The Evolution Of Minimum Wage Laws: A Historical Perspective

The minimum wage was established in the US in 1938 through the Fair Labor Standards Act (FLSA). The bill was signed into law by President Franklin Delano Roosevelt on June 25, 1938, and it became effective on October 24, 1938. The original minimum wage was set at 25 cents per hour. The FLSA was created in response to the Great Depression, which saw about 25% of workers unemployed, and many others struggling to secure housing and food. The bill was intended to improve labor standards and create a minimum standard of living to protect the health and well-being of employees. Since its inception, the FLSA has been amended multiple times, with the latest federal minimum wage increase taking effect in July 2009, at $7.25 per hour.

The Fair Labor Standards Act of 1938

The FLSA was enacted by the 75th United States Congress and signed into law by President Franklin D. Roosevelt on June 25, 1938. The act set the minimum hourly wage at 25 cents and the maximum workweek at 44 hours. It applied to industries whose combined employment represented about one-fifth of the labor force.

The FLSA was the culmination of years of effort by labor advocates to establish a minimum wage at the federal level. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, which was signed into law by President Roosevelt but later found to be unconstitutional. In 1938, a revised version of a proposal by Senator Hugo Black was passed. This revision was supported by several notable figures, including Frances Perkins, the Secretary of Labor, and Clara Mortenson Beyer from the Bureau of Labor Standards within the United States Department of Labor. The act adopted an eight-hour day and a forty-hour workweek, and allowed workers to earn wages for up to four hours of overtime.

The FLSA was enacted under Congress's authority in Article I, Section 8 of the U.S. Constitution, which grants Congress the power to "regulate commerce...among the several states." The act was designed to stabilize the post-depression economy, protect workers, and create a minimum standard of living to safeguard the health and well-being of employees. It was also intended to aid the lowest-paid workers in the nation, who lacked the bargaining power to secure a minimum subsistence wage for themselves.

The FLSA's requirements apply only to "employees" and not to independent contractors. Congress exempted certain employees from the minimum wage provisions, including executives, administrators, professionals, and outside salespersons. The act authorizes 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.

The FLSA has been amended numerous times since its enactment to extend its coverage, raise the minimum wage, and make other changes.

Amendments to the Act

The Fair Labor Standards Act (FLSA) of 1938 established the first federal minimum wage in the US at 25 cents an hour. Since then, the minimum wage has been amended several times, with the most recent changes taking place in 2009, when the Fair Minimum Wage Act was passed. Here are some of the key amendments to the Act:

1940 Amendment:

On June 26, 1940, an amendment was enacted to address the potential negative impact of the minimum wage on the economies of Puerto Rico and the Virgin Islands. It established special industry committees to determine minimum wage levels for these territories, which could be lower than the rates in the rest of the US.

1947 Amendment:

The Portal-to-Portal Act, which amended the FLSA on May 14, 1947, clarified what constitutes compensable hours worked under the Act. This amendment resolved issues related to underground travel in coal mines and make-ready practices in factories.

1949 Amendment:

In 1949, the minimum wage was increased from 40 cents to 75 cents per hour for all workers. Additionally, minimum wage coverage was expanded to include workers in the air transport industry. This amendment also eliminated industry committees, except in Puerto Rico and the Virgin Islands.

1955 Amendment:

The minimum wage was further increased to $1 per hour in 1955, with no changes to coverage.

1961 Amendment:

The 1961 amendments significantly expanded the scope of the FLSA in the retail trade sector. The minimum wage for previously covered workers was increased, and a new minimum wage was set for workers newly subject to the Act. Retail and service establishments were also allowed to employ full-time students at wages up to 15% below the minimum with proper certification.

1966 Amendment:

The 1966 amendments further broadened the coverage of the FLSA by lowering the enterprise sales volume test. Additionally, coverage was extended to public schools, nursing homes, laundries, and the construction industry. Farms were also included for the first time if their employment reached a certain threshold. The minimum wage was increased for newly covered non-farm workers, with incremental increases until it reached $1.60 in February 1971.

