Minimum wage has been one of the most heavily analyzed economic issues over the past two and a half decades, virtually none of the analysis has focused on legislation prior to the Second World War.

Perhaps the major reason for the dearth of analysis of the pre-War period is the perception that early minimum wage legislation was ineffective at increasing wages and, thus, did not significantly alter labor market outcomes. Prior to 1938, minimum wages were primarily in the domain of the state governments.

These laws, however, had limited coverage. Most minimum wage decrees issued under these laws were specific to certain industries and excluded men.

The minimum rates set under these laws were typically low and enforcement was often conspicuously absent. The first long-lived federal minimum wage law, the Fair Labor Standards Act of 1938 (FLSA) established a twenty-five cents minimum wage in October 1938 which was to increase to thirty cents a year later and to forty cents no later than October 1945.

As a percentage of average hourly earnings in manufacturing, the rates established in the 1938 Act were lower than has been the case for most of the post-War era. Such aggregation, however, tends to conceal the overall distribution of wages and, thus, potential effects of the minimum rate.

Minimum Wage

The American economy of 1938 was characterized by large regional wage differentials: the North being a high-wage region, largely unaffected by the FLSA; the South, a low-wage region, tremendously affected by the Act while the perceived ineffectiveness of the state laws and the FLSA may go a long ways toward explaining the dearth of literature on the effects of the minimum wage in the pre-War era, it cannot explain the relative scarcity of literature on the political economy of minimum wage legislation in the era.

The political economy of post-war national minimum wage legislation has been a relatively simple story: during years that the Republican party controlled at least one chamber of Congress, no increase in the nominal minimum wage has been passed.