The Political Economy of the Fair Labor Standards Act of 1938
Author(s): Andrew J. Seltzer
Source: The Journal of Political Economy, Vol. 103, No. 6 (Dec., 1995), pp. 1302-1342
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/2138713
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The Political Economy of the Fair Labor
Standards Act of 1938
Andrew J. Seltzer
Universityof Melbourne
This paper examines the congressional passage of the American
minimum wage law, the Fair Labor StandardsAct of 1938. Voting
on the act is modeled as a function of the concentration of the
constituenciesfor minimum wage legislation,North-Southdifferentials, and legislator ideology. It is shown that the House radically
altered the final content of the bill, abandoning a proposed Wages
and Hours Board with discretionarypowers to determine minimum
wages in favor of a flat rate following the objectionsof severalinterest groups; North-South divisions over the bill had little influence
over congressional voting; and the influence of constituent groups
increasedrelativeto legislators'ideologyas the bill becamean important election issue.
Prior to the 1930s, the only protective legislation approved by Congress, a law regulating the use of child labor, was seen by the courts
as an intrusion on the right to free contracting.' The "golden age"
of free contracting was brought to an abrupt end with the New Deal:
workers were given the right to bargain collectively, minimum wages
and maximum hours were imposed at the national level, and child
I wish to thank everyone who has read earlier drafts of this paper. I owe a particular
debt of gratitude to Lee Alston and Pablo Spiller. I have also benefited greatly from
comments and suggestions by Jeremy Atack, Charles Calomiris, Anne Carlos, Lee
Craig, Wallace Hendricks, Lawrence Kahn, Larry Neal, two anonymous referees, and
workshop participants at the University of Illinois, Indiana University, University of
Melbourne, North Carolina State University, and Sydney University. The views expressed and any errors contained therein are entirely my own.
1 This was the Supreme Court's ruling (Hammer v. Dagenhart) on the KeatingOwens Act of 1917.
Uournal of Political Economy, 1995, vol. 103, no. 6]
? 1995 by The University of Chicago. All rights reserved. 0022-3808/95/0306-0007$01.50
1302
FAIR LABOR STANDARDS
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labor was strictlyregulated. One of the most far-reachingand enduring laws that brought about these sweeping changes was the last major
piece of New Deal legislation: the Fair Labor StandardsAct of 1938
(FLSA).The FLSA established a national minimum wage, set a fulltime standardworkweek,and strictlyregulated the use of child labor.
Unlike the Agricultural Adjustment Act and the National Industrial
Recovery Act before it, the FLSA was truly a national law that left
little room for the discretion of local officials.
Despite the impact of the FLSA, most studies of the act focus primarily on other issues, treating the passage and effects of the act
itself as peripheral.2 Some contemporaries saw the passage of the
FLSA as a battle between competing interest groups. For example,
Southern Pine Industry Committee ChairmanC. C. Sheppard stated
that "there are groups favoring the wage-hour law that make strange
bed-fellows, but each crowd sees the wage-hour law as a means of
getting something for itself. [The law has] succeeded in enactment
less because of [its] soundness than because of [its] politicalattraction"
(U.S. Senate 1937, pp. 215-16). Wright (1986) and Schulman (1991)
have depicted the passage battle as being primarily fought between
the North and the South. Neither of these works, however, systematically examines voting on the act; instead, they focus on the rhetoric
of the participants.The only works that systematicallyexamine voting
are those by Kau and Rubin (1978) and Poole and Rosenthal (1991).
Kau and Rubin ignore many of the historical factors that influenced
congressional voting, and their model suffers from the problem of
omitted variables.3Poole and Rosenthal find that a one-dimensional
spatial model is sufficient to explain over 90 percent of legislators'
votes on minimum wage legislation in the postwar period, but that
no spatial model has this level of explanatory power for the prewar
period. None of these studies examines the rather lengthy process by
which the bill was introduced and amended in congressional committees.
This paper focuses on the political economy of the FLSA, using a
rational-choice model of congressional behavior. According to the
model, legislatorsare elected as agents of their constituents;however,
there will be some principal-agent slack in the relationship because
2 See, e.g., Tindall (1967) and Wright
(1986), who focus on changes in the South
during the 1930s and 1940s, treating the FLSA as an agent of these changes. Schulman
(1991) presents a more complete analysis of the passage of the FLSA but does not use
a formal model to do so.
3 Kau and Rubin do not include any measure of industry or sectoral effects, low-wage
workers, young workers, or small businesses. Additionally, they run a regression only
for the vote on the final passage of the FLSA in the House (May 1938), by which time
passage was all but a formality.
1304
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of imperfect competition in the political arena and power bases gen-
erated by congressional committees. This allows legislators to enjoy
"on-the-job consumption" in the form of ideological voting. Thus
analysesof the passage of legislation require the examinationof three
things: the interests of constituenciesaffected by legislation, the interests of the members of the relevant congressional committees, and
the ideology of legislators voting on the bill. There are four major
findings of this analysis: First, the bill was substantiallyaltered in
committee in response to pressure groups such as labor unions and
southern industry. Second, the rational-choicemodel has greater explanatory and predictive power than other models of voting on the
FLSA. Third, consistent with the model's prediction that the quantity
of ideological "shirking"should decrease as its price increases, there
is considerably less evidence of shirking after the FLSA became an
important election issue. Finally,the regional-politicalfactors emphasized by historians appear to have played little role in the voting on
the FLSA. The South opposed the bill because it had a far higher
concentrationof constituenciesthat were harmed by minimum wages,
not because it had deserted the New Deal coalition.
I.
Conceptual Framework
This section incorporates two often divergent topics from the economic literature on Congress: the ability of constituent interest
groups to capture their legislators'voting and the various institutions
that characterize the legislative process. Capture theory provides an
analyticalframework to analyze the relationship between legislators'
desire for reelection and the extent to which they will vote their constituents' interests. If voters are perfectly informed, it is known ex
ante who will be voting, and issues are one-dimensional, legislators
can assure reelection by voting the most preferred outcome of the
median voter (Mueller 1989, pp. 65-84, 180-85). If legislatureswere
characterized by one person/one vote and information about legislative voting could be obtained costlessly, then the supply of legislation
would be simple to model; legislators would have to pursue their
constituents'interests or be voted out.
However, these assumptions are rarely met; thus the simple model
does not provide an adequate description of reality. Incumbentshave
an electoral advantage because congressional rules create a premium
on seniority. Obtaining information is costly, and thus voters may
choose to remain "rationallyignorant" about issues over which they
have relatively little at stake. Consequently, legislators can improve
their chances of reelection by providing their constituents with select
information. Doing so requires funding, often provided by special-
FAIR LABOR STANDARDS
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interest groups. In order to receive funding, legislators must tailor
their voting to suit these groups (Denzau and Munger 1986). Political
parties can affect legislators' votes because of their influence in assigning committee positions and their abilityto provide financialsupport to election campaigns. Elections are infrequent, and thus incumbents become "locked in." Finally, logrolling introduces elements
unrelated to a specific bill into the analysis of voting. These factors
create a multiple principal-agentrelationshipbetween legislatorsand
their constituents, interest groups, other legislators,and politicalparties with the well-known outcome that the principals' utility will be
lower and the agent's higher than had these factors not been present.
As a result, senior legislators enjoy some agency slack and can often
ignore the others' interests and engage in on-thejob consumption in
the form of ideological voting (Kalt and Zupan 1984). As with other
forms of consumption, the quantity of ideological shirking should
decrease with an increase in its price (the increased probability of
losing the next election resulting from an ideological vote). Consequently, shirking should be far less prevalent on important electoral
issues and among junior legislators.4
The most important congressional institution for the purposes of
this paper is the committee system. Individual committees have
agenda control over legislation in their jurisdiction, so any bill must
be acceptableto a majorityof committee members in order to become
law, with the rare exception of bills that are petitioned out of committee. This "gatekeeping"power will affect the nature of any legislation
if the committee members' preferences differ from those of the full
legislature. Typically, this is the case because self-selection assures
that most committee members are preference outliers.5 Committee
power is enhanced by the fact that any differences between the House
and Senate versions of a bill will be resolved by a joint conference
committee appointed by the House and Senate committee chairs.
