Keith Mack
Minimum wage laws establish a base level of pay that employers must pay their employees. The first federal minimum wage in the United States was instituted in the National Industrial Recovery Act of 1933, but it was later deemed unconstitutional. The Fair Labor Standards Act (FLSA) of 1938 established the first constitutional federal minimum wage. Since its inception, the FLSA has been amended multiple times, with added exemptions and expansions specifying which groups of workers are covered under different aspects of the law. The latest proposed changes in Congress—the Raise the Wage Act of 2023—would increase the federal minimum wage to $17 per hour.
| Characteristics | Values |
|---|---|
| First federal minimum wage law | Instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt |
| First federal minimum wage law status | Found to be unconstitutional |
| Current federal minimum wage | $7.25 per hour |
| States with minimum wages higher than the federal minimum | 30 states and the District of Columbia |
| Percentage of Americans earning only the federal minimum wage in 2019 | 1.6 million (1% of workers) |
| Federal minimum wage applicability | Applies to companies that gross at least $500,000 in annual sales and engage in interstate commerce |
| States without a minimum wage law | Louisiana and Tennessee |
| States with minimum wages below the federal minimum | Georgia and Wyoming |
| States that have passed laws banning subminimum wages | 7 |
| Federal minimum wage enforcement agency | Wage and Hour Division in the Labor Department |
| Federal minimum wage enforcement officers | Wage-Hour Administrator and the Secretary of Labor |
| Federal minimum wage enforcement methods | Multiple methods authorized by the Fair Labor Standards Act (FLSA) |
| Latest proposed changes to federal minimum wage laws | Raise the Wage Act of 2023, which seeks to increase the federal minimum wage to $17 per hour |
| Federal minimum wage in U.S. territories | The Commonwealth of Northern Mariana Islands and American Samoa have phased increases to reach the general federal minimum wage over time |
| U.S. territory with a minimum wage above the federal minimum | Puerto Rico, with a minimum wage of $10.50 per hour as of July 1, 2024 |
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What You'll Learn
The Fair Labor Standards Act (FLSA) of 1938
The FLSA was a significant piece of New Deal legislation, aimed at improving the financial situation of the one-third of Americans who were struggling economically. It was designed to improve labor standards and end excessively long working hours, which were seen as detrimental to the health of workers and a barrier to employment for others. The act also sought to support the entire wage infrastructure by creating a floor that workers could use to negotiate higher wages through collective bargaining.
The FLSA has been amended multiple times since its inception, with added exemptions and expansions specifying which groups of workers are covered under different aspects of the law. For example, the act did not initially cover executives, seasonal employees, and some other groups. In 1947, Congress passed the Portal-to-Portal Act, which narrowed the definition of compensable work time in response to a Supreme Court ruling. In 1949, President Truman signed the Fair Labor Standards Amendment Act, which increased the minimum wage to 75 cents per hour and prohibited oppressive child labor in commerce or the production of goods for commerce.
The most recent proposed changes to the FLSA are included in the Raise the Wage Act of 2023, which aims to increase the federal minimum wage to $17 per hour. While the FLSA established a national minimum wage, it is important to note that states are allowed to set their own minimum wages independently, as long as they are compliant with federal law. Some states have enacted their own minimum wage laws, which may be codified in state statutes or constitutions.
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Federal, state, and local laws
In the United States, the minimum wage is set by federal, state, and local laws. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt. However, this was later found to be unconstitutional. The Fair Labor Standards Act (FLSA) of 1938 created the national minimum wage. This Act set a wage floor, established a 44-hour work week, and protected children from prematurely entering the workforce.
Since its inception, the FLSA has been amended multiple times, with added exemptions and expansions specifying which groups of workers are covered under different aspects of the law. For example, in 1974, Congress included all non-supervisory employees of federal, state, and local governments and many domestic workers under the FLSA. The latest proposed changes in Congress—the Raise the Wage Act of 2023—would increase the federal minimum wage to $17 per hour. The FLSA also authorises the Secretary of Labor to use several methods to evaluate an employer's conduct and enforce the minimum wage requirement. Congress created the Wage and Hour Division in the Labor Department to allow the Wage-Hour Administrator and the Secretary to investigate and detect violations.
In addition to federal minimum wage laws, some states also have their own minimum wages, codified in a state statute or the state's constitution. Municipalities, cities, or counties may also have local minimum wage laws, provided they comply with federal and state laws. As of August 2022, 30 states and the District of Columbia had minimum wages higher than the federal minimum. However, some states do not have a minimum wage law, such as Louisiana and Tennessee, and some states have minimum wages below the federal minimum, such as Georgia and Wyoming.
The interplay between federal, state, and local minimum wage laws can be complex. When an employee is subject to valid local, state, and federal minimum wage laws, they are entitled to the highest of the minimum wages. For example, the Puerto Rico Minimum Wage Act of 2021 raised the local minimum wage above the federal minimum. It increased the minimum wage from $7.25 to $10.50 per hour (or higher) by July 1, 2024.
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Exemptions and expansions
The minimum wage in the United States was first established at a federal level in 1938, under the Fair Labor Standards Act (FLSA). Since its inception, the FLSA has been amended multiple times, with added exemptions and expansions specifying which groups of workers are covered under different aspects of the law.