1974 Amendment:

In 1974, the FLSA was amended to include non-supervisory employees of federal, state, and local governments, as well as many domestic workers. However, in 1976, the Supreme Court held that the minimum wage and overtime provisions of the FLSA could not apply to state and local government employees engaged in traditional government functions.

1977 Amendment:

The 1977 amendments set a new uniform wage schedule for all covered workers, eliminating the separate lower minimum for large agricultural employers. The minimum wage was increased, and provisions were eased for establishments employing students at a lower wage rate. Additionally, special waivers were allowed for children aged 10 to 11 years old working in agriculture.

1989 Amendment:

The 1989 amendments established a single annual dollar volume test of $500,000 for enterprise coverage of both retail and non-retail businesses. These amendments eliminated the minimum wage and overtime pay exemption for small retail firms. The minimum wage was raised to $3.80 per hour starting in April 1990 and to $4.25 in April 1991. A training wage provision was also established for employees under the age of 20, which expired in 1993.

1996 Amendment:

The 1996 amendments increased the minimum wage to $4.75 per hour in October 1996 and to $5.15 in September 1997. They also established a youth sub-minimum wage of $4.25 per hour for newly hired employees under 20 years old during their first 90 days of employment. Additionally, the tip credit provisions were revised, and the hourly compensation test for computer-related professional employees was set at $27.63 per hour.

2007 Amendment:

The Fair Minimum Wage Act of 2007, passed in 2009, increased the minimum wage in three steps from $5.15 per hour in 2007 to $7.25 per hour in 2009. This amendment also included phased increases to the minimum wages in the Commonwealth of Northern Mariana Islands and American Samoa.

The Raise the Wage Act of 2023

• Gradually raising the federal minimum wage from $$7.25 to $17 by 2028, which will give around 28 million Americans a pay raise.
• Indexing future increases in the federal minimum wage to median wage growth to maintain its value over time and prevent erosion due to inflation.
• Ensuring that tipped workers receive at least the full federal minimum wage by phasing out the subminimum wage for tipped workers, allowing them to receive consistent pay without relying solely on tips.
• Phasing out the subminimum wage for teen workers to guarantee that they are also paid at least the full federal minimum wage.
• Eliminating subminimum wage certificates for workers with disabilities, providing them with competitive employment opportunities and enabling their fuller participation in their communities.

The act has received support from various Democratic members of Congress, with 146 original House co-sponsors and 29 original Senate co-sponsors. The Raise the Wage Act of 2023 is part of a broader movement to increase the minimum wage and address income inequality in the United States.

Racial impact of the minimum wage

The minimum wage was first introduced in the US in 1933, as part of the National Industrial Recovery Act, but this was later deemed unconstitutional. The Fair Labor Standards Act of 1938 established a federal minimum wage of 25 cents an hour. This legislation was intended to stabilise the post-depression economy and protect workers, setting a minimum standard of living to safeguard the health and well-being of employees.

The minimum wage has been a critical tool for decreasing the wage divide between Black and White workers. Black Americans are overrepresented among low-wage workers, and so are disproportionately impacted by changes to the minimum wage. Raising the minimum wage to $15 an hour, for example, would increase the earnings of 38.1% of Black workers, compared to 23.2% of White workers.

Historically, the minimum wage has excluded sectors with a high proportion of Black workers, such as farming and domestic services. The Fair Labor Standards Act of 1938, for example, focused on industries such as transportation, finance, manufacturing, and wholesale trade, reflecting the racialised and gendered conceptions of work at the time.

However, amendments to the Act in 1961 and 1966 extended coverage to workers in agriculture, nursing homes, laundries, hotels, restaurants, schools, and hospitals. This expansion of the minimum wage had a positive effect on Black workers, as earnings growth in the newly covered sectors jumped, relative to earnings in the sectors that had been covered by the initial 1938 Act. The minimum wage expansion also led to a decline in the racial income divide, explaining more than 20% of the fall in both the racial earnings and income divides experienced between 1965 and 1980.

Today, Black and Latinx workers are more likely to experience wage theft and to be paid less than the statutory minimum wage. Black workers are 50% more likely than White workers to experience a minimum wage violation, and Latinx workers are 84% more likely.

