A Wage Floor, Not a Job-by-Job Rate
In 1938, Franklin D. Roosevelt signed the Fair Labor Standards Act, creating the first federal minimum wage. The idea was to set a legal floor beneath pay: employers could still pay more, but covered workers could not be paid less. The floor did not vary according to a worker’s occupation or skill level, so it established a basic standard rather than a separate rate for every trade.
That was a significant shift in how wages were treated. Pay was no longer only a matter for an individual worker to bargain over with an employer; the federal government claimed a role in setting a minimum acceptable price for labor.
Why Roosevelt Made the Case
During the Depression, job scarcity weakened workers’ ability to refuse very low offers. Roosevelt argued that a business should not be allowed to survive by paying wages too small to live on. His point was both moral and economic: workers needed enough income to support themselves, and wages also helped sustain the spending on which businesses depended.
A minimum wage could limit the pressure on employers to compete by undercutting one another’s pay. Instead of treating the lowest possible wage as a business advantage, the law made a portion of that competition illegal.
What the Law Could—and Couldn’t—Guarantee
The federal minimum wage was meant to protect workers from the most inadequate pay, but it could not ensure that every worker could afford a decent standard of living. A legal wage floor does not automatically adjust to local living costs, household needs, or changes in prices. Nor did the law cover every worker in the same way.
Its lasting consequence was the principle it put into federal law: there is a limit to how low covered wages may go, even when an employer and worker might otherwise agree to less.