These powers give committees considerable control over the content
of legislation in their jurisdiction. The House Rules Committee fur4 Contrary to the agency model, it has been suggested that the significance of ideology in voting analyses is due to the omission of constituent characteristics from a voting
regression or to the signal to constituents provided by legislators. Ideology is typically
measured as a residual from a vector of votes and will be spuriously correlated to
voting on other issues if all relevant characteristics are not controlled for in creating
the ideology measure or analyzing voting (Peltzman 1984, 1985). In signaling models,
an ideological reputation acts as a "hostage" or "brand name." Because individuals
have little incentive to monitor their representatives' voting record, an ideological
reputation provides a signal as to how they will vote in the future (Lott 1987; Lott and
Reed 1989).
5 This is true for special-interest committees only. Party leadership has an incentive
to avoid having extreme preference outliers dominate the general-interest committees
(Cox and McCubbins 1993).
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ther constrainsthe outcome and reduces the number of possible bills.
After a bill is passed by its committee, the Rules Committee grants a
rule governing the debate and amendment process. If a rule is not
granted, then the bill is killed, unless petitioned out of the Rules
Committee by the full House. This assures that the committee decision is constrained by the preferences of members of the Rules Committee.
While it is evident that, in the American political system of the
1930s, parties had less control over their members than during the
earlier part of the century or as in much of Europe, there are several
reasons to believe that they had some influence over individual legislators' voting. Party leaders' control of committee assignments induces greater party loyalty because legislators with better committee
assignments are better able to service their constituents and, thus,
have a better chance of being reelected. Rank-and-filemembers also
have an incentive to delegate power to party leaders because their
fates at the voting booth depend on the public's perception of party
performance (Cox and McCubbins 1993). The creation of "internal
constituencies" provides another electoral basis of party influence.
Legislators seeking reelection, particularlythose facing serious challenges, need organizational support from their party. In order to
receive party support, these legislators must tailor their voting to suit
party insiders, who typically are preference outliers (Demsetz 1990).
It seems likely thatjunior legislators,who lack the independent organizational support of their senior counterparts, would be most likely
to be controlled by party leadership on this basis.
II.
The FLSA in Committee
As discussed earlier, agenda control allows the committee of jurisdiction to choose the bill that best suits its preferences from the set of
possible bills. To do so, however, the committee must have accurate
information about the preferences of the other actors. House Labor
Committee members appear to have been uncertain about the Rules
Committee's preferences, and Rules Committee members appear to
have been uncertain about the full House's preferences, perhaps because the FLSA was such a radical departure from previous legislation.6As a result, the implicit agreements on the passageof legislation
broke down. After initial passage by the Senate, there was an unusu6 Prior to the
FLSA, the Rules Committee had always granted a rule governing the
debate and amendment process, regardless of how committee members finally voted
on the bill. However, on two occasions, the Rules Committee refused to grant a rule
for the FLSA, directly defying the wishes of President Franklin Roosevelt.
FAIR LABOR STANDARDS
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ally long and difficult battle in the House. This section shows how
this battle altered the final content of the bill.
In the Senate, the bill was reported out of the Educationand Labor
Committee and passed on its first vote in July 1937. After initial
approval by the House Labor Committee, the bill was blocked by the
Rules Committee. On November 18, 1937, a petition circulated by
Rep. Mary Norton (D-N.J.) obtained the necessary number of signatures to bypass the Rules Committee and bring the bill to the floor,
but the House voted 216-198 to recommit the bill on December 17.
The bill was then modified in the Labor Committee and voted out,
but again blocked by the Rules Committee. It appeared that the FLSA
would die in committee until the overwhelming primary victories of
two ardent supporters of the FLSA, Sen. Claude Pepper (D-Fla.)and
Rep. Lister Hill (D-Ala.), over anti-FLSAopponents. Shortly thereafter, the bill was again petitioned out of the Rules Committee, and on
May 24, 1938, it was passed by the House 314-97. A compromise
bill that increased the number of exemptions and graduallyimposed
the wage and hour standardsof the act was approved by the Conference Committee on June 12, by the House on June 13, and by the
Senate on June 14. The bill was signed into law by PresidentRoosevelt
on June 25, and the law became effective on October 24, 1938 (Douglas and Hackman 1938, pp. 500-515).
Much of the discussion in committee focused on two issues:
whether to permit regional minimum wage differentials and who
would administer the proposed law. Because the proposed minimum
was above the prevailing wage in the South but below it in the North,
the South sought regional differentials and the North preferred a
flat rate. Southerners claimed that regional wage differentials were
justified because of higher transportationcosts and the lower cost of
living in the South. John Edgerton, president of the Southern States
Industrial Council, testified before the committee that southerners
had a far lower cost of living because prices tended to be lower in
southern cities than in northern cities and a larger proportion of the
southern population lived in small communities (U.S. Senate 1937,
p. 778). Consequently, establishing a nationallyfixed minimum wage
would put the South at an unfair real wage disadvantage.7
Initially,this reasoning had limited support in the Rooseveltadministration. Labor Secretary Frances Perkins testified that she would
support regional differentials based on cost of living but that the issue
7Although most southern industrydesperatelywantedto preservelow relativewages
for the region, the few high-wagesouthernindustrialistsopposed regionaldifferentials
in minimum rates. For example, RobertJohnson, president of Johnson and Johnson
(a company that paid the same wage schedule in its northern and southern plants),
testified strongly against regional differentials (U.S. Senate 1937, pp. 91-125).
13o8
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should be approached very cautiously (p. 193). However, regional
differences were unacceptable to other interests. John L. Lewis, president of the Congress of Industrial Organizations and the United
Mine Workers of America, testified that the cost of living was lower
in the South not because individual prices were lower but rather
because poor southerners were forced to purchase an inferior basket
of goods (p. 273). John Davis, spokesman for the National Negro
Congress (NNC), testified that the major effect of geographic differences would be to lower black wages (p. 572).8 New York manufacturer John M. Keating testified that it would be impossible to set
regional differentials based on objective criteria, and thus it would
be the "chiselers" that would benefit from differentials (pp. 455-56).
Of course the primary objection of opponents of regional differentials was that industry would migrate to the low-wage, less unionized
South. On this issue, Sen. David Walsh (D-Mass.) stated that under
the national minimum wage proposed in the FLSA, "Industries in
New England will not continue to be subject to competition with
goods produced by [regions] that can undersell New England producers due to the fact that they are paying their employees lower wages"
(Douglas and Hackman 1938, p. 501).
The bill passed by the Senate and the House Labor Committee
contained provisions allowing for regional differentials. Undoubtedly
the differentials would have become law had the Rules Committee
granted a closed rule and brought the bill to an immediate floor vote.9
However, an open rule, allowing for amendments to the bill, was
adopted after it was petitioned out of the Rules Committee. Under
the open rule, the House adopted a modified bill that eliminated
regional differentials and defeated all amendments to include regional differentials (pp. 503-13). Ironically, it appears that the five
southern members of the Rules Committee would have better served
their constituents by granting a rule and bringing the bill to an immediate floor vote rather than attempting to kill it.
8The NNC was an umbrella organization of approximately 600 black organizations
in 38 states whose primary objective was to aid "the struggle of [black] workers against
the exploitation of the employers" (A. Philip Randolph [president of the NNC], keynote address at the first convention of the NNC, 1936). The organization wanted
minimum wage legislation to increase the annual earnings of black workers. Davis
testified that an agency with discretionary powers would be unlikely to approve increases in the nominal wages of unskilled blacks, which would ultimately result in
reducing their real wage because of wage-push inflation (U.S. Senate 1937, p. 574).
Although the NNC was not representative of all blacks (northern and industrial interests were overrepresented), Davis's testimony is included in this analysis because he
was the only black leader to testify at the hearings on the FLSA.
9 There is considerable evidence that the bill would have easily passed had it immediately been brought to a floor vote (Douglas and Hackman 1938, p. 507).
FAIR LABOR STANDARDS
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1309
Perhaps the most controversy arose over how much discretion to
give the administrative agency. The Senate bill stipulated an hourly
minimum wage of $0.40 but empowered a five-person Wages and
Hours Board to set a minimum hourly wage of up to $0.80 or $1,200
annually. In addition to being able to make discretionary changes in
the minimum wage, the board was empowered to change the maximum workweek, restrict or prohibit industrial homework, recommend government regulation where "substandard" labor conditions
led to disputes that burdened the flow of interstate commerce, exempt small employers, and classify employers and employees "according to localities, population of the communities, the number of
employees, the nature and volume of the goods produced, and such
other differentiating circumstances" (p. 496). In short, the yet-to-becreated board would have discretionary powers equal to those of any
peacetime agency.
