A History of Minimum Wage Laws

With two exceptions (New Zealand, 1894; Australia, 1896), no country had a minimum wage law until the 20th Century. Instead, employers paid supposed “just (or fair) wages” on the purported mutual consent of their workers.

Beginning in the late 1800s, religious and political groups attacked the “just wages” principle on the premise that the vast majority of employees lacked the bargaining power to negotiate a livable wage. In the United States and throughout the industrialized world, factory conditions were also notoriously harsh and workdays long. Not uncommonly at the time, American businesses hired woman and children for lower wages than men, notoriously under horrendous conditions. By 1910, two million children worked up to 20 hours a day in this country. Exhausted, many were killed or injured on the job.

Into the 1920s, American lawmakers sought to improve working conditions in their states. By 1925, fifteen states had passed minimum wage laws, including California at 16 cents an hour. The U.S. Supreme Court later ruled several of the laws unconstitutional. (By 1929, every state had passed laws limiting child labor.)

President Roosevelt’s New Deal radically changed the employment landscape. The 1938 Fair Labor Standards Act (FLSA) established the first federal minimum wage at 25 cents an hour. The law also imposed overtime pay (“time and a half”) after a mandated 40-hour regular workweek. The Act also introduced the classification of “exempt (from overtime)” and “non-exempt” employees as well as outlawed many forms of child labor.

By 1943, the Labor Department under Francis Perkins had raised the federal minimum wage to 40 cents an hour. It hit $1.00/hour in 1955. Federal minimum wage has been $7.25 an hour since 2009. Although each U.S. state has the power to set a higher minimum wage than the federal rate, none can set a lower one.

California first set the state minimum wage in 1916, 16 cents/hour. It now stands at $16.50/hour, with higher minimums for certain fast food and health care workers($20.00/hour and $25.00/hour, respectively).  Some 40 cities and counties continue to set higher local minimums.

This state’s wage regulation began with the 1913 creation of the Industrial Welfare Commission (IWC). Over the decades, the agency has issued 17 industry-specific “wage orders” confirming minimums and setting other wage and working conditions.

Nations without a government-mandated minimum wage include Sweden, Denmark, Norway,  Switzerland, Finland, Singapore, and Italy.  These countries rely on strong collective bargaining between unions and employers to set wage standards for different industries, ensuring fair pay and worker protections without a statutory wage floor.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

●  California New Minimum Wages Rates Take effect in July (June 19, 2025)
●   Lunch Time Tracking – Preventing a Recordkeeping Business Buster (August 8, 2025)
●   Send Away Pay – Mastering “Reporting Time Pay” Compliance (August 7, 2025)

Tim Bowles
October 3, 2025