Federal Minimum Wage History

The FLSA established the federal minimum wage at $0.25/hour, alongside the 40-hour workweek and overtime rules. The 1938 Act covered only employees engaged in interstate commerce, which excluded most agricultural, domestic, and retail workers - roughly 20% of the labor force was actually covered. The Supreme Court upheld the FLSA in U.S. v. Darby Lumber (1941) after years of New Deal-era constitutional uncertainty.

The 1961 amendments extended FLSA coverage to retail and service workers, hotels, restaurants, schools, hospitals, and laundries. Coverage roughly doubled. The minimum wage was raised to $1.15 for newly-covered industries (phased to $1.25 by 1965 to align with previously-covered workers). The 1961 amendments are the structural foundation for who is and is not covered by the federal minimum wage today.

The 1966 amendments raised the minimum to $1.60 effective 1968, the highest real-dollar value in the program's history. In 2026 dollars, $1.60 in 1968 has the purchasing power of approximately $14.50/hour - well above today's $7.25 in real terms. Every nominal increase since 1968 has been smaller in real terms than the 1966-1968 step.

The minimum reached $3.35 in 1981 after the 1977 amendments' phased increases. Then the federal minimum stayed flat for nine years (1981-1989) - the longest stretch without an increase in FLSA history at that point. Inflation eroded the real value substantially during that period; by 1989, the $3.35 minimum had lost roughly 30% of its 1981 purchasing power.

The 1989 FLSA amendments raised the minimum to $3.80 in 1990 and $4.25 in 1991, with a controversial $3.35 "training wage" for younger workers (later expired). The Small Business Job Protection Act of 1996 phased a further increase to $4.75 in 1996 and $5.15 in 1997. The 1996 Act bundled the minimum wage increase with small-business tax relief to win Republican support.

The Fair Minimum Wage Act of 2007 phased the minimum from $5.15 to $5.85 in 2007, $6.55 in 2008, and $7.25 in 2009. The Act passed as part of a larger Iraq War supplemental appropriations bill. The federal minimum has remained at $7.25 from July 24, 2009 to the present - a 17-year freeze that is the longest in FLSA history. In real-dollar terms, $7.25 in 2009 has the purchasing power of approximately $5.10 in 2026.

With the federal minimum frozen, 30 states (plus DC) have set their own minimums above $7.25 as of 2026. California, Connecticut, Delaware, DC, Hawaii, Maryland, Massachusetts, New Jersey, New York, and Washington have minimums at or above $15/hour. Several major cities have minimums above $17 (Seattle, San Francisco, NYC). Most states with minimums above the federal level have indexed their minimums to inflation, ending the cycle of static-then-jumped increases that characterized the federal program.

The federal minimum wage remains at $7.25, unchanged since 2009. The 17-year freeze is unprecedented in FLSA history. Roughly 1.6% of hourly workers earn at or below the federal minimum (BLS Current Population Survey 2024), down from 6% in 2010 - largely because state minimums have risen and labor markets have tightened. Multiple federal proposals have been introduced to raise the minimum (most prominently the Raise the Wage Act, which would phase to $17 by 2028) but none has passed.