There is considerable evidence that several constituencies feared
the exercise of discretionary powers by a Wages and Hours Board or
a Labor Department administrator.'0 Blacks feared that an agency
would be captured by racist interests, as they believed had happened
with the National Recovery Administration (NRA). John Davis stated
that "in the period of NRA code hearings, Negro workers were helpless to defend themselves against demands made, especially by representatives of southern industry, for longer hours and lower wages
for those occupations, industries, and geographic divisions of industries in which the predominant labor supply was Negro" (U.S. Senate
1937, p. 571). Davis believed that under the initial provisions of the
bill, "There is not a single thing that will prevent the same type of
ruthless exploitation of Negro workers" (p. 573).
More important to those voting on the bill, the prospect of agency
discretion also troubled organized labor and southern industry. William Greene, president of the American Federation of Labor (AFL),
wanted the board to enforce a fixed minimum wage of $0.40 but to
let wages above that be determined by collective bargaining. He felt
that a board with discretionary powers would be "dangerous and
unacceptable" and that giving discretionary control to a single administrator in the Labor Department was "even more dangerous and
10The FLSA was not unique among New Deal legislation in generating congressional
opposition to agency discretion. Wallis (1991) shows that Federal Emergency Relief
Administration (FERA) director Harry Hopkins's exercise of discretion in creating
criteria for the receipt of relief grants drew considerable opposition from Congress
and the states. When the objectives of the Federal Emergency Relief Act were put into
permanent legislation with the Social Security Act, Congress replaced FERA with a
Social Security Board that did not have discretionary powers over relief grant allocation.
1310
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should be rejected"(Douglas and Hackman 1938, p. 510). Several of
the representativeswho signed the petition to bring the bill to a floor
vote but then later voted to recommit it did so because of the AFL's
opposition to giving discretionarypowers to the board (p. 511).
Although the primaryconcern of southern industrywas preserving
lower wages in the region, it also feared the possibility of agency
discretion. Under the Senate proposal, there would have been only
one southerner on the five-person board; under the House proposal,
there would have been at most two. Southerners feared that the board
would increase the minimum wage without regard for conditions in
the South. Edgerton stated that the bill would bring about "the domination of all industry in the United States by a board with headquarters in Washington .... The majorityof such a board would represent
majority interests in other sections with which the South must compete" (U.S. Senate 1937, p. 761). Southerners even resented the limited discretionarypowers given to the industrycommitteesin the final
compromise." Birmingham columnistJohn Temple Gravesreported
that "there is fear that the South is not politically strong enough at
Washingtonto assure proper representation"(Schulman 1991, p. 69).
The bargainingbetween politicalagents over the nature of the final
bill is illustrated in figure 1. Let the "bliss points" of the Senate,
House, Senate Education and Labor Committee, House Labor Committee, and president be represented by S, H, Sc, Hc, and P, respectively, and let Q represent the status quo.'2 For the Senate, the two
committees, and the president, the preferred set to the status quo is
the area within a circle passing through Q and centered on their bliss
point. The dotted circle centered on the House's bliss point can be
thought of as its notionalpreferred set.'3 The Pareto-optimalset is
the pentagon SHCPHSc.If each actor is given strict veto power, the
''winset" is the set of Pareto-optimalcore points (the shaded area on
the graph).'4 Suppose that after bargaining between the parties, the
bill establishes a new equilibrium at point A with the new law to be
" The committeeswere allowed to make recommendationson the timing of the implementationof higher minimum wages based on various industryconditions.
12 PresidentRooseveltproclaimedhis support for the FLSAearly in 1933 and would
have doubtlesslysigned any bill that could have passed the House. He was, however,
more conservativethan the Senate, having opposed the Senate-approvedBlackWages
and Hours Bill in 1933 as being "too restrictive."The House Rules Committee is
omitted from fig. 1 because it played no role in the final outcome as a result of the
successful petition by the full House.
13 The preferred set is described as notional because the House appeared to be
ready to vote against any bill that allowed for extensive agency discretion,set the basic
minimum rate above $0.40, or allowed for regional variationin minimum rates.
14 The fact that only two possible outcomes (the proposed legislationand the status
quo) are considered at a time implies that core outcomes need not be Pareto optimal, only Pareto superior to the status quo.
FAIR LABOR STANDARDS
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1311
RegionalWage
DIfferamal
SC
\H
S CI
BasicMinimumWae
FIG. 1.-Agency discretion and policy outcomes
enforced by an agency. Although agency discretion has the advantage
of adaptabilityto changing circumstances,it creates an opportunity
for agency members to implement a policy on the basis of their preferences rather than congressional intent. If not constrained, the
agency will be free to change the outcome to point B because the
president, Senate, and Senate committee prefer B to A and, thus, will
not overrule the agency's action. It is important to note that it is not
certain that the agency's preferred outcome will be preferable to the
status quo for each of the actors, and thus there is no guarantee that
even a Pareto-improving bill will be passed. Figure 1 also provides
an important insight into the relative importance of the five agents
in determining the final form of the bill.'5 It has been argued that
committees hold the balance of legislativepower because they actually
write the initial and final bills (Shepsle and Weingast 1981, 1987;
Weingast and Marshall 1988). However, in the event, it was the full
House that prevailed on all three major issues (a maximum basic
rate of $0.40, limited agency discretion, and the absence of regional
differentials), despite the fact that its preferred outcome was not closest to the status quo. The source of the House's power was its willingness to recommit an earlier version of the bill, an action that credibly
committed the House to further opposition should the ultimate bill
not be to their liking. This credible commitment forced the House
15I owe special thanks to an anonymousreferee, whose commentsgreatlyimproved
the discussion relating to fig. 1.
1312
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Labor Committee and the Joint Conference Committee to write a bill
that could pass in the full House rather than one that reflected its
own preferences.'6
Examining the composition of the relevant committees will provide
an idea of their bliss points. The membership of the Senate Education
and Labor Committee, the House Labor Committee, and the House
Rules Committee is shown in table 1. Table 2 compares the ideological
composition of committee members to that of nonmembers. There
is some evidence that members of these committees were preference
outliers: Senate Education and Labor Committee and House Labor
Committee members were less conservative than nonmembers, and
House Rules Committee members tended to be more conservative
than nonmembers. The two special-interest committees (Senate Education and Labor and House Labor) were composed predominantly
of preference outliers on labor issues and disproportionately supported the FLSA. In the Senate vote, 75.0 percent of committee members supported the FLSA, compared with 64.3 percent of nonmembers. In the two House votes, 76.2 and 95.0 percent of committee
members supported the FLSA, compared with 46.4 and 75.3 percent
of nonmembers. The House Rules Committee, a general-interest
committee, was disproportionately composed of opponents of the
FLSA. In the House votes, 28.6 and 42.9 percent of members supported the FLSA, compared with 48.5 and 77.4 percent of nonmembers. Because the committee system gives greater weight to senior
members, it is noteworthy that the cosponsors of the FLSA were
Senate Education and Labor Committee chair Hugo Black and House
Labor Committee chair Mary Norton and that all the ranking Democrats on both of these committees supported the bill.'7
III.
The Demand for Legislation: Constituent
Interests and the FLSA
The House and Senate bliss points from figure 1 can be identified by
using voting on the bill as a preference revelation mechanism. As
discussed earlier, a legislator's vote on a particular bill can be thought
of as a function of a vector of constituent interests, party affiliation,
and individual ideology. In other words, the vote, V, can be modeled
16
Similarly, Krehbiel and Rivers (1988) find that in a 1977 vote to amend the minimum wage, the Senate Committee on Labor and Human Resources was unable to
impose its preferences on the full Senate. Cox and McCubbins (1993) also have argued
that the extent of committee power has been exaggerated in the literature.
17 The original cosponsor of the bill in the House was former House Labor Committee chair William Connery (D-Mass.). After Connery's death in 1937, Norton became
the chair of the House Labor Committee and the House sponsor of the FLSA.
FAIR LABOR STANDARDS
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TABLE
COMMITTEE
1
MEMBERSHIP
Senate Education and Labor
Hugo Black
Royal Copeland
David Walsh
Elbert Thomas
James Murray
Claude Pepper
Allen Ellender
(D-Ala.)
(D-N.Y.)
(D-Mass.)
(D-Utah)
(D-Mont.)
(D-Fla.)
(D-La.)
Josh Lee
Vic Donahey
Rush Holt
William Borah
Robert LaFollette
James Davis
(D-Okla.)
(D-Ohio)
(D-W.V.)
(R-Idaho)
(P-Wisc.)
