{"id":10839,"date":"2021-02-23T15:25:56","date_gmt":"2021-02-23T21:25:56","guid":{"rendered":"http:\/\/blog.uwsp.edu\/cps\/?p=10839"},"modified":"2021-03-19T08:51:36","modified_gmt":"2021-03-19T13:51:36","slug":"the-history-of-the-minimum-wage","status":"publish","type":"post","link":"https:\/\/blog.uwsp.edu\/cps\/2021\/02\/23\/the-history-of-the-minimum-wage\/","title":{"rendered":"The History of the Minimum Wage"},"content":{"rendered":"\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"960\" height=\"528\" src=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwage.jpg\" alt=\"Minimum Wage\" class=\"wp-image-10848\" srcset=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwage.jpg 960w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwage-300x165.jpg 300w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwage-768x422.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/figure>\n\n\n\n<p>The minimum wage has been in the\nnews recently, primarily due to the proposed phase-in of a $15 minimum wage as\npart of President Biden\u2019s American Rescue Plan. The primary purpose of this\nblog is to shed some light on the history of the minimum wage, including the\nchanges in the minimum wage since its inception and how minimum wage earnings\ncompare to the Federal Poverty Level (FPL). <\/p>\n\n\n\n<p>The federal minimum wage has its roots in the 1938 Federal Labor Standards Act (FLSA). The minimum wage was initially set at $0.25 per hour. The 1938 Act generally applied to employees engaged in interstate commerce or in the production of goods for interstate commerce. Over the years the minimum wage has periodically been increased and amendments to the original law expanded the categories of workers covered by the minimum wage. A brief summary of some of the significant amendments and changes to the minimum wage law is presented below, with more details provided in the links provided at the end of the blog:<\/p>\n\n\n\n<ul><li>1949 \u2013 Minimum wage coverage was expanded to include workers in the air transport industry; the minimum wage was raised from 40 cents an hour to 75 cents an hour for all workers.<\/li><li>1961 \u2013 Application of the FLSA to the retail sector was greatly increased. Minimum wage coverage was extended to employees in large retail and service enterprises as well as to local transit, construction, and gasoline service station employees. Coverage was extended to employees of retail trade enterprises with sales exceeding $1 million annually; however, individual establishments within those enterprises were exempt if their annual sales fell below $250,000. The 1961 amendments significantly increased coverage in the retail trade industry from approximately 250,000 workers to 2.2 million. The minimum wage for previously covered workers was also increased to $1.15 an hour effective September 1961 and to $1.25 an hour in September 1963.<\/li><li>1966 \u2013 Congress further broadened coverage in the retail sector with amendments that lowered the sales volume test for enterprises to be subject to the minimum wage law. The 1966 amendments also expanded FLSA coverage to public schools, nursing homes, laundries, and the entire construction industry. Subject to certain conditions, farms were subject to coverage for the first time. &nbsp;<\/li><li>1977 \u2013 Categories of workers covered by amendments sometimes had a lower minimum wage that was applicable to their category. The 1977 amendments set a new uniform wage schedule for all covered workers. In addition, a phased-in increase to the minimum wage occurred with increases to $2.65 an hour in January 1978, $2.90 in January 1979, $3.10 in January 1980, and $3.35 in January 1981.<\/li><li>2007 \u2013 Amendments provided another phased-in increase to the minimum wage to $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009.&nbsp;<\/li><\/ul>\n\n\n\n<p>Not all workers are covered by the\nminimum wage law. Categories of workers not covered by minimum wage laws\ninclude independent contractors, and certain categories of farmworkers and\nprofessional workers. In addition, there are special rules that apply to workers\nwho earn tips, young workers, and student workers. <\/p>\n\n\n\n<p>Table 1 below shows the minimum wage by effective date for most categories of workers, and the approximate time between increases since 1938. Prior to 1977, select categories covered were subject to a lower minimum wage. (Greater detail is provided in the links below.) The U.S. is currently in the midst of the longest period where the minimum wage has not changed.<\/p>\n\n\n\n<p><strong>Table 1 \u2013 Federal Minimum Wage<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable1.jpg\"><img decoding=\"async\" loading=\"lazy\" width=\"935\" height=\"997\" src=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable1.jpg\" alt=\"Table 1 \u2013 Federal Minimum Wage\" class=\"wp-image-10845\" srcset=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable1.jpg 935w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable1-281x300.jpg 281w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable1-768x819.jpg 768w\" sizes=\"(max-width: 935px) 100vw, 935px\" \/><\/a><figcaption><em>Source: U.S. Department of Labor<\/em><\/figcaption><\/figure>\n\n\n\n<p>Table 2 below shows the annual\nearnings of a minimum wage worker as a percentage of the Federal Poverty Level\n(FPL) for 1 person, 2 person, and 4 person households each year since 1970. The\nFPL shown is for the 48 contiguous states and the District of Columbia. The FPL\nfor Hawaii and Alaska varies slightly. <\/p>\n\n\n\n<p><strong>Table 2 \u2013 Federal Poverty Level (FPL) by Household Size and Minimum Wage Earnings as a % of FPL<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable2.jpg\"><img decoding=\"async\" loading=\"lazy\" width=\"798\" height=\"1024\" src=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable2-798x1024.jpg\" alt=\"Table 2 \u2013 Federal Poverty Level (FPL) by Household Size and Minimum Wage Earnings as a % of FPL\" class=\"wp-image-10842\" srcset=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable2-798x1024.jpg 798w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable2-234x300.jpg 234w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable2-768x986.jpg 768w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2021\/02\/cbei202102minwagetable2.jpg 969w\" sizes=\"(max-width: 798px) 100vw, 798px\" \/><\/a><figcaption><em>Source: U.S.