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History of the Minimum Wage

Minimum wage laws have become controversial in recent months with increased lobbying for a raise in both state and federal minimum wage rates. The minimum wage is the minimum amount of money an employer can pay an employee per hour. Employees can be classified as exempt (paid a salary), or non-exempt (paid an hourly wage). Non-exempt employees are covered by minimum wage laws under the Fair Labor Standards Act (FLSA). In the United States, there is a federal minimum wage that applies to all non-exempt employees in the country. In addition, individual states can apply a state-wide minimum wage provided that this rate is not less than the federal standard.

Beginnings

In the 1930s, employment standards in the United States were not subjected to many federal standards. There were few regulations regarding child employees, maximum weekly work hours, workplace safety, health standards, or minimum wages. However, after a series of significant and sometimes violent employee strikes, organizations such as the Congress of Industrial Organizations (CIO) called for significant changes in federal labor laws and regulations in order to protect employees.

In 1932, Alabama Senator Hugo Black drafted a far-reaching act known as the Fair Labor Standards Act. This act was written to regulate work hours and wages by enacting a maximum number of weekly work hours and a minimum hourly wage. In 1938, as part of the New Deal legislation, president Franklin D. Roosevelt signed the FLSA into law. By 1945, FLSA required a maximum workweek of 40 hours and a minimum wage of 40 cents per hour.

Revisions

The Fair Labor Standards Act might have appeared to be straightforward and a positive addition to federal employment laws, however, the law proved to be controversial. In 1946, a Supreme Court decision began the debate on exactly what type of work was considered to be included in the FLSA mandates. By 1947, the Portal-to-Portal Act was designed to specify exactly what type of work was included in FLSA.

In the 1960s, further controversy arose when women began to demand compensation equal to the rate that men received for the same work. The Equal Pay Act of 1963 further amended FLSA, requiring that gender should not determine the rate of pay and that both male and female employees were protected under FLSA mandates.

Inflation Adjustments

The federal minimum wage rate has been increased several times in order to keep up with inflation and other economic issues. In 1974, domestic workers were included in the FLSA for the first time. In addition, the minimum wage was raised to $2.30 per hour. From 1977 through 1981, the rate was increased yearly to $3.35 an hour. In addition, tipped employees saw changes in their compensation requirements to account for the fact that tips often drastically increased employee wages.

In 1990, minimum wage increased to $4.25 an hour in an amendment which also enacted a training wage for new employees under 20 years of age. In 1996, amendments to FLSA detached tipped employees from minimum wage increases while also increasing the federal minimum wage to $5.15 an hour. By 2007, President George Bush signed the Fair Minimum Wage Act of 2007 into law. This law once again increased the minimum wage, making it $7.25 an hour. Today, the debate on appropriate minimum wage rates continues with another increase possible within the next several years.

Last Updated: May 04, 2015