By Jordan Rosman
Can the federal government regulate intrastate commerce? Anybody with a basic understanding of U.S. constitutional law would answer an emphatic “no”: the constitution only affords the federal government the power to regulate interstate commerce. Article I of the constitution, which contains the commerce clause, reads: “Congress shall have power to regulate Commerce with foreign nations, and among several States, and with the Indian tribes.” This clause exemplifies one of the fundamental tenets of American political theory, federalism—the separation of powers between federal and state governments. The distinction between intra and inter is certainly not arbitrary nor a matter of semantics. The framers of our constitution understood that any intrastate economic affairs launched onto the circus of federal politics would be subject to the petty partisanship of Washington bureaucrats and politicians. Meanwhile, those who would stand to suffer from politically tinged federal regulation of intrastate affairs, intrastate residents, become sitting ducks.
In realistic terms, the federal government has increasingly assumed many new and even obscure intrastate regulatory responsibilities—wheat production quotas, labor standards, and, most relevant to the modern political landscape, a national minimum wage. In calling income inequality the “defining challenge of our time,” President Obama has called upon Congress to raise the federal minimum wage to make sure the “economy works for every working American.” Senators Tom Harkin (D-Iowa) and Congressman George Miller (D-California) are commanding the initiative to raise the federal minimum wage with legislation known as the Fair Minimum Wage Act which would raise the federal minimum wage from $7.25 an hour to $10.10 an hour in a span of three years. Now, if we take a step back from the current political atmosphere, some might find it perplexing that a federal minimum wage even exists. After all, are wages not an intrastate affair? How does the federal government have the constitutional authority to regulate what the University of Pennsylvania pays its employees who live and work in Pennsylvania? How did the federal minimum wage, which did not even exist during America’s first 150 years, become such a normalized element of current legislative affairs?
Up until the New Deal era, the Supreme Court had seen the federal minimum wage as unconstitutional, as an exercise of federal regulation over intrastate commerce. Finally, an FDR-friendly Supreme Court ruled in 1941 that a federal minimum wage, along with other labor regulations, was constitutional. The court, in United States vs. Darby Lumber Co., reasoned that unfair intrastate labor practices gave states a competitive advantage in the interstate commerce scheme at large, and thus were subject to federal regulation. Essentially, this case follows an important line of Supreme Court precedents during the New Deal that vastly expanded the power of the federal government. Since then, this enlargement of federal responsibilities like the minimum wage has given Washington lawmakers more opportunities to irresponsibly politicize issues that should be handled at the state level.
Anybody who has taken Intro to Microeconomics has learned that minimum wages can increase efficiency and societal well being when hiring firms have excess market power. Minimum wages can often be helpful at the state level, but should states with distinct labor markets, such as West Virginia and New York, have the same minimum wage? In an affront to federalism, the federal minimum wage has often been recklessly tossed around as a political tool, promoting the agendas of lawmakers who represent high-wage states at the expense of those who represent low-wage ones. In 1960 for example, Representative John Lindsay of New York explicitly stated that he supported an increase in the minimum wage to protect the apparel industry in his district. In 1966, Representative Joseph Resnick, also from New York, favored an increase in the minimum wage to protect Northeastern farmers, who were paid about $1.50 an hour, from their Southern counterparts in Mississippi, who were paid only $3.00 a day.
In recent years, national parties have exploited the minimum wage as a tool to advance partisan initiatives. Specifically during election years, the minimum wage is a perfect wedge issue for Democrats to paint Republicans as heartless defenders of the corporate world. Washington Democrats understand that issues like the minimum wage tap into the moral conscious of many voters, even if it is an issue better left to state governments. Of course, Republicans are also guilty of exploiting the moral consciousness of voters for partisan purposes with issues like abortion. Nevertheless, in his 2014 State of the Union address, President Obama called upon the country to support a new minimum wage: “Tom Harkin and George Miller have a bill to fix that by lifting the minimum wage to $10.10. It’s easy to remember, $10.10…. Give America a raise.” As the political season begins to heat up with elections looming, the federal minimum wage will surely enter the public arena as a divisive and partisan issue. Revisiting this article’s first question, can the federal government regulate intrastate affairs? Should the power to regulate wages be delegated to unaffected and insulated Washington politicians? The answer: an emphatic “no.”
This article originally appeared in the Spring 2014 edition of PPR.
Image (Attribution License) courtesy of José Juan ‘Potti’ Luna on Flickr.