Creation of the Minimum Wage

The Fair Labor Standards Act of 1938, signed into law by President Franklin D. Roosevelt, established the federal minimum wage at 25 cents per hour, with a maximum workload of 44 hours and a few other labor protections. By 2010, the federal minimum wage had risen to $7.25 an hour. Many states have created their own wage protection laws at a rate higher than the federal mandate. Minimum wage laws have been the source of bickering and political debate throughout their history.


A minimum wage law, whether mandated by the federal or state government, establishes the least amount an employer can pay certain employees. Some categories of employees, such as babysitters, executives and outside commissioned salespeople, are exempt from the federal minimum wage law but may be protected by a state law. The Fair Labor Standards Act includes a federal penalty of up to $11,000 and various civil penalties for and financial restitution from an employer who fails to abide by its provisions. The federal government requires employers to post the basics of the federal law on a large poster in the workplace.

Arguments for the Minimum Wage

The federal minimum wage was created, in part, to help stabilize the economy and the wages of employees during the Great Depression. Wage protection provides peace of mind for employees by allowing them to count on a fixed amount of pay per hour worked. The minimum wage also prevents the largest employer in a small town from driving wages artificially lower, since workers have few alternatives. Some appreciate the redistributive properties of a minimum wage and state that these laws force wealthy employers to pay employees more, which reduces the gap between the two. Others say a minimum wage is the right thing to do for an unskilled but hard-working employee.

Arguments Against the Minimum Wage

When enacted, a minimum wage law alters the market forces for hiring employees. Opponents say that employers will not hire as many employees as the minimum wage drives pay up, especially in unskilled positions. Minimum wage laws encourage employers to attempt to bypass the system by hiring undocumented workers to fill often unskilled positions at a very low rate, leaving these employees unprotected by federal worker protections unless the employers are caught.

Wage History

Since the federal minimum wage became law in 1938, it has steadily increased. By 1972, the federal minimum wage had risen to $1.60 an hour, and by 1992 it had grown to $4.25. In 2013, the federal minimum wage was $7.25, with discussion of raising it to $9. State minimum wage laws often fill gaps in the federal statutes by covering those not included in the Fair Labor Standards Act and may also include a higher wage. In Washington and Oregon, for example, state minimum wages were $9.19 and $8.95 in 2013, respectively. Wyoming had a minimum wage of $5.15 for those not covered in the federal law.