The Fair Labor Standards Act established a minimum wage—but it didn't cover everyone

US tipped employees receive the 'subminimum wage' of $2.13, unchanged since 1991

Tipped employees (anyone who makes $30+ per month in tips) are not federally entitled to a traditional minimum wage. Customers determine their earnings. The National Restaurant Association believes that if restaurant owners are forced to pay above the subminimum wage for tipped workers, restaurants could be forced to close.

After emancipation, many slaves went from working for free to working for tips

In 1938, the New Deal established a minimum wage for one-fifth of the labor force, with many sectors—including service workers—not covered. Today, although the subminimum wage of $2.13 an hour is enforced, a large portion of those paychecks go to taxes like Social Security and Medicare.

Minimum wage laws are a relatively new phenomenon in the US

Today, the federal minimum wage in the US is $7.25 per hour. But the country wasn’t founded with minimum wage laws in its DNA. The first federal minimum wage wasn’t set until 1938, when it was 25 cents per hour.

Many states require higher direct wage amounts for tipped employees than the federal requirement

Employers of "tipped employees" are required to pay them $2.13 per hour in direct wages if that amount, combined with the tips, at least equals the federal minimum wage of $7.25. If the employee's tips combined with the employer's direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer has to make up the difference. However, this differs from state to state. This interactive map shows what tipped workers make per hour in every state.

Since its inception in 1938, Congress has raised the federal minimum wage 22 times

If you want all the details about when and why these rate increases happened check out this resource from the US Department of Labor.

Tipped workers in ‘$2.13 states’ experience an estimated 18.5% poverty rates

In so-called “equal treatment states,” where tipped workers are subject to the normal federal minimum wage or higher rather than the tipped minimum wage, the poverty rate is 11.1%.

An animation of how the minimum wage changed every year from 1968 to 2018

In the United States, both the federal and state minimum wages have changed a lot over the years. See how—both in each state and at the federal level.

The way the minimum wage is set in other countries often differs from US methods

Unlike the US, some countries set the minimum wage by industry through collective bargaining agreements. In Luxembourg, the minimum wage translates to roughly $19.50 per hour, currently making it the country with the highest minimum wage in the world.

When a state’s minimum wage differs from the federal's, the higher number wins out

Being that the federal government hasn’t raised the minimum wage in over 15 years, some states have taken matters in their own hands.

The Fair Labor Standards Act gave workers more time for vacations

The Fair Labor Standards Act of 1938 guaranteed time off for full-time employees, offering the opportunity for more vacations. Passed by President Franklin D. Roosevelt and celebrated by the labor movement, the law limited working hours, established overtime pay, and provided a minimum wage.

The Fair Labor Standards Act regulated child labor and introduced many protections

Child labor was widespread until the formation of the National Child Labor Committee, which hired photographer Lewis Hine to document conditions. His images spurred reform efforts like the Keating-Owen Act in 1916, which was overturned by the Supreme Court. Progress came in 1938 with the Fair Labor Standards Act.

In the 1920s, Prohibition helped cement tipping norms in the US

During Prohibition, restaurants lost significant revenue, given that they could no longer legally serve customers high-margin alcohol. As a result, many of these restaurants leaned more heavily on tips to ease the financial pressure of paying employees.

Does minimum wage hurt workers?

Many economists traditionally believed raising the minimum wage hurt workers more than helped them. They argued that doing so would lead to job losses believing that if something is more expensive (like labor), people (like business owners) would want to buy less of it. However, recent research suggests otherwise.

Americans spend an average of nearly $500 per year on tipping at restaurants and bars

The habit runs contrary to economic rationality: Why pay more for a good or service you have already received when it isn’t mandatory? Researchers found that people tip, in part, to avoid the psychological pain of not fitting in.

Only 28% of Americans think restaurant prices are fair

Seven in 10 Americans dine out at least once a month, but only 28% of diners think menu prices are fair, a 2025 YouGov survey found. That changes only slightly by income, with 44% of higher-income Americans finding the prices fair.

One Fair Wage is a national organization advocating for eliminating subminimum wages

Saru Jayaraman has run One Fair Wage since 2020, an offshoot of a 9/11 relief organization for displaced workers and victims’ families she helped start shortly after the attacks. Seventy-three employees of the World Trade Center’s top-floor restaurant were killed on September 11.

In 1980, the median US household income was $21,020

In 1980, a steady middle-class job paid roughly $13,000 to $16,000 a year, according to Bureau of Labor Statistics data. That income comfortably supported a household on one paycheck. The average full-time worker today, who makes $68K per year often cannot afford to support a household without a second income.

Fast-food prices have increased more over the past 10 years than both full-service restaurants and inflation

Apparently, according to experts on the subject, rising labor costs are to blame. Fast-food giants like McDonald's are now seeing the consequences in their underwhelming earnings reports.

