The Way research packet. Built 2026-10-28. Online version: https://michiinstitute.com/cases/minimum-wage.html

The Observatory · Case 59 · Labor and land · 1938 to 2026

Minimum wage (United States, 1938 to 2026)

1. Review status

Status

Not yet reviewed by a person. This page was researched and written with the help of AI tools. Every key claim is labeled by evidence status near the end, but no person has checked the sources yet. Treat it as a draft.

Verified by

No one has verified this page yet. No verifier is recorded.

Sources checked

2026-10-25

Review history

https://michiinstitute.com/members/reviews.html?case=minimum-wage

Packet built

2026-10-28

2. The article

The 1938 federal minimum wage began at 25 cents an hour and left out farm work, a category that employed many Black workers; the rate has been $7.25 since 2009, economists still disagree on job effects, and states now set very different floors.

The record

The 1938 law and who it covered

• The Fair Labor Standards Act (FLSA) was enacted June 25, 1938 (52 Stat. 1060). Section 6 set a minimum of "not less than 25 cents an hour" for the first year. Section 13(a)(6) said Sections 6 and 7 do not apply to "any employee employed in agriculture." Section 5 created industry committees, which "shall include a number of disinterested persons representing the public." (52 Stat. 1060, GovInfo; opened, read through a text summarizer, not line by line)
• The Department of Labor (DOL) says the 1938 Act applied generally to employees in interstate commerce or producing goods for it. (DOL, history chart; opened)
• Domestic workers: the summary of the 1938 text I opened showed no express domestic-service exemption in Section 13(a). DOL says later amendments covered "certain domestic workers." I did not find or open a source that states how the 1938 Act treated domestic work, so that point is Unverified here. (DOL chart; 52 Stat. 1060)
• Coverage grew by amendment. The 1961 Amendments reached large retail and service enterprises, local transit, construction and gas stations. The 1966 Amendments reached state and local hospitals, nursing homes and schools, laundries, large hotels and restaurants, and farms. (DOL chart)
• Today, 29 U.S.C. 213(a)(6) still lets some farm employers skip the minimum wage, for example those that used no more than 500 "man-days" of farm labor in any quarter of the prior year, and for immediate family of the employer. Section 213(a)(15) exempts casual babysitting and "companionship services" for people unable to care for themselves. (29 U.S.C. 213, Cornell LII; opened, a copy of the statute)

The race history of the exclusions: what the scholars say

• Phyllis Palmer, "Outside the Law: Agricultural and Domestic Workers under the Fair Labor Standards Act," Journal of Policy History 7(4), 1995, pp. 416 to 440. Its abstract frames the farmworker exemption as a racial injustice that civil rights activism corrected in 1966, and says these were the jobs where "most African Americans and a large number of other nonwhite Americans worked in 1938." The page I opened did not give her account of why the exemptions were written. (Cambridge Core abstract; abstract and notes opened)
• The same page's notes cite other work: that half of Southern Democratic senators opposed the FLSA in 1937 (Patterson), that Southern businessmen opposed a national standard, a view that the 1938 law "codified the traditional powerlessness of farm laborers" (Daniel), and a speculation that farmworkers tied to family farms were left out (Hart). These are what Palmer cites, not findings I checked. (Cambridge Core page)
• Juan Perea, "The Echoes of Slavery: Recognizing the Racist Origins of the Agricultural and Domestic Worker Exclusion from the National Labor Relations Act," 72 Ohio State Law Journal 95 (2011). Its title concerns the NLRA (1935), not the FLSA. I could open only the citation page, not the article text. It is a lead for the same pattern, not proof about the FLSA. (Loyola Chicago scholars page; citation only)
• Not opened: Ira Katznelson's Fear Itself (2013) and Farhang and Katznelson, "The Southern Imposition" (2005). A search returned reviews but I did not read them, so I make no claim from them.
• What the record does not settle: how much of the exclusion was about race, how much about farm lobbying and administrative worries, and who in Congress said what. The statute names occupations, not races. I draw no conclusion about individual members' motives.

Federal minimum by year (DOL table, opened)

Employment-effect evidence

• David Card and Alan Krueger surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania after New Jersey raised its minimum from $4.25 to $5.05 in April 1992. They "find no indication that the rise in the minimum wage reduced employment." (Card and Krueger, American Economic Review 84(4), 1994, pp. 772 to 793; abstract page; abstract opened, full paper behind a paywall)
• David Neumark and William Wascher re-checked the question with payroll records from 230 restaurants (Burger King, KFC, Wendy's, Roy Rogers). They report the survey data show about three times the variation in employment change as the payroll data, and the payroll data imply a 4.6 percent employment decrease in New Jersey relative to Pennsylvania (elasticity of -0.24), against the survey's 17.6 percent increase (NBER Working Paper 5224, August 1995; NBER page; abstract opened).
• Card and Krueger answered with a different payroll file (BLS ES-202 data). They report similar or slightly faster job growth in New Jersey, and trace differences in the other sample to a small group of restaurants owned by one franchisee (NBER Working Paper 6386, 1998; NBER page; abstract opened). The published exchange is Neumark and Wascher's comment (pp. 1362 to 1396) and Card and Krueger's reply (pp. 1397 to 1420), American Economic Review 90(5), December 2000. I saw only the citations (RePEc); the text is behind a paywall.
• Arindrajit Dube, commissioned by the UK government (published November 4, 2019), reviewed international evidence. The page says recent research shows "only a small effect" on employment and that minimum wages raised earnings for low-paid workers. It does not discuss poverty. (UK Government publication page; opened summary only)

