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Minnesota’s troubled past with the minimum wage: from leader to outlier

Minnesota was one of the first states to pass minimum wage laws, but has since fallen behind.

Two women working in a Minnesota machine shop in 1943.
Courtesy of the Minnesota Histor

This is one in a series of articles funded by a grant from the Northwest Area Foundation.

Ray Faricy never shied away from a controversy. During the 1973 legislative session, the Democratic state representative from St. Paul pushed for tougher handgun control, an equal rights amendment and a ban on abortion in the state’s constitution. He also resolved to establish the first-ever statewide minimum wage in Minnesota.

Constituents flooded his office with letters of outrage over the wage proposal. Some were handwritten and some typed – many of them are tucked away in his files in the Minnesota Historical Society.

“Ray, this bill, to me, looks like a special interest piece of legislation that sounds extremely good on the surface but has the potential for a devastating effect on the citizens of Minnesota,” wrote Gerard Nichols of St. Paul.  

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In the end the proposal passed, etching in law books the state’s first minimum wage at $1.80 per hour that applied to both businesses in the metro and in the far-flung regions of the state. But the wage debate in Minnesota actually started 60 years before Faricy’s bill passed, and it would continue on long after.

Minnesota was one of the first dozen states to pass minimum wage laws and workplace standards for women and children in 1913, but court cases challenging the constitutionality of the minimum wage kept it from being implemented for decades. Even after Faricy passed the state’s first minimum wage law, the battles raged on, now focusing on how high the wage should be set.  

Lawmakers this year will once again pick up the debate, considering an increase that would push the state’s minimum wage to $9.50 per hour, the highest in the nation. Minnesota’s current minimum wage is $6.15 per hour for large employers, only one of four states in the nation with a wage below the federal level, although most companies must pay a higher federal wage because they engage in inter-state commerce. And despite an all DFL-controlled state government, the minimum wage — as it has throughout its troubled 100-year history — faces major political obstacles to getting passed.

Progressive Era and women’s rights

From the start, the minimum wage debate was about women.  

The concept of minimum-wage legislation gained popularity during the Progressive Era, as citizens battled rapid industrialization and corporate capitalism. Hourly wage standards for the lowest-paid workers were pushed to combat these so-called “evils.” Most of those workers were women and children.

Between 1912 and 1923, 15 states enacted some kind of minimum wage laws. Minnesota was one of the first in 1913, passing a proposal to prohibit children under 14 to work in factories, mills, mines or any workhouses. Children under 16 were not allowed to work more than 48 hours a week or eight hours a day.

For women, the act stated that no woman could be forced to work more than 10 hours a day or 58 hours a week. It regulated everything from lunch breaks, weekend and overtime hours to ventilation systems and paint conditions.

Taking an example from several other states, the new law also established a Minimum Wage Commission. In its first order, which was supposed to go into effect in November of 1914, the commission called for a weekly minimum wage of between $8.25 and $8.50 for women and minors in the state’s lowest-paid jobs.

Court battles

But business owners took action before that could happen. In the fall of 1914, the A.M. Ramer Co., a candy store in Winona, filed a suit in Ramsey County Court arguing the law was unconstitutional and deprived the employer and employee of the right to make contracts.

Then-Minnesota Attorney General Samuel Iverson defended the new wage laws. “The protection of the health, morals and happiness of the citizens has always been held a proper subject legislation and not in inhibition of the federal constitution,” he argued. “Our laws must change and develop with changing conditions of society.”

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But Ramsey County Judge Frederick Catlin sided with businesses, adding that the new law instituted “radical and far-reaching innovation in the state.”

“It will be necessary for employers of women and minors, in all the enumerated occupations, to readjust their business arrangements to an untried standard,” Catlin wrote. “Manifestly many women and minors incapable of earning the ‘minimum wage’ must lose their employment.”

