contract. But the nature of the contract needed to be changed. Slavery was too expensive for industrial production, and it was simply considered to be more efficient to pay workers wages for the actual labor they performed. They, in turn, would be responsible for their own upkeep. Industrial production, however, came with its own set of problems, most notably the business cycle and that wages might fluctuate according to that cycle. Wages for factory workers were often insufficient for basic subsistence. That government would ultimately come to endorse the types of institutions that would boost wages was really an acknowledgment that the economy indeed needed it. In this chapter I trace the evolution of wage policy in the United States beginning with the transformation from slave labor to indentures to wage labor through the development and support of wage bolstering labor market institutions like unions and the minimum wage. The early indentures were clearly a byproduct of the pre-industrial and mostly agrarian economy. And if unions and the federal minimum wage were the byproducts of industrialization, current
Living Wage ordinances, discussed in Chapter 5, and even renewed interest in the minimum wage at the state level, are the byproducts of the post-industrial economy. It will become clear that the evolution of wage policy does parallel the various economic transformations from a feudal economy to industrial to postindustrial, and that wage policy has indeed been a critical component of economic development, albeit not always stated as such.