Congressional Budget Office (CBO) projections for a $15 federal minimum by 2025

Both pages were read through a summarizer, so the exact table wording should be checked against the PDFs before quoting at length. I did not open the PDFs.

Poverty-effect evidence

• Neumark and Wascher, "Do Minimum Wages Fight Poverty?" (NBER Working Paper 6127, 1997; Economic Inquiry, 2002), used matched March CPS surveys. They find increases help some poor families rise above the line but push some non-poor families below it; the number pushed in is "somewhat larger" than the number lifted out, though the difference is not statistically significant. (NBER/RePEc abstract; opened)
• CBO's 2019 and 2021 figures above point the other way on net poverty (fewer people in poverty) while also projecting job loss. Both can be true: more people gain than lose, at a cost of fewer jobs.

Tipped wage and state differences (DOL pages, updated July 1, 2026; opened)

• Federal tipped minimum cash wage: $2.13. Maximum tip credit: $5.12. Combined with tips, the employer must reach $7.25. (DOL tipped table)
• 34 states have a minimum cash wage of $7.25 or less for tipped workers (counting Connecticut's hotel and restaurant rate of $6.38). Seven states (Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington) require the full state minimum before tips; Montana has a lower tier for small businesses. (DOL tipped table)
• Five states have no state minimum wage law: Alabama, Louisiana, Mississippi, South Carolina, Tennessee. Employers covered by the FLSA there must pay $7.25. 29 states and DC are above $7.25 on the basic rate. Highest: Washington at $17.13 (DC is $18.40). (DOL state table)

What this case shows

1. The people left out were named in the statute, and the occupations were ones where many nonwhite workers labored. Section 13(a)(6) is public text. Palmer ties the farm exemption to the jobs held by "most African Americans" in 1938. Who was covered was decided in a bill that ordinary voters could read but rarely did.
2. Correcting an exclusion took decades and legislation, not a single decision. Farms came in 1966 with a lower farm rate in 1974 (DOL chart), and some farm and companionship exemptions remain in 29 U.S.C. 213 today.
3. A fixed national number is set by Congress and not indexed. The rate has stayed at $7.25 since July 24, 2009 (DOL). That means the real value changes whenever Congress does nothing, and voters can see the number but may not see the drift.
4. States became the main place where the number is voted on. 29 states and DC exceed the federal floor; five states have no law at all (DOL). Where a worker lives now decides much of what the floor is, and ballot measures and legislatures are the route for change.
5. The evidence is split, and the split is itself public. CBO gives a median job loss with a wide range and a net poverty reduction. Neumark and Wascher find mixed poverty results. Card and Krueger and Dube find small or no job effects. A voter can read all of it.

The strongest objections, and our answers

1. Objection: the exclusions were about administration and farm economics, not race. Possible. Palmer's notes include the family-farm explanation (Hart). Mitigation: we state the occupational fact, cite the scholars by name, and say the statute does not mention race and we do not infer any member's motive.
2. Objection: higher minimums cost jobs and hurt the people they aim to help. CBO's median is 1.3 to 1.4 million fewer jobs at $15, and Neumark and Wascher report some families pushed below the line. Mitigation: we show these figures at the same weight as the poverty gains.
3. Objection: Card and Krueger showed no job loss, so the fear is overstated. Neumark and Wascher's payroll re-check reached the opposite sign, and Card and Krueger disputed that sample. Mitigation: we show the whole exchange, and note we did not read the 2000 papers in full.
4. Objection: state variation shows federal policy is too blunt, or too weak. Both readings exist. Mitigation: we give the DOL counts and draw no conclusion about the right level.
5. Objection: CBO projections are about a $15 option, not today's $7.25. True. The figures show how an analyst agency framed the tradeoff, not what the present law does. We label them as projections for a $15 option reached in 2025, a date now past.

Open questions: what would change our minds

• The legislative record of why agriculture and domestic work were handled as they were (committee reports and floor debate in 1937 and 1938) was not opened. Without it the race-versus-administration question stays open.
• How the 1938 Act treated domestic workers is Unverified here; the 52 Stat. 1060 summary showed no express exemption.
• Perea's article is about the NLRA; Katznelson and Farhang were not opened. If their FLSA claims check out against the text, the scholarly basis would be stronger.
• The 2000 AER exchange (Neumark and Wascher; Card and Krueger) was not read in full.
• CBO's 2021 range, and the exact wording of both reports, should be checked in the PDFs.
• A DOL table for rates after 2009 was not separately opened; the continuity at $7.25 comes from the July 2026 DOL state and tipped pages.
• No data opened on how many workers today are covered by the remaining farm and companionship exemptions.

