In 1831, the U.S. minimum wage was just one quarter per hour. In today’s modern economy, that doesn’t even amount to $5.
It is hard to believe the minimum wage could ever be so low, but since its inception, the minimum wage has struggled to meet the demands of the ever-changing American economy. The federal minimum wage has not increased since 2009 despite incredible inflation, making it near impossible to live independently on minimum wage.
Minimum wage is rarely a direct reflection of the cost of living, making U.S. income and economic disparities a source of contentious debate in Washington and around the country. It continues to be a popular topic, as more and more Americans clamor for fair wages in the workplace.
Before we can move forward, however, we must first understand how far we have come. This is the history of the U.S. minimum wage.
Table of Contents
The History of Minimum Wage
In 1831, French silk workers scheduled two walkout strikes over unfair wages. In 1894, New Zealand made history with its new labor law, the first of its kind entitled the Industrial Conciliation and Arbitration Act. It not only set a minimum wage but also made certain mandates, such as employees are prohibited from strikes and walkouts on the job.
It wasn’t long until the U.S. took notice; it just took some time for things to come to fruition. Samuel Grompers was an early American advocate for minimum wage, serving as the president of the American Federation of Labor and advocating for the introduction of a minimum wage that was in line with the cost of living. His efforts were successful first on a state level, with Massachusetts enacting the first minimum wage law in 1912.
It wasn’t long until progress came to a screeching halt. The Supreme Court ruled against minimum wage in the 1923 landmark case Adkins v. Children’s Hospital of D.C., claiming a violation of the Fifth Amendment’s liberty of contract for both employer and employee. This judgment overruled state laws, too.
It wasn’t until 1938 that the very first federal minimum wage was set, priced at just $0.25 an hour. Under this federal mandate, employees were now guaranteed a minimum pay for their work, no matter where they work.
Fair Labor Standards Act
Minimum wage in the United States was largely due to the efforts of President Roosevelt. It was a coveted portion of his New Deal that sought to revitalize the economy after the long, hard Great Depression.
As a part of the Fair Labor Standards Act (FLSA), minimum wage was a groundbreaking measure that made workplace compensation a legal issue. The minimum wage changed again in1949 when Congress voted to increase the minimum wage to 75 cents.
In 1961, the FLSA was adjusted once more and adapted to include more workers under its umbrella. It also made certain new concessions for students who were full-time students, allowing retail and service employers to pay 15% less than the minimum wage.
Change came again in 1963 with President Kennedy’s Equal Pay Act, which further fine-tuned existing laws to provide coverage regardless of gender.
The 1966 amendment introduced some major changes:
- Included state and local government employees;
- Increased the minimum wage by $1.60 for some employees;
- Expanded coverage for qualifying farmworkers.
Congress again tightened regulations to include businesses earning $500,000 or more in a fiscal year. Additionally, employees of schools, hospitals, and nursing homes were protected, as well as government agencies and those companies conducting interstate commerce.
2007 was the last major change to the minimum wage, with the introduction of the Fair Minimum Wage Act. It increased the minimum wage on an incremental basis, from $5.85 on July 24, 2007 to $7.25 just two years later.
For the first time, it also incorporated American Samoa and the Commonwealth of Northern Mariana Islands.
Minimum Wage History Chart
The minimum wage peaked in 1968 with its highest economic value of $1.60. In modern currency, this equals $11.86 an hour. It would be the last time that the minimum wage accurately reflected the cost of inflation.
|Effective Date||Unadjusted Rate
Amendments 1961, 1966, and subsequent
|October 24, 1938||$0.25|
|October 24, 1939||$0.30|
|October 24, 1945||$0.40|
|January 25, 1950||$0.75|
|March 1, 1956||$1.00|
|September 3, 1961||$1.15||$1.00|
|September 3, 1963||$1.25|
|September 3, 1964||$1.15|
|September 3, 1965||$1.25|
|February 1, 1967||$1.40||$1.40
|February 1, 1968||$1.60||$1.60
|February 1, 1969||$1.30 Nonfarm
|February 1, 1970||$1.00 Nonfarm|
|February 1, 1971||$1.60 Nonfarm|
|May 1, 1974||$2.00||$2.00
|January 1, 1975||$2.10||$2.10
|January 1, 1976||$2.30||$2.30
|January 1, 1977||$2.30 Nonfarm
|January 1, 1978||$2.65 for all covered, nonexempt employees|
|January 1, 1979||$2.90 for all covered, nonexempt employees|
|January 1, 1980||$3.10 for all covered, nonexempt employees|
|January 1, 1981||$3.35 for all covered, nonexempt employees|
|April 1, 1990||$3.80 for all covered, nonexempt employees|
|April 1, 1991||$4.25 for all covered, nonexempt employees|
|October 1, 1996||$4.75 for all covered, nonexempt employees|
|September 1, 1997||$5.15 for all covered, nonexempt employees|
|July 24, 2007||$5.85 for all covered, nonexempt employees|
|July 24, 2008||$6.55 for all covered, nonexempt employees|
|July 24, 2009||$7.25 for all covered, nonexempt employees|
Although the government sets a federal minimum wage, it is also important to note that there may be an additional state minimum wage, as well.
The Department of Labor reported in 2019 that Washington D.C. and twenty-nine states enforce a higher minimum wage than the federal wages. Eight other states use the cost of living as a measuring stick for their minimum wage.
Minimum Wage Laws
As a U.S. worker, you enjoy certain rights under the Fair Labor Standards Act. This includes payment of the applicable minimum wage, as well as overtime pay for any time worked over 40 hours within a single workweek. The FLSA also includes specific restrictions regarding child labor laws to ensure that minors are not exploited in the workplace.
Certain exemptions apply for specific parties such as full-time students, disabled workers, and tipped workers who rely on mostly tipped pay. State and local government employees may also be subject to special exemptions regarding minimum pay, particularly where fire protection, law enforcement, and volunteer services are concerned.
Even if the federal minimum wage remains low, you can still find ways to earn the living wage in your state. It’s simply a matter of staying informed of the changing minimum wage in your state with our minimum wage state guides for everyone from small business owners to students.
Image Source: https://depositphotos.com/
Want a FREE Credit Evaluation from Credit Saint?
A $19.95 Value, FREE!