The History of Minimum Wage

Minimum wage is the lowest hourly wage that an employee can earn. The concept of minimum wage became a law in the United States in 1938 under the Fair Labor Standards Act. (Photo courtesy of Creative Commons)

In 1938, the United States Congress passed the Fair Labor Standards Act.  This law guarantees overtime pay, record keeping, provides youth employment standards and establishes minimum wage.  

Minimum wage is the lowest hourly rate the government says an employer can pay their employees.  The first minimum wage set by the government was $0.25 per hour in 1938.  Over the last 83 years, the national minimum wage rate increased by 7 dollars, guaranteeing employees make at least $7.25 per hour.

The purpose of minimum wage, according to Cornell University, was to stabilize the post-depression economy and protect the workers in the labor force. Minimum wage created a minimum standard of living to protect the health and well-being of employees.  

Over time minimum wage grew.  The noticeable trend was the more money that was being made, the more money there was being spent by the average American.  This balanced out the American economy, even during times of rapid inflation.



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