Sources

Evidence status and correction history

Key claims

Correction history

Found an error or a better source? We keep every correction on the record with its date and reason. Nothing here is quietly rewritten.

3. Sources and their details

One entry per source in the page's Sources table. "Checked" is the date the page says its sources were checked. A Wayback link and SHA-256 appear only where a snapshot has been recorded.

4. Every link used in the article

1. Review history
   https://michiinstitute.com/members/reviews.html?case=minimum-wage
2. 52 Stat. 1060, GovInfo
   https://www.govinfo.gov/content/pkg/STATUTE-52/pdf/STATUTE-52-Pg1060.pdf
3. DOL, history chart
   https://www.dol.gov/agencies/whd/minimum-wage/history/chart
4. 29 U.S.C. 213, Cornell LII
   https://www.law.cornell.edu/uscode/text/29/213
5. Cambridge Core abstract
   https://www.cambridge.org/core/journals/journal-of-policy-history/article/outside-the-law-agricultural-and-domestic-workers-under-the-fair-labor-standards-act/564F84EE9A0A19D84D2A864566E8136A
6. Loyola Chicago scholars page
   https://lawscholars.luc.edu/en/publications/the-echoes-of-slavery-recognizing-the-racist-origins-of-the-agric/
7. abstract page
   https://ideas.repec.org/a/aea/aecrev/v84y1994i4p772-93.html
8. NBER page
   https://nber.org/papers/w5224
9. NBER page
   https://www.nber.org/papers/w6386
10. RePEc
    https://ideas.repec.org:443/a/aea/aecrev/v90y2000i5p1397-1420.html
11. UK Government publication page
    https://www.gov.uk/government/publications/impacts-of-minimum-wages-review-of-the-international-evidence
12. CBO publication 55410
    https://www.cbo.gov/publication/55410
13. CBO publication 56975
    https://www.cbo.gov/publication/56975
14. NBER/RePEc abstract
    https://ideas.repec.org:443/p/nbr/nberwo/6127.html
15. DOL tipped table
    https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
16. DOL state table
    https://www.dol.gov/agencies/whd/minimum-wage/state

5. Revision history

First published (earliest change on record): 2026-10-25.

Corrections on the page

Change log for the page

• 2026-10-28: Visual follow-up: "On this page" list above the bubbles, no layout jumps, faster Submit animation
• 2026-10-28: Visual fixes: one-row phone header, no floating bubbles on phones, and small text and image crop fixes
• 2026-10-28: Hand art: soft fade at the wrist, and fresh cache keys for the thread and hand pictures
• 2026-10-28: Fix styling on case, Government and case-study pages after the move
• 2026-10-28: Turn search indexing on for the public pages
• 2026-10-28: Move public pages out of /preview/ to clean URLs, add SEO basics (indexing stays off)
• 2026-10-28: Keep the AI label full width on pages whose main area is a grid
• 2026-10-28: Pull a Thread: Save to notes, unverified flags, source checks, ballot accordion (0045)
• 2026-10-28: Label AI-written pages with a review status, and let reviewers change it (0044)
• 2026-10-28: Bubbles: one size from the stylesheet, rising air bubbles, Submit thread button, label
• 2026-10-28: Collapse case review banners and TABOR notes into details
• 2026-10-28: Header: logo centered, Pull a Thread art in header and menus
• 2026-10-28: Pull a Thread, round 2: preliminary answer for every request, grants fix, and the floating buttons (0036, 0037)
• 2026-10-28: Site analytics: use the new Cloudflare Web Analytics token (new michiinstitute account)
• 2026-10-28: Add Pull a Thread: send a link, a screenshot or a question, with a review queue ranked by our own score (0030 to 0035)
• 2026-10-28: Menus: "How government works" is now just "Government"
• 2026-10-27: Move the How government works entry from Research to Civics & History
• 2026-10-27: Case packets v2: cover, source cards, revision history; Email me updates moves into the report row
• 2026-10-27: Point links that reached the old preview home at the current site
• 2026-10-25: Cases banner 1025c (73 pages) and members update 33

6. How to cite

The Way (Michi Institute). "Minimum wage (United States, 1938 to 2026)." Case 59, The Observatory. Sources checked 2026-10-25. Packet built 2026-10-28. https://michiinstitute.com/cases/minimum-wage.html

This is preliminary research. Before relying on a claim, cite and check the primary source it points to. To save as a PDF: use your browser's Print and choose Save as PDF.

Not left. Not right. We are The Way. A nonpartisan research project, not a political party.