Minimum Wage Policy in Great Britain and the United States

By Jerold Waltman | Go to book overview

CHAPTER 5. THE FEDERAL MINIMUM WAGE

When the Fair Labor Standards Act (FLSA) passed in 1938, it set the minimum wage at 25 cents per hour, but included a provision pushing it up to 40 cents in a series of steps culminating in 1945. Its coverage, though, was far from universal. Only those workers “engaged in commerce or in the production of goods for commerce” that crossed state lines were protected. Further, for the “production of goods” section to apply, the worker had to work in a field “necessary” to such production. Moreover, there were numerous exemptions, the most important of which excluded agriculture and large swaths of the retail industry.

In a series of acts beginning in 1949, Congress steadily raised the level of the wage and extended its coverage. As a result, by the mid-1970s the minimum wage penetrated virtually every corner of the economy. However, though the nominal level of the wage has been raised several times since, its real value peaked in 1968.

Perhaps not coincidentally, it was also during the Johnson administration, when the Great Society programs were being fashioned and implemented, that the minimum wage moved from centerpiece of social reform to the margins. As those who had historically been the stalwarts of minimum wage advocacy turned increasingly to public expenditure programs to attack poverty, the fervor for raising the minimum wage diminished. Since the opponents of the minimum wage lost none of their antipathy to the program, this loss of fervor was all but fatal to keeping the level of the wage in line with increases in inflation, productivity, or other measures of prosperity. To

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