The federal minimum wage did not begin as a policy aimed at part-time or entry-level workers. It began as a Depression-era response to a labor market that Congress considered broken.
The idea came from Frances Perkins, U.S. Secretary of Labor under President Franklin D. Roosevelt (D). Perkins was the first woman to hold a Cabinet position, and she pushed for a law that would set a wage floor, cap the workweek, and restrict child labor. Roosevelt signed her proposal into law as the Fair Labor Standards Act on June 25, 1938. It took effect on October 24, 1938, at a rate of 25 cents an hour.
Supporters framed the law around a specific problem. Congress at the time found that substandard wages at some companies were dragging down pay industry-wide, since competitors felt pressure to match the lowest payer just to stay in business. Lawmakers also pointed to findings that roughly one-third of the country was, in the language of the era, “ill-nourished, ill-clad, and ill-housed.” The minimum wage, the 40-hour workweek, and new child labor restrictions were built to address all three problems at once.
The original law only covered about one in five American workers, since it applied to employees engaged in interstate commerce or the production of goods for interstate trade. Retail, agriculture, and domestic work were left out entirely. Congress expanded that coverage over the following decades, first to large retail and service businesses in 1961, then to government hospitals, nursing homes, schools, laundries, and hotels in 1966.
FEDERAL MINIMUM WAGE TIMELINE
Below is every increase to the federal minimum wage since its creation, according to the U.S. Department of Labor’s Wage and Hour Division.
- 1938: $0.25 per hour (Fair Labor Standards Act enacted)
- 1939: $0.30
- 1945: $0.40
- 1950: $0.75
- 1956: $1.00
- 1961: $1.15
- 1963: $1.25
- 1967: $1.40
- 1968: $1.60
- 1974: $2.00
- 1975: $2.10
- 1976: $2.30
- 1978: $2.65
- 1979: $2.90
- 1980: $3.10
- 1981: $3.35
- 1990: $3.80
- 1991: $4.25
- 1996: $4.75
- 1997: $5.15
- 2007: $5.85
- 2008: $6.55
- 2009: $7.25
The wage has not moved since 2009. That is the longest stretch without a federal increase since the law was written. Adjusted for inflation, the 2009 rate has lost roughly 30% of its purchasing power. The highest the wage has ever been worth in real terms came in 1968.
Congress has never indexed the federal minimum wage to inflation. Every increase on the list above required a separate act of legislation. That is different from most states with their own minimum wage laws, many of which now adjust automatically each year based on the Consumer Price Index.
Because the federal rate has stayed flat for so long, states have increasingly set their own, higher floors. As of 2026, 30 states and the District of Columbia require a minimum wage above the federal $7.25, with Washington state and Washington, D.C. at the top of that list. The other 20 states default to the federal rate, either because they have no state minimum wage law of their own or because their state law simply matches it.
Based on how these 20 states voted in the 2024 presidential election, 19 of the 20 went for Trump: Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin, and Wyoming.
The lone exception is New Hampshire, which went for Kamala Harris in 2024 and also went for Joe Biden in 2020, even though it has no state minimum wage law above the federal $7.25 floor.
TIPPED WORKERS AND THE TIP CREDIT
The minimum wage law does not apply the same way to every worker. Since 1966, the Fair Labor Standards Act has allowed employers of tipped workers, most commonly restaurant servers and bartenders, to pay a lower direct cash wage and count a portion of the employee’s tips toward the rest of the required minimum wage. This is known as the tip credit.
At the federal level, that cash wage has been frozen at $2.13 an hour since 1991. A 1996 amendment locked that figure in place even as the regular minimum wage kept rising, so the federal tip credit, the gap employers can cover with customer tips instead of cash, has grown to $5.12 an hour, or roughly 71% of the full $7.25 minimum wage. If tips do not bring a worker’s total pay up to the full minimum wage in a given pay period, the employer is legally required to cover the shortfall.
States are free to set their own rules above of the federal floor, and many do. Arizona is one example. Its state minimum wage stood at $15.15 an hour in 2026, and state law allows employers to claim a tip credit of up to $3.00 an hour, meaning a tipped employee’s guaranteed direct cash wage can be as low as $12.15 an hour, with tips required to make up the rest. Seven states, including California, Nevada, Oregon, and Washington, do not allow a tip credit at all, and require tipped employees to be paid the full state minimum wage in cash before tips.
WHAT THE MINIMUM WAGE CAN ACTUALLY BUY
The minimum wage was never meant to just cover pocket money. Its ability to support a household, especially when it comes to housing, has shifted dramatically since 1938.
- In 1968, at the minimum wage’s high point in real value, a full-time worker earning $1.60 an hour, equal to roughly $14 in today’s dollars, made enough over a year to keep a family of three above the federal poverty line, though a family of four still fell short.
- Today, a full-time federal minimum wage worker earns $15,080 a year, which falls below the federal poverty line for a family of two.
- Nationally, a full-time worker must earn $34.73 an hour, nearly 5x the federal minimum wage, to afford a modest two-bedroom apartment at fair market rent, according to the National Low Income Housing Coalition’s 2026 “Out of Reach” report.
- Following the standard guideline of spending no more than 30% of income on housing, a full-time federal minimum wage worker can afford only about $377 a month in rent. The average fair market rent for a two-bedroom apartment nationwide is $1,806 a month.
- There is no state, metro area, or county in the country today where a full-time worker earning only the federal minimum wage can afford a modest two-bedroom apartment at fair market rent.
The gap has widened mainly because rents have kept climbing while the federal wage floor has sat still since 2009. States that raised their own minimum wages have narrowed that gap locally, but nowhere has closed it entirely.
A COMMON MISCONCEPTION
Many Americans assume the minimum wage exists mainly for teenagers working part-time jobs before they move on to a “real” career. The law’s history does not support that view, and neither do the government’s own labor statistics.
Frances Perkins and Franklin Roosevelt built the Fair Labor Standards Act around adult breadwinners struggling to support families during the Depression, not students earning spending money. Federal data collected since then has consistently shown that most minimum wage workers are adults, not teenagers.
According to the Bureau of Labor Statistics, workers under age 25 made up only about one-fifth of all hourly paid workers in 2024, yet they accounted for 43% of those earning at or below the federal minimum wage. That means the majority of minimum wage earners, 57%, were age 25 or older. Among teenagers specifically, ages 16 to 19, only 2.6% earned the minimum wage or less, a small share of that age group overall.
The data points to a wage floor that still functions largely as it was designed to. It serves as a backstop for lower-wage adult workers across the economy, not a training rate for high schoolers.
SOURCES:
- U.S. Department of Labor, Wage and Hour Division: “History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938-2009”
- Congressional Research Service: “The Fair Labor Standards Act (FLSA): An Overview”
- Congressional Research Service: “State Minimum Wages: An Overview”
- U.S. Bureau of Labor Statistics: “Characteristics of Minimum Wage Workers, 2024”
- Economic Policy Institute: “A History of the Federal Minimum Wage: 85 Years Later, the Minimum Wage is Far From Equitable”
- National Low Income Housing Coalition: “Out of Reach 2026: The High Cost of Housing”
- U.S. Congress Joint Economic Committee: “The Federal Minimum Wage” fact sheet
- U.S. Department of Labor, Wage and Hour Division: tip credit provisions of the Fair Labor Standards Act
- Arizona Industrial Commission: 2026 minimum wage and tip credit rules under A.R.S. § 23-363
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