(R-Pa.)
House Labor
Mary Norton
Robert Ramspeck
Glenn Griswold
Kent Keller
Matthew Dunn
Reuben Wood
Jennings Randolph
John Lesinski
James Gildea
Edward Curley
Albert Thomas
(D-N.J.)
(D-Ga.)
(D-Ind.)
(D-Lll.)
(D-Pa.)
(D-Mo.)
(D-W.V.)
(D-Mich.)
(D-Pa.)
(D-N.Y.)
(D-Tex.)
Joseph Dixon
William Fitzgerald
William Allen
Graham Barden
George Schneider
Richard Welch
Fred Hartley
William Lambertson
Clyde Smith
Bruce Barton
Santiago Iglesias
(D-Ohio)
(D-Conn.)
(D-Del.)
(D-N.C.)
(P-Wisc.)
(R-Calif.)
(R-N.J.)
(R-Kan.)
(R-Maine)
(R-N.Y.)
(D-P.R.)
House Rules
John O'Connor
Adolph Sabath
Arthur Greenwood
E. E. Cox
William Driver
Howard Smith
J. Bayard Clark
(D-N.Y.)
(D-Ill.)
(D-Ind.)
(D-Ga.)
(D-Ark.)
(D-Va.)
(D-N.C.)
Martin Dies
Byron Harlan
Lawrence Lewis
Joseph Martin
Carl Mapes
J. Will Taylor
Donald McLean
(D-Tex.)
(D-Ohio)
(D-Colo.)
(R-Mass.)
(R-Mich.)
(R-Tenn.)
(R-N.J.)
SOURCE.-CongressionalDirectory, 74th Congress (Senate) and 75th Congress (House).
as P(V = 1) = g(C, P. I). To operationalize this model, it is necessary
to appeal to economic theory to determine which constituencies will
demand legislative action and their effectiveness in doing so. This
section examines the effects of the FLSA and the political power
of each of the affected groups in order to specify an appropriate
congressional voting model.
The primary focus of this study is voting on the minimum wage
provisions because the establishment of a national minimum wage
was by far the most controversial aspect of the FLSA. Because the
FLSA was a package, incorporating both minimum wages and maximum hours, ignoring the hours provisions may lead to incorrect conclusions. Accordingly, some of the effects of the hours provisions will
TABLE 2
IDEOLOGICAL COMPARISON
BETWEEN COMMITTEE MEMBERS AND NONMEMBERS
A.
EDUCATION
SENATE
AND LABOR
COMMITTEE(N = 12)
LIB 1
LIB2
PFL
CONI
CON2
OTHERS (N = 72)
Mean
Standard
Deviation
Mean
Standard
Deviation
t-Value
.553
.477
.379
-.497
-.367
1.084
.932
1.018
.880
.583
.322
.227
-.057
-.037
-.010
.970
.763
.713
1.120
.693
.69
.88
1.43
-1.61
-1.91***
B.
HOUSE
LABOR COMMITTEE
(N = 21)
LIB 1
LIB2
PFL1
PFL2
CONI
CON2
CON3
OTHERS (N = 420)
Mean
Standard
Deviation
Mean
Standard
Deviation
.328
.291
.381
.243
-.175
-.168
-.193
.751
.644
.853
.588
.847
.409
.645
.320
.288
-.015
-.058
.230
.012
.076
.839
.721
.632
.463
1.224
.534
.757
t-Value
.05
.02
2.10**
2.31**
-2.08**
- 1.94***
- 1.85***
RULES COMMITTEE
(N = 14)
LIB 1
LIB2
PFL1
PFL2
CONI
CON2
CON3
OTHERS
(N = 427)
Mean
Standard
Deviation
Mean
Standard
Deviation
.517
.516
-.421
-.367
1.569
.383
.599
1.020
.862
.448
.308
1.793
.586
.819
.314
.280
.018
-.033
.166
-.009
.045
.828
.712
.649
.474
1.164
.524
.746
t-Value
.74
1.01
-3.54*
-3.92*
2.91*
2.47**
2.50**
NOTE.-See the Appendix for the definition of the ideology variables. The t-values are based on a test of the
null hypothesis that the mean value of the logistically transformed index is the same for committee members and
nonmembers. The appropriate test statistic is
t=
X - Y
v7(SXl)27+ Sy/nY)2
* Significant at the 1 percent level in a two-tailed test.
** Significant at the 5 percent level in a two-tailed test.
*** Significant at the 10 percent level in a two-tailed test.
FAIR LABOR STANDARDS
ACT
1315
be discussed, although not fully analyzed.'8 It is appropriate to ignore
the child labor provisions because they generated little controversy
in Congress.-9 Thus voting on the FLSA is modeled as a function of
the size and strength of the voter groups demanding legislative action
on the establishment of a national minimum wage. These voter
groups can be identified by examining the impact of a minimum
wage. The primary effects of establishing a minimum wage and the
variables used to measure these effects follow.20
A. Regional Effects (South)
It is well known that there were significant regional wage differentials
in 1938. The minimum wage set by the FLSA was binding only in the
South, and there is strong evidence that northern legislators sought to
impose national wage standards in order to prevent the flow of capital
to the South.21 Northerners hailed the end of "substandard" and
"oppressive" wages and hours; southerners saw the beginnings of
a "new Reconstruction" (Schulman 1991, pp. 55-58). The variable
11 states of the former Confederacy, Kentucky, and
South-the
Oklahoma-controls
for these effects.
The extent of the North-South differentials in economic characteristics is shown in table 3. In the South, a higher proportion of the
population was black, a lower proportion of the workforce was unionized, a higher proportion was employed in agriculture, a higher proportion of teenagers were in the labor force, average annual earnings
were lower, the proportion earning less than $800 or $1,200 annually
was higher, and the Democratic party was completely dominant.
18It is doubtful that the hours provisions had much effect on voting. Census data
from 1940 show that the 40-hour workweek was the norm before being mandated by
the FLSA. At the time of the census, the mandated workweek was 42 hours. The data
show that 31.7 percent of the workforce worked 41 hours or more and only 14.3
percent worked between 41 and 44 hours. Even this modest figure overstates the
effects of the FLSA because it includes workers who were not covered by the hours
provisions of the act.
19 During the 1930s, there was overwhelming congressional support for child labor
legislation, with the only controversy being whether to attach it to wages and hours
legislation. Proponents of the FLSA argued that the child labor provisions "would be
more difficult to sustain separately than in company with the other substandard
labor provisions" (testimony of Robert H. Jackson, Department of Justice [U.S. Senate
1937, p. 7]). Opponents of the FLSA sought separate legislation in order to reduce
its support.
20 Some possible effects of minimum wage legislation, such as effects on aggregate
demand, price, and productivity, are not included in this analysis because they are
very small or I have found no evidence that they provided the basis for interest group
lobbying.
21 See Wright (1986, pp. 219, 225) and Seltzer (1994, pp. 140-94). See also the
remarks by Michael Bradley (pp. 1166-67) and William Citron (pp. 832-33) in the
Appendix to the CongressionalRecord (1938).
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TABLE 3
NORTH-SOUTH
DIFFERENCES IN ECONOMIC AND POLITICAL CHARACTERISTICS
% Black
% Unionized
% Teens ILF
% Agriculture
% Earning <$800 annually
% Earning <$1,200 annually
Average annual earnings
% Democratic senators
% Democratic representatives
North
South
3.635
16.544
25.536
12.820
21.387
42.380
$1,408.46
75.71
72.55
25.023
5.143
28.994
34.382
46.544
62.039
$976.99
100.00
97.41
SOURCE.-1940 U.S. Census and CongressionalDirectory.
These figures understate the regional wage differentials in 1937-38
because they reflect the $0.25 minimum wage that was implemented
in 1939 and because they do not reflect regional differences in the
length of the workweek.22
Because the model controls for the factors described in table 3, a
different interpretation must be given to region. One interpretation
is that the coefficient measures the strength of the New Deal coalition
in Congress. Previous New Deal programs brought the South federal
money without federal control. These programs were federal in origin but left individual states virtually complete control over implementation and enforcement (Wallis 1985, pp. 40-44). Thus they received considerable southern support. The FLSA, however, was truly
a national law that brought about unwanted federal intervention in
the South and, thus, threatened the basis of southern support for the
New Deal. The FLSA may have broken apart the New Deal coalition
by alienating the South. Alternatively, southern opposition could be
interpreted as demonstrating the relative strength of the elite in
southern politics. The elite-who were more likely to oppose the
FLSA for reasons outlined below-exerted
near complete control of
southern politics, as poll taxes, literacy requirements, and outright
intimidation effectively disenfranchised the poor, particularly blacks
(Bunche 1973; Alston and Ferrie 1989).
