How Minimum Wage Works

By: Dave Roos
Minimum wage legislation passed in 1938 as part of then-President Franklin Delano Roosevelt's New Deal. See pictures of U.S. presidents.
Hulton Archive/Getty Images

The Industrial Revolution was both a blessing and a curse. It was a blessing for the bank accounts of wealthy industrialists, but a curse for poor, uneducated workers who slaved away in dangerous factory jobs for inhumanely long hours and little pay.

In early 19th-century Great Britain, it was not uncommon for a factory worker just eight or nine years old to work a 14-hour day and receive a brutal beating for tardiness or falling asleep at the machines. All this for a penny an hour.


It took nearly a century for the cries of women, children and other mistreated factory workers to reach the ears of politicians.

In the 1890s, Australia and New Zealand were the first countries to establish minimum wage laws. In 1909, Great Britain passed the Trade Boards Act, which included provisions for negotiating fair wages in many industries. In the United States, Franklin D. Roosevelt pushed through minimum wage and worker's rights legislation in 1938 as part of his New Deal reforms.

These laws were the first to establish the basic working conditions that most modern workers take for granted: the eight-hour workday, overtime pay, the minimum age for work and the minimum living wage or minimum wage, as it's commonly called.

A century after those early reforms, some critics argue that minimum wage is still unfairly low. Others say that minimum wage is actually to blame for economic problems like inflation, high prices and even unemployment.

Keep reading to learn more about who's eligible for minimum wage, how different countries enforce minimum wage laws and some of the arguments for and against minimum wage.