History of the Minimum Wage

The first minimum wage law in the United States was established in 1912 in the state of Massachusetts. Several states would follow suit over the next two decades, and, in 1938—at the height of the Great Depression—Congress established the first federal minimum wage as part of the Fair Labor Standards Act (FLSA).

The stated purpose of the federal minimum wage is to keep America’s workers out of poverty and to increase consumer purchasing power in order to stimulate the economy. But because the law did not include automatic cost of living adjustments, legislative action is needed to raise the nation’s wage floor and prevent inflation from eroding its real value over time.

Today, the vast majority of states (45, plus the District of Columbia) have minimum wage laws on the books. Of those, 29 states plus D.C. have wage rates higher than the federal minimum wage. In 21 states, the minimum wage is equal to the federal minimum wage, which was last increased to $7.25 per hour in 2009 by way of legislation passed by Congress in 2007 and signed by then-President George W. Bush.

Minimum wage laws have only existed in the U.S. since the early part of the 20th century. The fight to assure a strong and livable wage floor has a history – one that continues to this day.

Without an automatic, annual cost of living adjustment to the federal minimum wage, its real value erodes over time due to inflation. At $7.25, the real value of the federal minimum wage has declined by about 25 percent since 1968.

A sub-minimum wage for tipped workers is allowed in most states. The federal minimum wage for tipped workers, such as waiters, waitresses, nail salon workers and parking attendants, is $2.13 per hour — a rate that was set when it was last raised in 1991. Some states have higher minimum wages for tipped workers; in several states the full minimum wage also applies to tipped workers.

The most recent attempts to raise the federal minimum wage have failed in Congress. In 2013, House Republicans voted unanimously to defeat a bill to raise the minimum wage in stages to $10.10 per hour. In 2014, a filibuster by Senate Republicans blocked a similar measure from getting a vote even though a majority of Senators supported the bill. Since then, no specific minimum wage increase has been allowed a hearing or a vote in Congress.