B.
SectoralEffects (Agriculture)
The FLSA did not cover agriculture, most agricultural processing,
firms not engaged in interstate commerce, domestic service, and small
22
Census data show that in 1939 the average workweekwas 41.7 hours in the South
and 40.1 hours in the rest of the nation.
FAIR LABOR STANDARDS
ACT
1317
businesses. The exemptions for domestic service and small business,
however, came from the Conference Committee compromise bill
rather than the original bill and, thus, do not influence the analysis
of voting. The variable Agriculture, measured by proportion of the
workforce, controls for sectoral effects in the model.
An effective minimum wage will create unemployment in the covered sector.23 Labor will move between sectors in reaction to the minimum wage; however, it is unclear theoretically whether there will be
a net migration of workers to the covered sector (waitunemployment) or the uncovered sector (spillovers). Empirical studies have shown that the spillover effect dominates the waitunemployment effect (Mincer 1976, p. S 103). Thus the net effect will
be an outward shift in the agricultural labor supply and a reduction
in the agricultural wage. All else equal, this implies that farmers
would have favored the FLSA, but most farm groups actually opposed the bill. They believed that the bill expanded the scope of
government and thus increased the probability of a future minimum
wage for the agricultural sector.24 In addition, farm groups may have
opposed the bill because the regulation of working hours extended
to agriculture.
C. Businesses ('5 Employeesand 6-20 Employees,
Textiles,Lumber, OtherManufacturing, and Trade)
In general, businesses will be hurt by a binding minimum wage because their labor costs, and thus total costs, will be driven up. Two
factors-firm size and industry-will determine the actual impact of
a minimum wage. Firm size is controlled for by the variables '5
Employees and 6-20 Employees, each measured by proportion of
firms. Small businesses were clearly harmed more by the FLSA than
large businesses. While both face higher labor costs, small businesses
disproportionately hire low-wage labor, are more labor intensive, and
are less able to substitute capital for labor. It is uncertain whether
small businesses will be able to mount an effective lobbying campaign
because they are a diffuse interest group that faces a significant free23 Throughout this analysis I have made the simplifying assumption of market clearing in the uncovered sector. This assumption does not adequately describe southern
agriculture under the Agricultural Adjustment Administration's acreage retirement
program, which caused crop changes away from cotton with consequent increased
mechanization and lower labor requirements in southern agriculture (Alston 1981, p.
230). Nonclearing of both sectors, however, is a simple extension to the model and
does not alter the basic conclusions.
24 See, e.g., the statement by Rep. Charles McNary (R-Ore.) on the "dangerous
expansion" of the federal government in the Appendix to the CongressionalRecord (1938,
p. 302).
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rider problem; however, owners of small businesses may constitute a
large enough voting bloc so that legislators cannot ignore their interests, even in the absence of an effective campaign. It is theoretically
unclear whether large firms will be hurt or helped by minimum wages
because the competitive advantage gained relative to smaller firms
may offset their increases in labor cost.
The effects of a minimum wage vary considerably across industries
within the covered sector, depending on characteristics such as demand elasticity and wage levels. Industries with relatively inelastic
output demand can pass on increases in production costs to consumers. High-wage industries, such as heavy manufacturing, will be affected little by a minimum wage; whereas low-wage industries, such
as retail trade, will be affected considerably. Other sources of differentiation are the ability to substitute capital for labor, the ease of
adapting or developing labor-saving technologies, and the geographic
location of firms. Industry effects are controlled for by the variables
by
Textiles, Lumber, Other Manufacturing, and Trade-measured
Textiles
industry.
the proportion of employment in the particular
and lumber were the two industries most affected by regional capital
movements (Seltzer 1994). The coefficients on these variables are
expected to be negative if southern industry's interests dominated
and positive if northern interests dominated. Retail and wholesale
trade were low-wage industries in both regions and, thus, doubtlessly
opposed the bill.
D.
Low-Wage Workers(Low-Wage)
The effect of minimum wages on low-wage workers is theoretically
ambiguous. The impact on individual low-wage workers is determined by the wage and employment effects, which work in opposite
directions. Low-wage workers will benefit from higher wages; however, they will be hurt by reductions in employment caused by a
reduced scale of output and the substitution of high-wage labor and
capital for low-wage labor. Individual workers cannot know for certain whether they will be among those who lose their job. Thus their
support or opposition will depend on expected, rather than actual,
gains or losses. It is likely that some low-wage workers will rationally
support minimum wages, whereas others will rationally oppose them.
This depends on three individual-specific factors: the expected probability of job loss, the discount rate, and risk aversion.
Advocates of low-wage workers unequivocally supported the
FLSA.25 However, it is unlikely that low-wage workers, a diffuse inter25 See the statements by Rep. Gerald Landis (R-Ind.) (1939, pp. 3771-73) and Rep.
John Coffee (D-Wash.) (1938, pp. 549-51) in the Appendix to the CongressionalRec-
FAIR LABOR STANDARDS
ACT
1319
est group that lacks resources, were able to mount a major lobbying
campaign. Thus it is doubtful that their interests had much of an
effect on congressional voting. It is more likely that employers of
low-wage workers (a more concentrated and financially stronger interest group) were able to capture the congressional votes. Employers
of low-wage labor were likely to have been hurt by the FLSA more
than any other interest group because they faced the largest increase
in production costs and because their competitive advantage would
have been reduced. Thus, ceteris paribus, one would expect legislators from districts with a high proportion of low-wage workers to
oppose the bill.
This paper employs two measures of the concentration of low-wage
workers. The final version of the FLSA established a minimum wage
of $0.40 per hour. With a 40-hour workweek (the mode in every state
and approximately the mean everywhere except the South) and a
50-week work year, $800 would be the appropriate cutoff for low
wages. However, the bill before the Senate and the first bill before
the House empowered a regulatory board to modify the minimum
wage for all workers earning less than $1,200 per year; thus I have
chosen this figure as the appropriate cutoff for low wages for these
two votes and $800 as the appropriate cutoff for the second House
vote. The variable Low-Wage represents the proportion of workers
earning less than the cutoff amount.26
E.
Minority Groups (Black)27
The net effect of a minimum wage on minorities is also theoretically
unclear. The demand for low-wage blacks is more elastic than for
low-wage whites because of discrimination and skill differentials. Employer discrimination may result from the unemployment created by
a minimum wage because the relative homogeneity of unskilled labor
and the high cost of ex ante predicting the quality of unskilled workers make discrimination virtually costless. As a result, low-wage minority workers might be less supportive of the minimum wage than
ord. See also the statements by Gardner Jackson, chair of the National Committee on
Rural and Social Planning (pp. 1196-1202); Frances Perkins, Secretary of Labor (pp.
173-88); and John L. Lewis, president of the Congress of Industrial Organizations (pp. 275-76) in U.S. Senate (1937).
26 Workers earning between $0 and $99 (the modal range in both regions and most
states) were assumed to be nonwage workers who would not be covered by the FLSA
and thus were not included in this analysis.
27 The 1940 Census used four racial classifications: white, black, American Indian,
and Asian. Because the Asian and American Indian populations were small, the terms
minority and black are used interchangeably in this analysis. The variable Black is
measured by proportion of the population.
1320
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low-wage whites. However, a disproportionate number of blacks
worked for low wages and, thus, stood to benefit from the wage increases brought about by the FLSA. Thus it is theoretically ambiguous
whether blacks will support or oppose minimum wages; however,
the majority of the black leadership has historically favored every
proposed increase and opposed any racial differentials in the minimum wage (Schulman 1991, p. 56). However, the concerns of blacks
were unlikely to have driven congressional voting. In the 1930s,
blacks, particularly southern blacks, were effectively disenfranchised;
thus it would be incorrect to view their concerns as driving legislative
behavior. However, the interests of the employers of black labor and
other enfranchised whites might have affected congressional voting.
Employers of blacks seeking to keep their own labor costs down would
have opposed minimum wages. Whites who resented blacks earning
relatively high wages would have opposed minimum wages on those
grounds. For these reasons, one would expect that legislators from
states with a high black population would have been more likely to
oppose the bill.
F.