Effects of pay transparency legislation

Research on pay transparency’s impacts has been limited given the short amount of time since American states began passing pay transparency legislation. However, this early study from researchers out of Brown and Harvard found that increasing pay transparency could have the potential to decrease worker bargaining power, resulting in lower average wages for employees. Read the research here.

Free agency dramatically changed player compensation

When team owners created the reserve clause in 1879, the idea was that each team would control player salaries rather than the open market. After the 1975 elimination of the reserve clause, players became eligible for free agency after a contract expired, increasing wages across the league.

A guide to gig-worker taxes and the new Venmo rule

Tax laws are catching up to modern freelancers. Starting with income made in 2024, gig workers will have to report the earnings they receive via apps like Venmo and PayPal differently. The main change: workers will have to detail all app earnings above $5,000 (previously, it was $20,000), and that’ll eventually drop to $600. This guide explains what that’ll mean and answers common questions about the new rule.

The de minimis exemption was a US tariff loophole

Until Aug. 29, 2025, US consumers could purchase up to $800 of goods per day, directly from an overseas company without incurring any tariffs on the products.

Hospitals are required to care for emergency patients, even if they can't pay

A federal law called the Emergency Medical Treatment and Labor Act, which was passed in 1986, requires any Medicare-participating hospital with an emergency room to provide emergency medical care—including if the patient is in labor—until the patient is stable. That requirement applies regardless of the patient's ability to pay, insurance status, or, in some cases, immigration status.

The Federal Transit Administration distributes roughly $20B annually to support local transportation

Created by the Urban Mass Transportation Act in 1964, the FTA funds and oversees the roughly 2,200 transit systems that receive federal support across the US, covering everything from subway capital investment to rural bus service.

While the Fed is involved in issuing new generations of cash, the way it adds to the money supply does not involve printers

The majority of money in circulation is credit, not cash. This credit, which acts similarly to direct deposit from employers, is added to bank accounts by the Federal Reserve. The Fed also employs tools like the federal funds rate and open market operations to expand or contract credit.

Calculate how much of your tax dollars go to each federal program based on your income, filing status, and number of children

Domino's Pizza's 30-minute delivery guarantee was responsible for the chain's 1980s surge, but it was discontinued after the company was found liable for delivery driver accidents.

See a ranking of the best (and worst) Federal Reserve Chairs since 1914 out of the 16 men and women who have held the office since.

At the beginning of the 20th century, a group of young men ate standard American food—replete with food additives like borax and formaldehyde—as part of government research to better understand food safety.

The US Constitution is widely regarded as the longest-standing written national constitution still in force—see how it has influenced rights worldwide.

About 2,000 US babies are born annually without some portion of their limbs, potentially leading to a lifetime of pricey prosthetics.

Some coin denominations have ridges etched on their sides, partly to prevent counterfeiting, in a practice called 'reeding.'

See this overview of the firework rules across all 50 states, ranging from a complete ban on non-professional fireworks in Massachusetts to states with more lax rules like Indiana.

The first steps to rebuilding your credit score include getting to know exactly what's on your credit report and figuring out how far you are from the '700 club,' or 'good score' range.

The United States has had a tumultuous relationship with Cuba since its 1959 revolution, highlighted by a nuclear crisis and a decades-long trade embargo.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

Before the current East Wing ballroom project, only two White House renovations in the past 100 years cost more than $10M.

Jimmy Carter signed a 1978 bill that legalized home brewing, a move credited with kick-starting the craft beer industry.

For centuries, it was common to sleep in two shifts: a few hours at the beginning of the night, and a longer period beginning around midnight

The Mona Lisa's celebrity status and repeated restorations have obscured what made the painting so revolutionary for its time

The Beatles' US label rejected the band's first two singles, 'Please Please Me' and 'From Me to You,' with one executive calling the band 'dead in the water.'

The most expensive ad of all time was for Chanel No. 5 perfume and cost roughly $33M to produce in 2004—about $57M in today's dollars.

'Saturday Night Fever,' the 1977 film that introduced disco to the mainstream, was based on a fabricated magazine story.

The rivalry between Alexander Hamilton and Thomas Jefferson centered on federalism—the question of how much power the federal government should hold relative to the states.

Walt Disney's early film 'Alice's Wonderland' was a groundbreaking innovation in the silent film era

How fusion—which releases energy when two lighter atoms combine to form a heavier atom—differs from fission

A small portion of The Winstons' 'Amen, Brother,' an obscure '60s gospel record, is the basis for thousands of hip-hop tracks, making it one of the most sampled records ever that's informally known as 'the Amen break.'

Abraham Lincoln was almost assassinated weeks before his inauguration as he traveled from Illinois to DC through Baltimore in 1861; it took two independent claims for Lincoln to be convinced the threat was real

To reduce wrinkles in clothing, research recommends gentle wash cycles with more water and tumble drying with smaller loads and longer times.

Chaos theory—informally known as the butterfly effect—is the reason why weather forecasts are presented with probabilities rather than certainties.