This article examines the effects of the Victorian Factory and Shops Act, the first minimum wage law in Australia. The Act differed from modern minimum wage laws in that it established Special Boards, which set trade-specific minimum wage schedules. We use trade-level data on average wages and employment by gender and age to examine the effects of minimum wages. Although the minimum wages were binding, we find that the effects on employment were modest, at best. We speculate that this was because the Special Boards, which were comprised of industry insiders, closely matched the labor market for their trades.

In a well-crafted recent article in this JOURNAL, Robert Fleck argues that voting on the Fair Labor Standards Act (FLSA), the last and among the most contentious pieces of major New Deal legislation, was heavily influenced by regional political differences and by the “southern political system.” This contention is broadly supportive of a view held by several traditional historians, who have argued that political differences between the North and South were a major factor in voting. According to this view, the considerable support for minimum wages among southern workers, African American leaders, and the general public did not translate into congressional votes for the FLSA due to southern political institutions that effectively disfranchised many of the voters who were predisposed to support the FLSA. In a previous article I argued that, although southern representatives were more likely to vote against the FLSA, this was primarily because of economic differences between the two regions, not political factors. I argued that the opposition to the FLSA was spearheaded by low-wage employers, who were disproportionately concentrated in the South. This note examines the reasons for these conflicting results. It is argued that Fleck's approach to prediction, which evaluates the marginal impact of his independent variables individually, but does not jointly consider the variables that defined the southern political system, is misleading, and a more appropriate approach using his own regression results supports my contention that political differences between North and South were inconsequential to the overall roll-call vote on the FLSA. It is shown that, holding economic factors constant, had the South been politically like the North, the estimated roll-call vote on the FLSA would have been very similar to the actual votes in 1937 and 1938.

In the 1970s the United States had far higher wages than the rest of the developed world; 1979–1981 median weakly earnings of men in full-time employment were $609 in 1998 prices, compared to an average of $419 across six other developed countries. However, the United States also had a higher unemployment rate; in 1973 it was 4.8 percent compared to an average of 2.1 percent in 11 other countries. Fast forward two decades. Median real wages in the United States, although still higher than in the other countries, had fallen 5.5 percent whereas in the other countries they had increased an average of 22.6 percent. However, whereas the unemployment rate in the United States fell slightly over the period, it skyrocketed in most of the other countries, averaging 8.2 percent in the European Union in 1999. By the late 1990s the United States also differed from the rest of the developed world in a number of other labor-market outcomes. The U.S. had: a lower average duration of unemployment and less prevalent long-term unemployment, higher labor-force participation rates among both men and women, longer average hours of work over the course of the year, and greater earnings inequality.

The Fair Labor Standards Act of 1938 imposed a binding minimum wage on the southern seamless hosiery and lumber industries. However, the process of adjusting to the new minimum differed across the two industries. Seamless hosiery firms substituted capital for labor and converted or replaced old machinery. Southern lumber firms employed fewer workers relative to northern and western firms, however, changes in their resource base and war-related government purchases prevented an absolute decrease in employment levels. Numerous southern lumber firms continued to pay less than minimum rates by illegally evading the act or taking advantage of the intra-stage exemption.

Although in the last two decades there have been literally hundreds of studies of postwar minimum wage legislation, there have been but a handful of studies of the first federal minimum wage, the Fair Labor Standards Act of 1938 (FLSA), and no studies of the state laws that preceded it.1 My dissertation attempts to bridge this gap by examining the political economy and effects of early American minimum wage legislation.