Young Workers(Teen ILF, 20-24 ILF)
It is also theoretically unclear how a minimum wage will affect young
workers. Young workers typically work for low wages and tend to
bear a disproportionate share of the unemployment created by minimum wage legislation. However, young workers lack political power;
the right to vote was not granted to 18-year-olds until the 1960s, and
people in their early twenties have always been less likely to vote than
older people. Thus the coefficients for the young worker labor force
participation variables cannot be interpreted as their demand for
minimum wage legislation. Four more plausible interpretations of the
coefficients are that they represent the lobbying efforts of businesses
that hired young workers, older workers that are potential substitutes
in production, the parents of young workers, and reformists that
sought to end "child" labor. Businesses that hired large numbers of
young workers actively opposed minimum wage legislation, older
workers supported minimum wages because of the potential substitution effects, and reformists promoted minimum wage legislation in
order to bring up the living standards of young workers and to keep
teenagers in school.
G. OrganizedLabor (AFL, Other Union)
Generally, labor unions are strong supporters of minimum wage legislation. The establishment of a minimum wage increases the price
FAIR LABOR STANDARDS
ACT
1321
of unskilled workers, a substitute in production for union members.
Thus minimum wage legislation will increase the demand for union
labor.28 Furthermore, unions have always been more successful at
organizing in the North than in the South. The fact that in the postwar years unions have remained relatively ineffective in the South
indicates that the lack of southern industry may have been a sufficient
but not necessary condition for the dearth of unions during the earlier period. Thus unions might have also supported the bill because
it reduced migration of industry to the South. In actuality, unions
voiced strong support for wages and hours legislation but were divided over the regulations proposed in the FLSA. After the bill initially failed in the House, the House Labor Committee eliminated the
provisions that organized labor found objectionable. The bill that
emerged from committee was strongly supported by organized labor.
IV. The Supply of Legislation: Ideology
and the FLSA
As previously discussed, the principal-agent slack between legislators
and their constituents allows legislator ideology to influence voting
on any bill. There is a great deal of evidence from testimony in the
congressional hearings on the FLSA that ideology did, in fact, influence congressional voting. Much of the testimony in Congress concerned issues that a modern neoclassical economist would not associate directly with minimum wage legislation. This testimony was
typically far less specific and far more emotional than the testimony
concerning the constituent interests described in the previous section.
For example, Rep. Matthew Dunn (D-Pa.) testified in support of the
act: "If such human legislation were enacted into law, we would not
be compelled to spend $15,000,000,000 for the prevention of crime"
(CongressionalRecord, 1937, p. 1801); Rep. Wade Kitchens (D-Ark.)
testified in opposition: "The proposal is unworkable, un-American,
impractical, and dangerous to our institutions. This bill, carried to its
logical conclusion, will destroy State sovereignty, State rights, local
self-government, and individual liberty" (p. 1832). Others compared
opposition to the FLSA to opposition to the Constitution in 1789
(Rep. Adolph Sabath [D-Ill.], pp. 1813-14), talked about an "American standard of living" (Rep. Gerald Landis [D-Ind.] [Congressional
Record, 1939, p. 3771]), and spoke of the elimination of "sweatshop
conditions" (Roosevelt 1938, 8:xxiv-xxv).
28 For example,
Linneman (1982) finds that union members benefited more than
any other group from the minimum wage increase in 1974. See also Silberman and
Durden (1976, pp. 319, 320).
1322
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ECONOMY
Because far more testimony was of this nature than concerned the
direct effects of the act, it is difficult to dismiss as solely being a cynical
attempt to mislead colleagues or constituents. Rather, it is likely that
these statements, at least in part, reflect sincerely held ideological
beliefs about an ideal state of the world and the role of the FLSA in
such a world. Thus to obtain unbiased results, a measure of ideology
must be included in the regressions on voting on the FLSA. Because
interest group ratings are not available for the 1930s, an alternative
measure must be utilized. Thus I have created implied ideology ratings for each legislator based on roll-call votes for the Seventy-fourth
Congress (1935-36) and the voting of known ideologues.29 Indexes
for the variable Ideology were constructed for conservatism (CON),
liberalism (LIB), and progressivism (PFL). The Appendix provides a
description of how the indexes were created.
V.
Empirical Results: Voting in the
Full Legislatures
This section examines the determinants of voting on the bill in the
House and Senate. Logit regressions were run for the Senate vote of
July 1937 and the House votes on recommitting the bill in December
1937 and May 1938. Voting for recommission is assumed to indicate
opposition to the bill; voting against, to indicate support.30 The primary source of data is the 1940 U.S. Census. The Population: Characteristicsof the Population volumes provide data on population, minority
population, and employment by industry groups. The Population:
CharacteristicsbyAge volumes provide data on youth labor force participation. The Population: The Labor Force volumes provide all wage
data. The Manufactures volumes provide data on business size. Data
on unionization were obtained from Troy (1957). Data on voting in
the 1936 presidential election came from Congressional Quarterly's
Guide to U.S. Elections (1985). All congressional voting data were acquired from tape files compiled by the University of Michigan InterUniversity Consortium for Political and Social Science Research. Fi29 Ideology may change somewhat over time. Consequently, it is appropriate to construct the indexes using voting data from around 1937-38. Using the Seventy-fifth
Congress, however, would create a problem with the direction of causality in a regression on voting on the FLSA because any vote trading involving the FLSA would influence the ideology indexes. The Seventy-sixth Congress was deemed to be less appropriate than the Seventy-fourth because the main issues had turned from New
Deal legislation to preparation for war.
'? The assumption is clearly reasonable for the 1938 vote, when only one legislator
voted differently on recommitting and passing the bill. However, it is less clear for the
1937 vote. Legislators may have voted to recommit it in order to force the Labor
Committee to modify the bill.
FAIR LABOR STANDARDS
ACT
1323
nally, personal information on the legislators was obtained from
CongressionalDirectory and CongressionalIndex. The quantitative data
are aggregated at the state level. This is appropriate for the Senate
but creates some measurement error for the House. Consequently,
the model should have greater explanatory and predictive power for
the Senate than for the House.
A. An Analysis of Voting on the FLSA
In addition to the constituent interest and legislator ideology variables, the variables Republican,3' New Deal Democrat, Landon,
Elect37, and Elect38 are included in the regressions. Republican and
New Deal Democrat (first elected after 1931) were included as measures of party influence. Younger Democrats, lacking an independent
power base, may have been more likely to follow party line and support the FLSA. Constituent ideology is controlled for by the variable
Landon, the proportion of a state's votes going to Republican candidate Alfred Landon. Elect37 (Elect38) takes on a value of one if the
Senate seat was up for election in 1937 (1938), and zero otherwise.
These variables were included as a measure of the senators' time
horizons. Ceteris paribus, the closer an individual senator was to facing an election, the more likely that he would vote in favor of the
FLSA, which contemporary public opinion polls indicated was overwhelmingly supported in virtually every region of the country (Douglas and Hackman 1938, pp. 511-12). Alternatively, these variables
could reflect a cohort effect; that is, an atypically liberal group of
senators was elected in 1932 because of the Depression. Table 4 presents summary statistics of the independent variables and the expected signs of the regression coefficients.
The influence of the independent variables is determined by statistical significance in a logit regression and the change in probability
of support resulting from a one-standard-deviation change in the
individual variables. Change in probability is used as a second criterion because some of the statisticallysignificant variables may not have
been politicallysignificant. Because the ideology indexes are somewhat
ad hoc, regressions using each index were run to provide sensitivity
analysis. Table 5 and columns 5 and 6 of table 8 below present the
results for the Senate vote. The model is significant at any standard
level and correctly classifies between 82.6 and 90.9 percent of the
31 Senators Robert LaFollette (Prog.-Wisc.) and Ernest Lundeen and Henrik
Shipstead (Farmer-Laborer-Minn.) were classified as Democrats and Sen. George Norris (Ind. R-Neb.) was classified as a Republican for the purposes of this study. Similarly,
Progressive and Farmer-Laborer representatives were also classified as Democrats.
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FAIR
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STANDARDS
ACT
1325
votes. It outperforms other models of Senate voting on the FLSA,
the CON2 specification correctly classifying 8.5 percent more senators than a party/region model and 9.5 percent more than a one- or
two-dimensional spatial model. The variables with the largest impact
are Low-Wage, Teen ILF, Small Business, and the ideology indexes.
Not surprisingly, the constituent interest variable with the largest effect is Low-Wage. The large effect of Ideology is also not surprising
given the relative lack of national attention focused on the Senate
vote. The sign and magnitude of the Teen ILF coefficient suggest
that senators catered their voting to older workers who would benefit
from teenage disemployment, the parents of teenagers who would
benefit from higher wages, and the reformists seeking to end child
labor. The other result of note is the positive coefficient on South.