Minimum Wage: Too low or too costly?He issued a temporary injunction blocking the law until the U.S. Supreme Court ruled on a similar case in Oregon. An appeal was immediately taken to the state Supreme Court and arguments were heard in January of 1915. But a motion for re-argument wasn’t heard until two years later. By 1918, the state Supreme Court had unanimously found the wage commission constitutional.

But a U.S. Supreme Court ruling complicated things. Just three years after women gained the right to vote in 1920, the Supreme Court heard Adkins v. Children’s Hospital. The Children’s Hospital claimed it could not afford to pay its female housekeepers the District of Columbia’s statutory minimum wage. In a close decision, the court ruled that if women had the right to vote, they also had the same rights to work for less than the state-sanctioned minimum wage.

It its opinion, the court stated that the legal and political differences between the sexes “have now come almost, if not quite, to the vanishing point.”

The decision led to the striking down of most other minimum wage laws across the nation. In 1925, the Minnesota Supreme Court upheld the law as applied to minors, but the state’s attorney general said the minimum wage was unconstitutional as it applied to adult women.  

By the end of the 1920s, 17 states had enacted original minimum wage laws, including Minnesota. Of those, seven were found unconstitutional and five were either never enforced or repealed.  The remaining laws were lightly enforced, as states knew they would land in court if they pushed too hard.  

Gov. Floyd Olson and Great Depression

The Great Depression heightened the minimum wage debate in Minnesota and across the nation and led to one of the most violent strikes in the state’s history.

Disenchanted workers first flexed their muscles in 1930 when they elected Floyd Olson, the first Farmer-Labor governor in Minnesota’s history. He rode into office on a platform built by progressive politics and the rights of laborers and farmers.

Olson wasted no time. In his first term as governor, he signed an executive order that provided for a minimum wage of 45 cents per hours to all state workers, a system for unemployment insurance and equal pay for women. His views at the time were considered radical and his enemies branded him a Communist. “I do not mind being called a red,” Olson famously said. “I would prefer it to the term ‘yellow.’”

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But the Great Depression only worsened, hitting its peak in 1934. Back then Minneapolis was a non-union city, but workers began organizing for improved working conditions and a higher minimum wage. By early May, the General Drivers Local 574 of the International Brotherhood of Teamsters (IBT) had organized 3,000 truckers into a union. When employers refused to recognize the Teamsters, its leadership called a strike.

Trucking operations came to a complete stop. The conflict escalated in late May at the city market, where police and strikers battled for two days. There were hundreds of arrests, 200 people injured and four dead. In the end, the union was recognized and its demands settled, which included a minimum wage of 50 cents per hour for truck drivers.

The truckers’ strike was a pivotal moment in the debate on workers rights and minimum wage in Minnesota and nationally. Three years later President Franklin Roosevelt called for a federal minimum wage law, and the next year he signed the Fair Labor Standards Act (FLSA). The act banned child labor, set the minimum wage at 25 cents per hour and the maximum work week at 44 hours.

But the constitutional debate wasn’t quite over. After the FLSA was passed, the Darby Lumber Co. out of Georgia was charged with violating the act. The company argued it shouldn’t apply to them because they participated in intrastate commerce, something the federal government had no business regulating. An appellate court agreed with Darby, but in 1941, the U.S. Supreme Court upheld the act in an 8-0 vote.

In the court’s opinion, then-Chief Justice Harlan Stone said the constitutionality of minimum wage was “no longer open to discussion.”

Minimum wage goes statewide

Despite federal and state action on the minimum wage, Minnesota’s wage standards depreciated. By 1968, the Department of Labor estimated the lowest-paid workers in the state earned about 70 cents per hour, ahead of only Kentucky.

Enter Faricy. In 1973 he introduced Minnesota’s own version of the Fair Labor Standards Act. He initially pushed for a $2 per hour minimum wage for all workers – 40 cents higher than the federal minimum wage at the time – but he faced strong opposition. Fearing the bill would sink when it was put up for a full vote, Faricy amended the proposal down to $1.80 per hour and forged ahead.