&nbsp;Department of Health and Human Services, U.S. Department of Labor<\/em><\/figcaption><\/figure>\n\n\n\n<p>Since 1970, 1974 is the benchmark\nyear for the annual earnings of a minimum wage worker being at the highest\npercentage of the federal poverty level; 2006 is the benchmark year for the\nannual earnings of a minimum wage worker being at the lowest percentage of the\nfederal poverty level. The annual earnings of a minimum wage worker as a\npercentage of the federal poverty level for a household size of one has varied\nbetween 179% in 1974 to a low of 109% in 2006. In 2020, the annual earnings of\na minimum wage worker comprised 118% of the federal poverty level for a\nhousehold size of one. The annual earnings of a minimum wage worker as a\npercentage of the federal poverty level for a household size of two has varied\nbetween a high of 136% in 1974 to a low of 81% in 2006. In 2020, the annual\nearnings of a minimum wage worker comprised 87% of the federal poverty level\nfor a household size of two persons. The annual earnings of a minimum wage\nworker as a percentage of the federal poverty level for a household size of four\nhas varied between a high of 91% in 1974 to a low of 54% in 2006. In 2020, the\nannual earnings of a minimum wage worker comprised 58% of the federal poverty\nlevel for a household size of four persons.<\/p>\n\n\n\n<p>Discussions regarding the minimum\nwage have been a political and economic issue since the Great Depression. Those\ndiscussions will likely continue; hopefully, this blog provides some historical\ninsight.<\/p>\n\n\n\n<p>For further information:<\/p>\n\n\n\n<ol><li>From the U.S. Department of Labor, further details on the history of the federal minimum wage and changes to the minimum wage caused by amendments to the FLSA:<br><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/minimum-wage\/history\/chart\">U.S. Department of Labor &#8211; Minimum Wage Chart<\/a><br><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/minimum-wage\/history\">U.S. Department of Labor &#8211; Minimum Wage History<\/a><\/li><li>From Nolo.com, exemptions from the federal minimum wage law and greater info on state minimum wage laws:<br><a href=\"https:\/\/www.nolo.com\/legal-encyclopedia\/right-minimum-wage-32961.html#:~:text=Not%20all%20workers%20are%20entitled,(more%20on%20this%20below).\">Your Right to the Minimum Wage Law<\/a><\/li><li>From the Social Security Administration, based on data from the U.S. Department of Health and Human Services:<br><a href=\"https:\/\/www.ssa.gov\/policy\/docs\/statcomps\/supplement\/2019\/3e.html#table3.e8\">Federal Poverty Level Guidelines by Household Size<\/a> <\/li><\/ol>\n\n\n\n<blockquote class=\"wp-block-quote\"><p><strong><em>Related News:<\/em><\/strong><br><a href=\"https:\/\/www.wjfw.com\/storydetails\/20210317160100\/economist_says_raising_minimum_wage_would_benefit_everybody\">WJFW Newschannel 12: Economist says raising minimum wage would benefit everybody<\/a><\/p><\/blockquote>\n\n\n\n<div class=\"wp-block-media-text alignwide is-stacked-on-mobile has-background\" style=\"background-color:#a5a4a4;grid-template-columns:32% auto\"><figure class=\"wp-block-media-text__media\"><img decoding=\"async\" loading=\"lazy\" width=\"683\" height=\"1024\" src=\"http:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2019\/11\/CPS-BusEcon-Bahr-Kevin-683x1024.jpg\" alt=\"Kevin Bahr\" class=\"wp-image-12217 size-full\" srcset=\"https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2019\/11\/CPS-BusEcon-Bahr-Kevin-683x1024.jpg 683w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2019\/11\/CPS-BusEcon-Bahr-Kevin-200x300.jpg 200w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2019\/11\/CPS-BusEcon-Bahr-Kevin-768x1152.jpg 768w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2019\/11\/CPS-BusEcon-Bahr-Kevin-1024x1536.jpg 1024w, https:\/\/blog.uwsp.edu\/cps\/wp-content\/uploads\/sites\/2\/2019\/11\/CPS-BusEcon-Bahr-Kevin.jpg 1200w\" sizes=\"(max-width: 683px) 100vw, 683px\" \/><\/figure><div class=\"wp-block-media-text__content\">\n<p class=\"has-black-color has-text-color\">Kevin Bahr is a professor emeritus of finance and chief analyst of the <a href=\"https:\/\/www.uwsp.edu\/business\/sentry-school-of-business-and-economics\/centers-and-outreach\/center-for-business-and-economic-insight\/\">Center for Business and Economic Insight<\/a> in the Sentry School of Business and Economics at the University of Wisconsin-Stevens Point. <\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The minimum wage has been in the news recently, primarily due to the proposed phase-in of a $15 minimum wage as part of President Biden\u2019s American Rescue Plan. The primary purpose of this blog is to shed some light on the history of the minimum wage, including the changes in the minimum wage since its [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":10848,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,527,12],"tags":[568,305,342,343,344],"_links":{"self":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/10839"}],"collection":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/comments?post=10839"}],"version-history":[{"count":6,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/10839\/revisions"}],"predecessor-version":[{"id":10916,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/10839\/revisions\/10916"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/media\/10848"}],"wp:attachment":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/media?parent=10839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/categories?post=10839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/tags?post=10839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}