Exemptions
When the FLSA was first introduced, many of the industries that were exempted from the minimum wage were also industries that Black workers were heavily represented in. Some have argued that President Franklin D. Roosevelt excluded these industries to gain favour with Southern lawmakers. These exemptions left Black workers vulnerable to wage theft, excessively long hours without overtime, and an overall lack of workplace protections.
The FLSA provided several exemptions for specific categories of workers, including executives, administrators, professionals, and certain outside sales employees. Other exemptions apply under specific circumstances to workers with disabilities, full-time students, and youth under the age of 20 in their first 90 consecutive calendar days of employment.
Expansions
As amendments were made to the FLSA over the subsequent decades, more of the labour force was covered. The 1966 amendments expanded coverage and introduced a $1 wage floor to several new sectors, including agriculture, schools, nursing homes, and restaurants—sectors where Black workers were disproportionately employed. As a result, the expansion of the minimum wage had an especially positive impact on Black workers.
However, the 1966 amendments also allowed employers to credit a portion of employees' tips toward workers' minimum wages, permitting employers to reduce wage obligations to tipped staff. That means that tipped workers, predominantly working in restaurants and other service sectors, saw both an expansion of coverage and a reduction of pay from employers simultaneously.
In addition to federal minimum wage laws, many states have also enacted their own minimum wage laws, which can be codified in a state statute or the state's constitution. Municipalities, cities, or counties may also have local minimum wage laws, provided they are compliant with federal and state laws. In August 2022, 30 states and the District of Columbia had minimum wages higher than the federal minimum.
The latest proposed changes in Congress—the Raise the Wage Act of 2023—would increase the federal minimum wage to $17 per hour.
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The National Industrial Recovery Act of 1933
The National Industrial Recovery Act (NIRA) of 1933 was one of several measures passed by Congress and supported by President Franklin D. Roosevelt to help the nation recover from the Great Depression. The NIRA is widely considered a policy failure, both in the 1930s and by historians today. The Act was an unusual experiment in U.S. history, as it suspended antitrust laws and supported an alliance of industries.
Under the NIRA, companies were required to write industry-wide codes of fair competition that effectively fixed wages and prices, established production quotas, and placed restrictions on the entry of other companies into the alliances. These codes were a form of industry self-regulation and represented an attempt to regulate and plan the entire economy to promote stable growth and prevent another depression. The Act also permitted trade or industrial associations to seek presidential approval of codes of fair competition, as long as such codes did not promote monopolies or provide unfair competition against small businesses.
The implementation of the Act began immediately, with the National Recovery Administration (NRA) and the Public Works Administration (PWA) as the leading agencies. The NRA was established on June 20, 1933, four days after the law's enactment, to promote compliance with the NIRA. The NRA was chiefly engaged in drawing up industrial codes for companies to adopt and was empowered to make voluntary agreements with companies regarding hours of work, rates of pay, and prices to charge for their products.
The NIRA was declared unconstitutional in May 1935, and Congress passed the National Labor Relations Act in 1935 to address the issues with the NIRA. The minimum wage was later established in 1938 through the Fair Labor Standards Act (FLSA). This bill set a wage floor, instituted a 44-hour work week, and protected children from prematurely entering the workforce.
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The Raise the Wage Act of 2023
The minimum wage in the United States was first established at the federal level by the Fair Labor Standards Act (FLSA) of 1938, enacted by Congress under Franklin D. Roosevelt. Since then, the federal minimum wage has been periodically raised and adjusted to account for changing economic conditions and the rising cost of living.
Despite these adjustments, the federal minimum wage has remained stagnant at $7.25 per hour since 2009, prompting calls for further action. In response, the Raise the Wage Act of 2023 was introduced in the U.S. House of Representatives and the U.S. Senate on July 25, 2023. The primary goal of this legislation is to address the issue of stagnant wages and ensure that all working people earn a living wage.
Additionally, the act seeks to address the issue of subminimum wages for specific groups of workers. It proposes to gradually eliminate the lower wages for tipped workers, workers with disabilities, and youth workers. These groups have often been subject to discriminatory wage practices, and the act aims to ensure that all workers covered by the FLSA are eventually at the same wage level.
The impact of the Raise the Wage Act of 2023 is expected to be significant. According to estimates, it will affect approximately 27.8 million workers across the country, or about 19% of the U.S. workforce. It will provide an additional $86 billion annually in wages for the lowest-paid workers, with the average affected worker receiving an extra $3,100 per year.
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Frequently asked questions
Yes, the minimum wage was created by Congress under the Fair Labor Standards Act (FLSA) in 1938. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roosevelt, but was later found to be unconstitutional.
The FLSA established a base level of pay that employers are required to pay certain employees. The Act also set a 44-hour work week and protected children from prematurely entering the workforce. The FLSA has been amended multiple times since its inception, with added exemptions and expansions specifying which groups of workers are covered.
The current federal minimum wage is $7.25 per hour. However, some states have their own minimum wages, which may be codified in state statutes or constitutions. In August 2022, 30 states and the District of Columbia had minimum wages higher than the federal minimum.