Some criticized him for backing down from $2 per hour and adding a provision that provided overtime pay only after 48 hours of work, a departure from the shorter 40-hour work week in federal law at the time. “How would you like your work week lengthened and your salary reduced to a bare subsistence?” read a hand-written note signed by Joseph Seide of Minneapolis, a self-described “irate taxpayer and voter.”

After a four-hour debate on the state House floor, the first minimum wage bill was passed. But not without a fight from opponents, who said the bill would result in job losses from small businesses that can’t afford the expense. “You can talk about paying a minimum wage,” then-House Minority Leader Aubrey Dirlam told the chamber, “but first they’ve got to have a job.” DFL Sen. John Watston successfully passed the bill in the state Senate. 

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The act established, for the first time in Minnesota, a statutory minimum wage rate of $1.80 per hour for adults and $1.62 for workers under the age of 18. It set the minimum working age to 14. The first Minnesota minimum wage law also had a tip credit: It allowed an employer to take a credit of up to 25 percent of the minimum wage rate against the pay of individuals who directly received tips. To be subject to the credit, the employee in question had to receive $20 or more in tips per month. The tip credit proposal would be removed years later but has stayed a constant part of the minimum wage debate.

The new law was expected to make the biggest impact in rural communities. Faricy estimated that 200,000 Minnesota workers were not covered by federal minimum wage or union contracts.

Modern minimum wage

Since it’s establishment, the state minimum wage has fluctuated with the political tides.

Under the governorship of Iron Ranger and Democrat Rudy Perpich, the minimum wage went up four times, from $3.35 an hour in 1983 to $3.85 an hour in 1989 and $3.90 per hour in 1990. Perpich was ousted by Republican Arne Carlson in 1990, but the minimum wage saw one more increase in 1991 that was passed under his watch. That year the minimum wage hit $4.25 an hour.

The next decade, however, saw little movement on the issue under Carlson. The Republican governor vetoed a minimum wage increase at least three times. In 1998 the wage was increased for the first time in seven years to $5.15 per hour, after Carlson agreed to sign a proposal during a second special session. He asked that the bill have an “opportunity wage provision,” which allowed for a lower wage to be paid to workers under 20 years old during the first 90 days on the job.

Democrats faced similar roadblocks under Republican Gov. Tim Pawlenty. In 2005, DFL Sen. Ellen Anderson and her Senate colleagues pushed for an increase of $2 an hour over two years. But Pawlenty and House Republicans refused to support such a large bump in the wage. They eventually compromised to raise the wage from $5.15 an hour to a high of $6.15 for large employers. It was the first increase since 1997.  

Business leaders and House Republicans viewed the increase as a huge defeat. The bluntest assessment came from then-GOP Rep. Randy Demmer, who said lawmakers were telling businesses that, “we love to have ya here, so we can screw ya.” Pawlenty vetoed another attempted increase in 2008.

Lawmakers consider highest wage

Lawmakers heading back to St. Paul in late February can expect a rapid push from House DFLers and Gov. Mark Dayton to pass a minimum wage that hits $9.50 per hour for large employers.

Already, lawmakers are hearing arguments that have echoed over the last 100 years of the wage debate. Democratic senators in rural and border communities have been hesitant to go much higher than the federal wage, which sits at $7.25, in fear of hurting Mom and Pop businesses in their districts. House Democrats, emboldened by a push from Washington, say the wage has been too low for too long.

At least one lawmaker, DFL Rep. Tom Anzelc of Balsam Township, wants to put an end to the minimum wage debate. He has proposed a ballot initative that would ask voters to raise the minimum wage to $10 per hour and adjust it to inflation after that. It’s an uphill climb to pass any constitutional amendment, but Anzelc is tiring of these debates.

“I’ve been at the Capitol in some form or another since 1968 and I’ve watched and I’ve participated in every one of these minimum wage arguments…the outcome every time is an excruciatingly difficult process of differing philosophies which leads to polarization,” Anzelc said. “I see this as a way of getting beyond this historical gridlock.”