There has been a lot of discourse lately about what is a fair minimum wage, particularly as inflation soars. While some states and cities have their own unique minimum wage, the federal minimum wage is now sitting at $7.25 per hour.  The federal minimum wage has increased over time; however, it has not always kept up with the pace of inflation. Here is a look at how this standard is set, as well as how it has changed through the years.

About the First Minimum Wage

The Fair Labor Standards Act of 1938 set the first minimum wage in the U.S. at $0.25 per hour.  The exact wage is set by Congress under the original act and can be revised with amendments.

Several states and cities have minimum wages that go far beyond the federal standard. For example, the state of Washington's minimum wage is over $17 per hour. However, the city of Seattle has a minimum wage of $21.30 per hour for most employees.

You have to go back to July of 2009 to find the last time that Congress bumped up the minimum wage. The increases are not on a regular schedule, making it difficult to anticipate when they may happen.

The Greatest Generation (1910 - 1924) did not have a federal minimum wage at all, as it was before the passage of the Fair Labor Standards Act. Not surprisingly, this era for American workers was fraught with dangerous work conditions, paltry wages, and long hours. Although some industries had labor unions to advocate for the workers, others were just out of luck.

The Silent Generation (1925 - 1945) was the first group of workers to enjoy the fruits of the federally mandated minimum wage. This wage was set at $0.25 initially before making its way to $0.40 per hour. This would translate to $5.59 - $7.28 per hour in 2026 wages.

The 1929 stock market crash was the defining moment for the Silent Generation, leading to the Great Depression. This time is widely considered to be the worst financial crisis in American history. The nation did not pull itself out of this economic turmoil until it joined the Allied forces in World War II in 1941.

The Great Depression was a bleak time for Americans. The few lucky ones to find jobs had to settle for low pay. The rollout of the federal minimum wage in 1938 happened during the height of the Great Depression as lawmakers scrambled for ways to help the country out of the crisis.

Financial Boom Following Great Depression Yielded Higher Wages

Baby Boomers (1946 - 1964) enjoyed overall great financial stability and success. As is often the case when a war ends, the economy rebounded significantly as consumer spending increased at a breakneck speed.

Congress passed several amendments to the Fair Labor Standards Act during this era, increasing the federal minimum wage multiple times. While the hourly wage sat at $0.40 at the beginning of the era, it was sitting at $1.25 at the end. This translates to $5.40 to $13.33 per hour in today's dollars.

The generation was also the first beneficiaries of the Civil Rights Movement, resulting in stronger labor rights for all American workers. In general, Baby Boomers entering the workforce for the first time were greeted with robust values for the money they made at minimum wage jobs.

Gen X (1965 - 1980) began their work journeys with a federal minimum wage of $1.25. This wage was $3.10 per hour by the time the era ended in 1980. Wages were relatively flat during the 1970s; however, the cost of living was beginning to climb at greater rates. Inflation rates ranged from 5.5% to 14.4% during this decade. Fortunately, Congress responded by voting to increase the minimum wage several times.  

In today's world, it is harder than ever to get ahead, even with dozens of states with minimum wages well over the federal standard. A tighter job market and soaring inflation have made it difficult for all but the top earners to build wealth.

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