How the federal minimum wage got to $7.25
The federal minimum wage arrived with the Fair Labor Standards Act in 1938 at 25 cents an hour, about $5.60 in today's money. Coverage was narrow at first, excluding retail, services and most of the South, and it took amendments in 1961, 1966 and 1974 to reach the workplaces the rate now mainly governs.
The real peak
Adjusted for inflation, the high point was 1968, when the rate was $1.60. That is worth roughly $13 to $14 an hour in current dollars, close to double the present figure. Every increase since has been outrun by prices within a few years, and the frozen period since 2009 is the longest on record.
The pattern of increases
| Period | Movement |
|---|---|
| 1938 to 1968 | Nine increases, real value rising to a peak |
| 1968 to 1981 | Nominal rises that roughly held real value |
| 1981 to 1990 | Frozen for nine years, real value fell by a third |
| 1990 to 1997 | Two increases |
| 1997 to 2007 | Frozen for ten years |
| 2007 to 2009 | Three step rises reaching $7.25 |
| 2009 to present | Frozen |
Two features recur. Increases have come in multi-year steps rather than one jump, so the real value decays between the last step and the next bill. And they have ridden on larger legislation, from the 1938 act itself to the 2007 war supplemental, rather than being voted on alone.
What replaced it
As the federal rate stalled, states took over. The state-level activity since 2014 exceeds everything before it, and where states also stalled, cities moved. The result is that the federal figure is now a floor adopted only by states that have chosen not to legislate at all, not the standard most American workers are on.