Origins

• Minimum wage legislation was first introduced in Australia and New Zealand in the 19th century in response to widespread labor unrest and strikes. In 1912, Massachusetts became the first U.S. state to adopt a minimum wage law although coverage was limited to women and children. During the Great Depression, the need for wage reform became more urgent as many American workers saw their standard of living deteriorate. Franklin D. Roosevelt took up the cause during the 1936 presidential campaign and rode to the White House on a wave of popular support for reform.
  
  

Federal Minimum Wage Legislation

• In 1923, the U.S. Supreme Court struck down a minimum wage law in Washington, D.C. on the grounds that it prevented workers from setting their own price for their labor. To deliver on his campaign promises, Roosevelt needed to find a constitutional solution that would hold up in court. The result of his efforts was the Fair Labor Standards Act, passed by Congress in 1938. The FLSA set the minimum wage at 25 cents per hour, limited the standard work week to 44 hours and banned child labor.
  
  

Changes Over Time

• Over the years, the minimum wage has been raised incrementally, but its real dollar value has not always kept up with inflation. After peaking in 1968, its real dollar value fell by 23 percent from 1973 to 2007. During the same time period, corporate profits rose by 50 percent, widening the income gap between rich and poor. In 2007 and 2008, the minimum wage rate was increased from $5.15 to $6.55 per hour. In July of 2009, it was raised an additional 70 cents to $7.25 per hour. In 1966, coverage was extended to include some farm workers, as well as state and local government workers. In the 1970s, the law was expanded further to include preschool and domestic workers.
  
  

Exceptions and Exemptions

• Not everyone is covered equally under the Fair Labor Standards Act. For a 30 year period starting in 1966, tipped employees, such as restaurant workers, received a fixed percentage of the minimum wage rate. In 1996, however, the wage rate for tipped workers was frozen under federal law at $2.13 per hour and would not be included in future minimum wage adjustments for inflation. Another notable exception under the federal minimum wage law is hand-harvest farm laborers, who in certain cases are paid on a piece-rate basis. Contractors, volunteers and some charity workers are also exempt.
  
  

Minimum Wage Legislation at the State Level

• Since 1938, many U.S. states have adopted their own minimum wage laws. In most cases, the state minimum wage rate is the same as the federal rate. In 14 states as well as the District of Columbia, the state minimum wage is higher. In the five states whose minimum wage rates fall below the federal level, workers are still entitled to the national minimum wage.
  
  

Significance

• The effectiveness of the minimum wage law has been the subject of debate since its inception. Opponents of the law have argued that the minimum wage contributes to unemployment because it makes the cost of hiring workers prohibitive. Supporters of the law contend that it offers indispensable protection to the most vulnerable members of the workforce and that the minimum wage actually stimulates the economy by putting more money into the pockets of low wage earners. Despite the controversy, there is no question that the Fair Labor Standards Act has had a lasting impact on labor reform. Most significantly, the act establishes in law the principle that all workers should be guaranteed "a minimum standard of living necessary for health, efficiency and general well being." That principle stands to this day.