A short history of the American minimum wage

Most people assume the minimum wage has always been part of the American economy, like the income tax or the Post Office. It hasn't. For most of the country's history, wages were set by the people paying and the people working, and the idea that a legislature should fix a floor under them was considered by many judges to be flatly unconstitutional. The national minimum wage is younger than the parking meter.

How it came to exist is worth knowing, partly because the story is genuinely interesting and partly because it complicates the way the policy is usually defended. The minimum wage did not arrive as a single act of compassion. It came out of a mix of humanitarian reform, labor-market protectionism, constitutional brinkmanship, and — in some quarters — ideas about race and "fitness" that almost everyone today would find repugnant. All of those strands are part of the record. None of them, on its own, settles whether the policy works.

The Progressive Era experiment

The American minimum wage was an import. New Zealand and the Australian state of Victoria had experimented with legal wage-setting in the 1890s, and Britain adopted trade boards for "sweated" industries in 1909. American reformers — the National Consumers League under Florence Kelley, settlement-house workers, and a new generation of academic economists — watched closely.

Massachusetts moved first, in 1912. Its law was strikingly mild by modern standards: a commission could recommend minimum rates for women and children in particular industries, and the main enforcement tool was publicity — publishing the names of employers who refused to comply. Other states followed quickly, and many went further, making their rates mandatory. Within roughly a decade, more than a dozen states and the District of Columbia had some kind of minimum wage law on the books.

Nearly all of these early laws applied only to women and minors. That was partly legal strategy. In Muller v. Oregon (1908), the Supreme Court had upheld maximum-hours limits for women on the theory that women needed special protection, and reformers built on that opening rather than trying to regulate men's wages directly. But it also reflected a widely held view of who belonged in the workforce, and on what terms — a point we return to below.

Twenty-five years in court

The early state laws ran straight into the constitutional doctrine of the day, usually called "liberty of contract." Under it, courts treated the right of workers and employers to agree on terms as a liberty protected by the due process clauses of the Fifth and Fourteenth Amendments.

The decisive test came in Adkins v. Children's Hospital (1923). Congress had set up a board to fix minimum wages for women and children in the District of Columbia. The Supreme Court struck it down. Justice George Sutherland's majority opinion argued that a wage floor detached from the value of the work performed amounted to an arbitrary taking from the employer — and, notably, that the recent Nineteenth Amendment made it harder to justify treating adult women as legally less capable of bargaining than men. Chief Justice William Howard Taft and Justice Oliver Wendell Holmes Jr. dissented.

Adkins effectively froze the movement. Some states kept their laws on paper, but enforcement withered. The Court reaffirmed the ruling as late as 1936, striking down a New York law in Morehead v. New York ex rel. Tipaldo. Meanwhile, the New Deal's industry wage codes under the National Industrial Recovery Act fell when the Court struck down that law in 1935.

Then, in 1937, the Court reversed itself. West Coast Hotel Co. v. Parrish involved Elsie Parrish, a chambermaid at a hotel in Wenatchee, Washington, who sued for back pay under the state's minimum wage law for women. By a 5–4 vote, with Chief Justice Charles Evans Hughes writing, the Court upheld the law and expressly overruled Adkins. The decision arrived weeks after President Franklin Roosevelt announced his plan to enlarge the Court, which is why Justice Owen Roberts's vote is often called "the switch in time that saved nine" — though historians still debate how much the court-packing threat actually influenced it, since the case had been argued and the vote reportedly taken before the plan was announced.

The motives historians found

The textbook account of the minimum wage stops at the humanitarian motive: reformers saw women working long hours in sweatshops for wages that could not support them, and they wanted a remedy. That motive was real, and it drove people like Florence Kelley for decades. But economic historians have documented a second strand of argument that is much less comfortable.

The most thorough account is Thomas C. Leonard's Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era (Princeton University Press, 2016), building on his earlier article in the Journal of Economic Perspectives. Leonard, an economist at Princeton, shows that a number of prominent Progressive-era economists understood perfectly well that a binding wage floor would price some workers out of jobs — and that some of them presented this as a benefit. In their framing, a minimum wage would sort the labor force, removing so-called "unemployables" (a category that, in the writing of the era, could include immigrants, the disabled, and others deemed "unfit") and protecting the wages of "deserving" native-born workers. Leonard traces versions of this reasoning to figures including the British Fabian Sidney Webb and to several American economists active in the reform movement.

A related argument concerned women. Some advocates — again, documented by Leonard and others — saw minimum wage laws for women as a way to discourage women's paid work and protect male breadwinners' wages, not only as a way to raise women's pay.

