Laws and Wages Legislation and Wages: An Intricate Dance, but Who's Leading?

Government and employment have always had and will necessarily continue to have a complex and mutually influential relationship, not least in the area of wages. What people are able to earn has always been a pressing issue in any capitalist system, and can influence the formation and the actions of government in numerous direct and indirect ways. In the other direction, legislation enacted by the government can both directly impact employees' wages and have indirect impacts through the changing of burdens that employers must contend with in compensating employees and operating their businesses. This paper briefly examines the relationship between government and wages, and specifically between legislation and employers' abilities to pay wages and utilize wages as an effective workforce motivator and stabilizer. This examination shows that good intentions can sometimes have questionable results, even when the ethical goods they serve are unquestionably warranted.

Minimum Wage, Equal Pay, and Complications for Business

The twentieth century saw the rise of the labor movement and the rise of labor laws, though many of the most relevant pieces of legislation were not passed until the latter decades of the previous century. The Lily Ledbetter Act, which made the wage gap between male and female employees more easily addressable through the courts, was not passed until 2009; until then, suits for wage discrimination based on gender had to be filed within 180 days of the pay-scale decision rather than from the date of the discriminatory paycheck -- a view which four members of the Supreme Court vehemently disagreed with in 2007 but which five members upheld in Lily Ledbetter's case against Goodyear (Cornell, 2007). This case shows the good that wage legislation can accomplish, as the Lily...

Equal pay legislation such as the Lily Ledbetter Act and the Equal Pay Act of 1963 do not truly present economic challenges to companies, as the entire basis for these laws is that every individual performing essentially the same work at a company (and thus generating essentially the same amount of revenue) should receive the same rate of pay for that work, regardless of gender, skin color, ethnicity, etc. This is not only an ethical imperative but also makes mathematic sense, but knowing that it is also a legal requirement is still important.
There are pieces of wage legislation meant to establish a more fair system for employees that actually end up presenting significant challenges to businesses and potentially even harming employees in the long run, however. Legislation such as the Davis-Bacon Act of 1931 and the McNamara-O'Hara Service Contract Act, which require U.S. government contractors to pay all employees at least prevailing wages for the locality and the type of work being performed, seem entirely sound on the surface: paying workers on government projects the same as workers are earning in fully private settings seems only fair (Bernstein, 1993; U.S. DOL, 2012). Both of these piece of legislation can (and do) not only drive up the price of government projects, thus limiting the number of projects the government can engage in and the number of private companies and private employees it can employ (not to mention decreasing public benefit from such projects, but they can actually price out workers at the bottom of the socioeconomic ladder and create discriminatory…