Prior to 1974, Congress held Puerto Rico’s minimum wage below that of the mainland, a sensible policy given the commonwealth’s lower level of economic development and labor productivity.
Then, with the best of intentions, lawmakers ordered Puerto Rico to equalize its rate with the federal figure; this was phased in by 1983, and the Puerto Rican minimum wage has moved in lock-step with the federal minimum ever since.
My colleague Tom Rustici, in his excellent 1985 paper on the political economy of minimum-wage legislation, quotes Simon Rottenberg’s explanation of the sordid motives of labor-union officials to raise the minimum wage in Puerto Rico. (The motive, unsurprisingly, was to diminish the competition posed by Puerto Rican workers to mainland unionized workers.) But Rottenberg, although writing in 1981 (in a paper that I’ve yet to read), seems from the quotation to be describing a political battle that was waged in the 1950s. But it wasn’t until the 1974 that Congress acted to again make the federal minimum wage the same in Puerto Rico as it is throughout the 50 states and DC. (Initially, in 1938, the federal minimum wage did apply to Puerto Rico, but its effects on workers there were so dreadful that Congress soon exempted Puerto Rico from having to have the same minimum wage as the mainland.)
So here’s my question: are there any good accounts of the political economy of Congress’s action in 1974 to again make the federal minimum wage apply to Puerto Rico? If so, can you direct me to them, either by e-mail or in the comments section? My strong prior is that Lane is mistaken to believe that Congress’s 1974 decision to force Puerto Ricans to suffer the same minimum wage that burdened low-skilled worker on the mainland was due to good intentions.