Clearly the North-South divisions emphasized by historians were not
decisive in Senate voting: the South actually voted in favor of the bill,
13-9 with three abstentions.32 Therefore, it must be concluded that
most southern Senators had not defected from the New Deal coalition, despite the opposition to the bill by previously staunch New
Dealers such as Senators Pat Harrison (D-Miss.) and James Byrnes
(D-S.C.).
The independent variables in the regressions on the House votes
are the same as for the Senate except for election proximity and
Republican. Elect37 and Elect38 were not included because all House
members run for reelection at the same time. Republicans were divided into pre-New Deal and New Deal Republicans because of the
larger sample size in the House. Table 6 and columns 1 and 2 of
table 8 below present the regression results for the December 1937
vote. The model does not have quite the predictive power as for the
Senate, probably because of the measurement problem. Nonetheless,
each specification is strongly significant and correctly classifies between 82.7 and 86.5 percent of the votes. The CON2 specification
correctly classifies 8.3 percent more representatives than the party/
region model, 19.4 percent more than the one-dimensional spatial
model, and 2.6 percent more than the two-dimensional spatial model.
The variables with the largest impact were Party, Textiles, AFL,
Other Union, Low-Wage, Teen ILF, and Ideology. As with the Senate, there is no evidence that the South was unified in its opposition
to the bill. While southerners disproportionately opposed the bill, the
regression results indicate that this was due to differences in constituent characteristics.
Table 7 and columns 3 and 4 of table 8 present the regression
results for the May 1938 House vote. The model correctly classifies
32
One Arkansas seat was vacant at the time of the vote.
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1332
JOURNAL
OF POLITICAL
ECONOMY
TABLE 8
MARGINAL PROBABILITIES OF THE QUANTITATIVE VARIABLES:
CHANGE IN P(Y = 1) FOR A ONE-STANDARD-DEVIATION
CHANGE IN X (Evaluated
(1937)
HOUSE
VARIABLE
Increase
(1)
Textiles
Lumber
-
- .1761
.0223
-
Agriculture
AFL
Other union
-.1753
.1529
.1408
Black
Low-wage
-
Teen ILF
20-24 ILF
'5 employees
6-20 employees
.1468
-.0518
.2056
.0955
Landon
-
CON (majority)
-
-
.2337
.1029
.2783
.0750
.2852
(1938)
Increase
(3)
SENATE
Decrease
(4)
Increase
(5)
Decrease
(6)
.0298
.0184
- .1448
- .0361
.3019
- .2546
.0745
- .2155
.2485
-.0229
.1803
.1434
-.1897
-.1714
.0910
.2057
-.1804
.0486
-.2871
-.1087
.0685
.2095
- .0485
- .0242
-.1199
.0116
-.0026
.0231
- .7843
.0189
-.2319
-.0571
-.2545
.0068
- .0385
.0211
.0147
.0286
- .0169
.0024
- .0599
.0358
-.0380
.0323
.0227
.0327
- .0083
.0190
- .3848
- .1612
-.3790
- .0286
-.1176
.3926
- .4241
.5226
-.3061
-.3303
-.2017
.4971
- .4013
.5042
.1789
.4943
.0291
.1268
- .3162
.5738
-.3955
.3771
.4146
.2303
- .3807
.5329
.0822
Trade
No change
Decrease
(2)
.1440
Other
manufacturing
HOUSE
at Wax)
.6451
.9639
.4248
SOURCE.-Tables 5-7.
NOTE.-The row "No Change" is the probability that a northern Democrat elected before 1932 and with constituent concentrations at the national mean will vote for the bill. This probability is given by Pi = exp(Xi3ij1xz)/[l +
(Maddala 1983, p. 25). The number in the column Increase (Decrease) is the change in probability
exp(ii3txix)]
caused by a one-standard-deviation change in the independent variable. It is given by
exp[i
1 + exp[>
ilxi +
illxi
j(Qlx +vxj)
+ j(tlxj +
Xj)
between 89.9 and 92.1 percent of the votes. The CON2 specification
correctly classifies 11.7 percent more representatives than the region/
party model, 13.8 percent more than the one-dimensional spatial
model, and 8.3 percent more than a two-dimensional spatial model.
The most noteworthy result is that only Party and Low-Wage are
statistically significant and have a quantitatively large impact on voting. Teen ILF and Ideology are both statistically significant, but neither has a quantitatively large impact. In fact, the capture and ideology specification (cols. 2-8) does not appear to improve on the
capture alone specification (col. 1). As with both other votes, there is
little indication of unified southern opposition.
B.
Did IdeologyMatter?
These results seem to indicate that ideology influenced voting on the
FLSA. Ideology is statistically significant in virtually all specifications
FAIR
LABOR
STANDARDS
ACT
1333
and has a large impact for the Senate and first House votes. However,
it appears to have had little impact on the second House vote. This
is consistent with the predictions of the agency model, given the bill's
increasing importance as an election issue and the fact that senators,
who face reelection less frequently, do not have to be as responsive
to their constituents as representatives. Although the FLSA was seen
as an important piece of New Deal legislation at the time of the Senate
vote, the House vote and the Pepper and Hill primary campaigns
made it the single most important national election issue.
The results, however, do not preclude Peltzman's (1984) hypothesis
that Ideology represents omitted constituent interests rather than
true ideology. A two-part procedure similar to that employed by Kalt
and Zupan (1984) and Stratmann (1992) was used to test this possibility. First, specification tests for omitted variables (Ramsey's RESET
test for the weighted least squares [WLS] regressions and a Lagrange
multiplier test for the logit regressions) were performed on the regression results. The test results, reported in the individual tables,
provide no evidence of omitted variables from the voting regressions
and only weak evidence from the ideology regressions. Thus any
variables omitted from the voting regressions that are correlated with
Ideology are included in the ideology regressions. To test the relative
importance of the systematic and legislator-specific components of
the ideology indexes, they were decomposed as Ii = Ii + Ui, where
Ii is the predicted value based on Appendix tables A2 and A3 and
Ui is the legislator-specific residual. If the apparent significance of
Ideology in explaining voting on the FLSA is due to omitted constituent characteristics, much of the relationship between ideology and
voting would be driven by Ii and little by Ui. This is tested by examining the correlation between the residuals of the capture-only specification of the voting regressions (Ec) and the two components of Ii.
Under Peltzman's hypothesis, the correlation between si and Ui will
be insignificant and the correlation between si and Ii will be significant. The correlation coefficients are presented in table 9. It is evident
that the significance of the ideology variables in the voting regressions
is primarily due to the significance of Ui, the legislator-specific component. This result can be interpreted as strong evidence against Peltzman's hypothesis, although it should not be regarded as conclusive
because only three votes are included in this study.33
33 Another possible explanation for the significance of ideology is that logrolling
affected voting on the FLSA. Although data inadequacies make it impossible to directly
test this hypothesis, there are strong theoretical reasons to believe that there was not
extensive vote trading on the FLSA. The major problems associated with logrolling
are the high costs of reaching an agreement on the "price" of a vote and creating an
enforcement mechanism to prevent ex post reneging on the agreement. The transactions costs facing potential logrolling coalitions on the FLSA were likely to have been
large because of the bill's unique importance as an electoral issue.
1334
JOURNAL
OF POLITICAL
ECONOMY
TABLE 9
CORRELATION
COEFFICIENTS
OF PREDICTED AND RESIDUAL IDEOLOGY (i
LOGIT RESIDUALS (Fi)
Variable
Residual (U,)
and Ui)
Predicted
WITH
(ii)
Senate (January 31, 1937)
Liberal:
Unanimity
Majority
Conservative:
Unanimity
Majority
Progressive/Farmer-Laborer: Unanimity
.3638*** (3.22)
.4121*** (3.73)
- .2926**
-.3255***
.2695**
(2.52)
(2.84)
(2.31)
.1444
.1463
(1.20)
(1.22)
- .2077* (1.75)
- .2029* (1.71)
(.95)
.1143
House (December 7, 1937)
Liberal:
Unanimity
Majority
Conservative:
Unanimity
Super-majority
Majority
Progressive/Farmer-Laborer:
Unanimity
Majority
(2.57)
(2.37)
.0087
.0076
(.17)
(.16)
-.1530***
(2.75)
- .2206*** (3.99)
- .2381 *** (4.33)
-.0076
.0004
.0035
(.16)
(.01)
(.07)
-.0124
-.0162
(.25)
(.33)
.1442**
.1332**
.2349*** (4.27)
.2381*** (4.33)
House (May 24, 1938)
Liberal:
Unanimity
Majority
Conservative:
Unanimity
Super-majority
Majority
Progressive/Farmer-Laborer:
Unanimity
Majority
(.69)
(.42)
-.0041
-.0081
(.08)
(.17)
(1.11)
-.0632
- .1 122** (1.98)
(1.83)
-.1042*
-.0309
-.0207
-.0120
(.63)
(.42)
(.24)
.0393
.0241
.0875
.0792
(1.54)
(1.39)
.0352
.0278
(.72)
(.57)
NOTE.-Absolute values of t-statistics are in parentheses. The t-test pertains to HO: p = 0, HA: p $ 0 and is based
on t = r/(1
-r2)/(n
-2).