A parallel story runs through federal construction policy. The Davis-Bacon Act of 1931, named for Senator James Davis and Representative Robert Bacon, requires contractors on federal construction projects to pay "prevailing wages," in practice often union scale. Its stated purpose was to stop low-bid contractors from undercutting local wages during the Depression. Legal historian David Bernstein and others have documented that the congressional debate also included explicit complaints about Southern contractors bringing Black workers north to compete with local white labor. Defenders of the law dispute that this was its central purpose, and the Act remains in force today.

1938: twenty-five cents

With Parrish settled, Roosevelt pushed for a national standard. After a long fight in Congress — Southern members in particular worried that a uniform national floor would erase their region's lower-wage advantage — the Fair Labor Standards Act was signed in June 1938 and took effect that October.

The FLSA set a federal minimum wage of 25 cents an hour, scheduled to rise to 40 cents over several years, along with a standard workweek that would step down to 40 hours with overtime pay beyond it, and limits on child labor. For the first time, the floor applied to men as well as women.

It did not apply to everyone. The original Act covered workers in interstate commerce and manufacturing — by the Department of Labor's own historical accounts, roughly a fifth of the labor force. Agricultural workers and domestic servants were among the large groups excluded. Because those occupations employed a large share of Black workers in the South, historians such as Ira Katznelson have argued that the carve-outs were part of the price of Southern Democratic votes and had a racially disparate effect by design. Other scholars argue that administrative difficulty and political economy explain the exclusions without requiring racial intent. The disparate effect itself is not seriously disputed; the motive is.

The long road to $7.25

Since 1938, Congress has raised the federal minimum in irregular bursts, usually in two- or three-step increases, separated by long stretches of inaction. A few landmarks, from the Department of Labor's historical table:

• 1950: 75 cents, a large jump after the postwar inflation.
• 1956: $1.00.
• 1966 amendments: coverage expanded substantially, reaching many retail and service workers and, for the first time, some farm workers. The rate reached $1.60 in 1968 — the highest value of the federal minimum after adjusting for inflation, a fact that features heavily in today's debates.
• 1974–1981: a series of increases during the high-inflation years, ending at $3.35.
• 1981–1990: nine years with no change, as inflation steadily eroded the real value of $3.35.
• 1990–1997: step increases to $4.25 and then $5.15.
• 2007–2009: three steps — $5.85, $6.55, and finally $7.25 in July 2009.

And there it has stayed. As of this writing, the federal minimum has been unchanged for more than seventeen years, by far the longest stretch since the FLSA was enacted. Proposals to raise it to $15 passed the House in 2019 but have not cleared the Senate.

Two things stand out in this record. First, the coverage expansions mattered as much as the rate increases; the federal floor today reaches a much larger share of the workforce than the 1938 law did. Second, the debates over each increase have followed a remarkably consistent script: supporters point to the eroded real value of the wage, opponents warn about job losses for the least-experienced workers. Economists from Milton Friedman onward argued that the law's costs fell hardest on Black teenagers in particular — an argument about effects rather than intent, and one that we cover in more detail elsewhere.

The states take over

The long federal freeze changed where the action is. States had always been free to set higher floors, and some did, but after 2009 the movement shifted decisively to state capitols, ballot initiatives, and city councils.

The turning point was the "Fight for $15" campaign, launched with fast-food worker strikes in 2012. Seattle adopted a phased $15 ordinance in 2014. California and New York passed statewide paths to $15 in 2016. Many states now index their minimums to inflation, so they rise automatically each year, and several have used ballot measures to bypass reluctant legislatures — including in states that are otherwise conservative.

The result is the patchwork described in our 2026 state-by-state guide: twenty states still at the federal $7.25, roughly thirty states plus D.C. above it, and eighteen states plus D.C. at or above $15. The minimum wage began as a set of state experiments a century ago; in practice, it has become one again.

What the history does and doesn't tell us

It is tempting, for opponents of the minimum wage, to treat its origins as a trump card: the policy was partly designed to exclude, so it must be bad. That would be a mistake, and a lazy one. Modern supporters of a higher minimum wage are overwhelmingly motivated by a sincere desire to help low-income workers.

But the history does teach something useful. The people who designed the first wage floors understood the core economic mechanism — that a legal minimum above some workers' productivity prices those workers out — far better than the policy's modern marketing admits. Some of them saw that mechanism as a feature. Today's debate is about how large the effect is, under what conditions, and for whom. That is the right debate to have. It is simply worth remembering that the question was on the table from the very beginning.

The deeper lesson may be about coverage and exclusion. At almost every stage — women-only laws, the FLSA's carve-outs, Davis-Bacon's prevailing wages — the wage floor's effects depended on who was inside its protection and who was left to compete from outside. That is still the right question to ask of any proposal today. If the goal is to raise the incomes of low-wage workers without closing doors on the least experienced, there are tools that do it more directly. Our comparison of the minimum wage and the EITC is a good place to start.