U.S. Federal Minimum Wage History
The minimum wage is the lowest dollar amount an employer can pay an employee in the United States. It is mandated through a federal minimum that is determined by the Congress of the United States. Workers in the U.S. have seen a minimum wage in a variety of forms since 1912. As of July 2007, states may make their own minimum wage as long as it is not less than the federally created wage.
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Early Minimum Wage Laws
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Massachusetts was the first state to produce a minimum wage law. In 1912, the Massachusetts State Legislature created a non-compulsory minimum wage that only applied to women and children as a response to the growing Progressive movement of the era. Thirteen states and the District of Columbia followed Massachusetts’ lead. Ultimately, these wage laws were ruled unconstitutional by the pro-business Supreme Court of the time.
The First National Minimum Wage
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In response to the Stock Market Crash of 1929 and the subsequent Great Depression, the National Industrial Recovery Act of 1933 brought on the first nationwide minimum wage requirement. The Supreme Court ruled the 25-cent wage unconstitutional in 1935 after the landmark Schechter Poultry Company vs. The United States case overturned numerous clauses of President Franklin D. Roosevelt’s New Deal.
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The Fair Labor Standards Act
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The minimum wage was again established following the Fair Labor Standards Act in 1938. As before, the wage was set at 25-cents an hour ($3.77 in 2009 dollars). Since the defeat of the original minimum wage in 1935, the mood in the country had turned towards pro-regulation. Since the act was put into law, Congress has raised the minimum wage several times as it deemed fit in regards to the current economic situation of the country. The year 1968 saw the highest purchasing power for the minimum wage at $1.60 ($9.77 in 2009 dollars).
Wage Freeze
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After a slow but steady increase throughout the 20th century, the minimum wage was frozen at $3.35 from January 1981 until April 1990. Following another period of slow increases, the wage was again frozen at $5.15 from September 1, 1997 until July 23, 2007. This is the current record for the amount of time the minimum wage has been frozen.
The Current Minimum Wage Law
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On July 23, 2007, Congress allowed the minimum wage to be determined by the individual states as long as it did not go below the federally mandated wage. The next day, 30 states introduced their own minimum wage standards. These minimums were determined based on the cost of living in the individual state as well as the strength of the economy and individual businesses. The national minimum wage has increased by 70-cents each year since 2007, resulting in the wage being at $7.25 an hour as of 2009.
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