* Significant at the 1 percent level.
** Significant at the 5 percent level.
*** Significant at the 10 percent level.
VI.
Conclusions
Much of the historical literature on the Fair Labor Standards Act has
portrayed the passage of the act as a battle between the North and
the South. In this paper I have tested this hypothesis using a rationalchoice model of committee decision-making and congressional voting. The results provide only limited support for the hypothesis. It
is clear that the South attempted to water down the original bill in
FAIR
LABOR
STANDARDS
1335
ACT
committee. It was successful in removing discretionary powers from
the enforcement agency but was unsuccessful in its primary interestpreserving regional wage differentials. Analysis of voting on the
FLSA shows that, although southern legislators disproportionately
opposed the bill, there was not a unified effort by the South to defeat
it. The South was less unionized, had a higher proportion of employment in agriculture, had lower wages, and had more blacks-all of
which led to southern opposition to the FLSA. However, if one controls for these characteristics, southern legislators were no more likely
to oppose the act.
The model is also employed to show the process by which the act
was introduced, modified, and passed. Labor unions and southern
industry were able to persuade the House Labor Committee to strip
the proposed enforcement agency of discretionary wage-setting powers. Legislators voting in favor of the bill were strongly influenced by
high-wage industries, advocates of teenage workers, labor unions, the
Democratic party, and left-wing ideology. Legislators opposing the
bill were strongly influenced by agricultural interests, low-wage industry, retail trade, the Republican party, and right-wing ideology. The
results indicate that the model describes the passage of the FLSA
better than the competing models proposed by historians and political
scientists.
Appendix
Creation of the Ideology Indexes
The first step in generating the indexes was to eliminate all lopsided votes.
These were arbitrarilychosen to be votes in which the winning side had
more than a 2-1 margin.34The consequences of the choice of margin differ
between the House and Senate because of compositional differences in the
two chambers. Republicansconstituted approximately30 percent of the Senate but slightlyless than a quarterof the House. Furthermore,House conservativeswere reluctant to oppose the administrationfollowing the Democratic
landslides in 1934 and 1936 (Patterson 1969, pp. 164-65). Thus it is likely
that a greater proportion of votes on ideological "litmus"issues were lopsided
and thus were eliminated from the sample in the House than in the Senate.
The indexes are based on the voting of several legislators regarded by
Patterson (1967, 1969) to be important ideologues. Geographical diversity
was used as a further selection criterion in order to reduce the influence of
regional
bills in the indexes.35 Appendix
table Al lists the legislators
selected
34 Paired and announced votes were treated in the same manner as ordinary votes
throughout this analysis.
35 It was not possible to achieve a geographic balance in the Progressive/FarmerLaborer indexes because all congressional Progressives were from Wisconsin and all
1336
JOURNAL
OF POLITICAL
ECONOMY
TABLE Al
LEGISLATORSUSED IN THE COMPILATIONOF IDEOLOGYINDEXES
A. HOUSE
Conservative
Liberal
Progressive/Farmer-Laborer
Cox (D-Ga.)
Smith (D-Va.)
Martin (R-Mass.)
Taber (R-N.Y.)
Rayburn(D-Tex.)
Sabath (D-Ill.)
Bloom (D-N.Y.)
Norton (D-N.J.)
Lundeen (F-L-Minn.)
Kvale (F-L-Minn.)
Schneider (P-Wisc.)
Gehrmann(P-Wisc.)
B. SENATE
Conservative
Liberal
Progressive/Farmer-Laborer
Austin (R-Vt.)
Bailey (D-N.C.)
Glass (D-V.I.)
Johnson (R-Calif.)
Black (D-Ala.)
Thomas (D-Utah)
Wagner (D-N.Y.)
LaFollette(P-Wisc.)
Shipstead(F-L-Minn.)
for this purpose. Two indexes were created for five of the six groups of
legislators. The first is based on bills that all the selected legislators who voted
favored or opposed (LIB 1, CON 1, and PFL for the Senate and LIB 1, CON 1,
and PFL1 for the House). The second also includes bills for which a majority
voted the same way (LIB2 and CON2 for the Senate and LIB2, CON2, and
PFL2 for the House). A Progressive/Farmer-Laborite majority index could
not be constructed for the Senate, which had only one Progressive and one
Farmer-Laborite. A third index, CON3, which includes votes for which the
selected representatives were unanimous or there was a 3-1 margin, was
constructed for House conservatives.
bills (i = 1, . . . , n) were determined,
Once the relevant
the indexes
were
generated as follows:
INDEX
= -Bi,
n
where
[1
B=
.5
L0
if voting with the selected legislators on bill i
if voting present or unaccounted for on bill i
if voting against the selected legislators on bill i.
The indexes range from zero to one, with higher values indicating greater
adherence to the ideology.
Farmer-Laboriteswere from Minnesota.Thus some of the votes included in the PFL
indexes may have reflected Midwesterninterests rather than ideology. As a consequence, these indexes may be a less pure measure of ideology than the conservative
or liberalindexes; however, it is also the case that the smallernumber of congressional
Progressivesand Farmer-Laboritesimplies that the indexes are less likely to represent
logrolling coalitions.
FAIR LABOR STANDARDS
1337
ACT
One problem that results from using voting from the 1935-36 session of
Congress to estimate ideology is that a number of legislators that voted on
the FLSA did not hold office for all or part of the session. If a legislatorwas
present for m of the votes used to compile a particularindex (m ? 10), the
index was computed as an average of the m votes. If a legislator was not
present for at least 10 votes, an index was estimated from the fitted value
from a regression of ideology on personal and constituent characteristics.
In order to use least squares,a transformationmust be made such that the
index (which is bounded at zero and one, and thus not normallydistributed)
can take on all values between minus infinity and infinity.36An ordinary least
squares(OLS)regression of a logisticallytransformedvariable,Ti,on a vector
of independent variableswill have heteroskedasticresiduals with asymptotic
variancewx= u2 + [nINDEX-(1 - INDEX-)]-', where U2 is the varianceof
the equation error and n is the sample size.37In order to obtain efficient
parameterestimatesand consistent standarderrors, the transformedvariable
T3was fit using WLSwith w- 1/2 used as the weight. The independent variables
were South, New Deal Democrat(those first elected in 1932 or later), Republican (which was split into those elected before and after 1932 for the House
regressions),Population, Urban (number of urban residents), Median School
(median years of formal schooling), Median Wage (of workers employed
12 months in 1939), Employment Ratio (the proportion of the labor force
employed 12 months in 1939), and % Unionized (of employed workers).
Appendix tables A2 and A3 present the Senate and House results of the
WLS regression on Ti. The regressions are all significantat a 5 percent level.
The most surprising result is that the coefficient on South is positive for
both the liberal and conservative indexes in the House. This implies that
southernerswere both more liberal and more conservativethan northerners
and, thus, suggests that the ideology indexes cannot be represented in a
single dimension, there exist significantnonlinearitiesin the posited relationships, or the indexes reflect logrolling coalitions within Congress.
36
The logistic transformationis appropriatefor this purpose. Under this transformation, the variablebecomes Tj = ln[INDEX?/(l - INDEXM)].
37The variance,s2, can be consistentlyestimatedby
S
s2 =
[,(ei
n(~- )[ki-xbI2
-
Y,.'b)2
-
1- INDEX1)]
i= nINDEXj-(l
E
where X is a vector of independent variables,b is a vectorof OLS parameterestimates,
e is a vector of OLS residuals, and k is the number of independent variablesin the
regression.
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FAIR LABOR STANDARDS
ACT
1341
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