The Birth Of The Minimum Wage In America

The Birth Of The Minimum Wage In America Listen · 4:49 4:49

In 1895, legislators in New York state decided to improve working conditions in what at the time could be a deadly profession: baking bread.

"Bakeries are actually extremely dangerous places to work," says Eric Rauchway, a historian at the University of California, Davis. "Because flour is such a fine particulate, if it gets to hang in the air it can catch fire and the whole room can go up in a sheet of flame."

New York passed a law called the Bakeshop Act. It didn't set a minimum wage — the minimum wage didn't exist yet in the U.S. — but it limited working hours and required that bakeries be kept clean.

The Supreme Court ruled the law unconstitutional. Bakers and their employers had the right to make any agreements they wanted about work hours, the court found. The Bakeshop Act, according to the court, interfered with individuals' right to enter into a contract.

The ruling suggested there was no way the Supreme Court of the time would allow anything like a minimum wage.

Several decades later, Franklin D. Roosevelt was president. To fight the Depression, he wanted to put money in people's pockets. "If all employers will work together to shorten hours and raise wages, we can put people back to work," he said.

Roosevelt wanted businesses to do this voluntarily. To that end, the administration created the National Industrial Recovery Act, which Congress passed in 1933.

Businesses that agreed to shorten hours and raise wages could hang special signs in their windows that showed a blue eagle logo and the words "doing our part."

Perhaps more powerful than the sign were the perks that went along with agreeing to offer higher wages: Participating businesses were allowed to form cartels and set prices. (At the time, the country was suffering from deflation, with prices and wages plunging.)

But the blue eagle was no match for nine men in robes: The Supreme Court unanimously struck down the law.

After Roosevelt was re-elected by a landslide in 1936, he tried to pack the court — to pass a law that would let him appoint additional justices. That effort failed.

But one of the court justices switched sides, and in 1937 the court upheld the right of Washington state to have a minimum wage.

The next year, FDR pushed through Congress the Fair Labor Standards Act, which contained a kind of minimal minimum wage.

The act, "applying to products in interstate, ends child labor, sets a floor below wages and a ceiling over the hours of labor," Roosevelt said at the time.

Rauchway says it was more of a political victory than an intellectual one. And the nation is still divided over it today.