The Ups and Downs of Minimum Wage Policy: The Fair Labor Standards Act in Historical Perspective

• Published date: 01 October 2015
• DOI: http://doi.org/10.1111/irel.12105
• Author: Michael Reich
• Date: 01 October 2015

The Ups and Downs of Minimum Wage Policy:

The Fair Labor Standards Act in Historical

Perspective

*

MICHAEL REICH

Introduction

I provide here a historical overview of the impact of minimum wage legisla-

tion, enacted over 75 years ago in the Fair Labor Standards Act (FLSA) of

1938 and as amended subsequently on numerous occasions.

Given elected officials’caution today about raising the minimum wage in

bad economic times, the timing of the passage of the FLSA is remarkable.

After a long and heated political debate, Congress passed the FLSA in 1938,

establishing a nationwide minimum wage of $0.25 per hour, with increases to

$0.30 in 1939 and to $0.40 in 1945. Importantly, the federal minimum wage

established a floor, not a ceiling. States and localities could enact higher mini-

mum wages—although none did until the 1980s.

Similar to much other landmark legislation, the initial law represented a

compromise with significant exemptions, many of which were closed only in

subsequent decades. Nonetheless, in his Fireside Chat of June 24, 1938, just

before he signed the bill, President Roosevelt had no doubts about the impor-

tance of the FLSA both for raising living standards and its effects on the econ-

omy. Roosevelt articulated these two key points as follows:

Except perhaps for the Social Security Act, it [the FLSA] is the most

far-reaching, far-sighted program for the benefit of workers ever

adopted here or in any other country. Without question it starts us

toward a better standard of living and increases purchasing power to

buy the products of farm and factory.

Do not let any calamity-howling executive with an income of

$1,000.00 a day, who has been turning his employees over to

the Government relief rolls in order to preserve his company’s

*The author’saffiliation is University of California Berkeley, Berkeley, California. Email: mreich@

econ.berkeley.edu.

This article is updated and revised from testimony to the Committee on Health, Education, Labor and

Pensions, U.S. Senate, June 25, 2013, “Building a Foundation of Fairness: 75 Years of the Federal Mini-

mum Wage,”on the 75th anniversary of the signing of the Federal Labor Standards Act of 1938.

INDUSTRIAL RELATIONS, Vol. 54, No. 4 (October 2015). ©2015 Regents of the University of California

Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

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