Money Basics: The history of minimum wage

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There are 2.2 million workers with jobs that pay minimum wage or less in the United States, according to the Bureau of Labor Statistics. Minimum wage is the lowest wage an employer can legally pay its workers. Currently, the federal minimum wage in the US is $7.25 per hour, a rate that hasn’t changed since 2009.

New Zealand was the first country in the world to enact a minimum wage law, in 1894. Australia standardized its minimum wage in 1908, and the United Kingdom followed suit in 1909. In the US, a federal minimum wage wasn’t enacted until 1938, when President Franklin D. Roosevelt passed the Fair Labor Standard Act (FLSA).

The FLSA set the minimum wage at 25 cents per hour. Adjusted for inflation, that that would be $4.19 in 2017. The law also provided overtime pay for workers and protections for children workers, as well as setting record keeping requirements.

Since 1938, the minimum wage has been raised 22 times, by 12 different presidents. Minimum wage can only be increased through congressional action and does not take into account inflation. Democrats introduced legislation in May of 2017 to increase the federal minimum wage to $15 per hour by 2024, but passing this legislation seems unlikely in the current Republican- controlled Congress.

States can set their own minimum wage rates, and 29 states have higher minimum wages than the federal rate. In 2017, 19 states increased their minimum wage to account for cost of living increases. Currently, Massachusetts and Washington State have the highest state minimum wage — $11 per hour.

Not all employers in the US are required to pay minimum wage. For example, “tipped workers,” like waiters and waitresses, can legally be paid less than minimum wage, because their tips would bring their hourly rate close or above the legal minimum wage.

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