A higher federal minimum wage would help to reduce poverty rates for Black and Latinx families and address racial wage inequality.

State minimum wage levels

In the United States, the minimum wage is set by U.S. labor law and a range of state and local laws. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, but was later found to be unconstitutional. In 1938, the Fair Labor Standards Act (FLSA) established it at 25 cents an hour.

The minimum wage laws establish a base level of pay that employers are required to pay certain covered employees. In addition to a federal minimum wage, some states also have their own minimum wages, codified either in a state statute or in the state's constitution. States are broken up into four classifications for minimum wage:

• States with minimum wages higher than the federal government's
• States with statutes that explicitly match the federal minimum wage
• States without any sort of minimum wage statute (which results in that state's minimum wage automatically matching the minimum wage of the federal government)
• States that explicitly set out a minimum wage that is lower than the federal government's

Municipalities, cities, or counties may also have local minimum wage laws if the laws are compliant with federal and state laws. When an employee is subject to valid local, state, and federal minimum wage laws, the employee is entitled to the highest of the minimum wages.

The first successful attempts at using minimum wage laws to improve the problem of non-living wages occurred in the Australian state of Victoria in 1896. In the United States, the earliest minimum wage laws were state laws focused on women and children. By 1923, fifteen U.S. states and the District of Columbia had passed minimum wage laws, with pressure being placed on state legislatures by the National Consumers League in a coalition with other women's voluntary associations and organized labor.

• Alabama: $11.91 since January 1, 2025.
• Alaska: $12.84 since January 1, 2025.
• Arizona: $14.70 (non-rural counties) and $13.70 (rural counties) since January 1, 2025.
• Arkansas: $13.00 since January 1, 2025.
• California: $17.27 since July 1, 2024.
• Colorado: $15.57 since January 1, 2025.
• Connecticut: $15.00 since January 1, 2025.
• Delaware: $12.00 since October 1, 2024.
• Florida: $12.00 since September 30, 2024.
• Georgia: $7.25 since January 1, 2025.
• Hawaii: $12.84 since January 1, 2025.
• Idaho: $7.25 since January 1, 2025.
• Illinois: $15.00 since January 1, 2025.
• Indiana: $7.25 since January 1, 2025.
• Iowa: $7.25 since January 1, 2025.
• Kansas: $11.00 since January 1, 2025.
• Kentucky: $10.75 since January 1, 2025.
• Louisiana: $11.50 since January 1, 2025.
• Maine: $14.70 since January 1, 2025.
• Maryland: $15.00 since January 1, 2025.
• Massachusetts: $15.00 since January 1, 2025.
• Michigan: $11.50 since January 1, 2025.
• Minnesota: $12.00 since January 1, 2025.
• Mississippi: $7.25 since July 24, 2009.
• Missouri: $12.00 since January 1, 2023.
• Montana: $12.84 since January 1, 2025.
• Nebraska: $12.00 since January 1, 2025.
• Nevada: $12.75 since July 1, 2023.
• New Hampshire: $7.25 since January 1, 2025.
• New Jersey: $15.00 since January 1, 2024.
• New Mexico: $12.00 since January 1, 2023.
• New York: $14.20 since December 31, 2022.
• North Carolina: $7.25 since January 1, 2025.
• North Dakota: $8.75 since January 1, 2025.
• Ohio: $10.70 since January 1, 2025.
• Oklahoma: $7.25 since January 1, 2025.
• Oregon: $15.50 since July 1, 2024.
• Pennsylvania: $7.25 since January 1, 2025.
• Rhode Island: $15.00 since January 1, 2025.
• South Carolina: $7.25 since July 24, 2009.
• South Dakota: $11.50 since January 1, 2025.
• Tennessee: $7.25 since January 1, 2025.
• Texas: $7.25 since September 1, 2009.
• Utah: $7.25 since January 1, 2007.
• Vermont: $13.19 since January 1, 2025.
• Virginia: $12.00 since January 1, 2025.
• Washington: $15.74 since January 1, 2025.
• West Virginia: $8.75 since January 1, 2015.
• Wisconsin: $7.25 since January 1, 2025.
• Wyoming: $7.25 since January 1, 2021.

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