From 1920 to 2020: How labor laws have changed in the last 100 years

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A lot can change in a century. Cars have gone from the Ford Model T to Tesla Model 3. The U.S. population has tripled in size from 106.5 million to over 327 million. 

In addition to changes in population and technology, changing labor laws have helped create better working conditions for employees across the country. So what’s changed, and what do employers and employees think should change next? Let’s use the 2019 State of Time Tracking Report to find out. 

 

The minimum wage: from 25 cents to $7.25 per hour

The federal minimum wage didn’t exist until 1938 when Congress signed the Fair Labor Standards Act (FLSA) into law. Some states had their own minimum wage laws. But many of those laws were overturned in a 1923 Supreme Court case that ruled a minimum wage unconstitutional. Fifteen years later, Congress enacted the first minimum wage at 25 cents an hour. 

Jump ahead to 2020: The federal minimum wage hasn’t changed since 2009. Currently, it’s $7.25 an hour. Thirty states, Washington D.C., and Guam have a higher minimum wage than the federal standard. But in the remaining 20 states, many Americans are left struggling to make ends meet. And if you adjust the minimum wage for inflation, you’ll find it hasn’t really changed since it became law.

Raising the federal minimum wage is a hot topic these days, but many businesses and workers support an increase. 70% of business owners surveyed in the time tracking report support a minimum wage increase. 71% of employees surveyed also support an increase. 

29% of employers said they support an increase because the cost of living has increased. 17% said an increase would reflect economic growth. However, employers and employees didn’t agree on how much the increase should be. 

28% of employers think $10 an hour is enough. 26% of employees are hoping for $15 an hour. Whatever happens to the minimum wage, an update feels long overdue for employers and workers in the U.S. 

 

The workweek: from 16-hour days to 8-hour days, plus overtime

Even before the 1920s, unions and laborers were shifting the workweek. In as early as the 1830s, laborers were protesting for an eight-hour workday. At the time, 10- and 16-hour days were common. Over the next century, an eight-hour workday gained popularity. But many employers weren’t yet on board. 

With the passing of the FLSA, the 40-hour workweek, an eight-hour workday, and overtime pay became a national standard. The overtime pay rate of time and a half became a requirement for nonexempt workers making less than $1,560 annually. 

Since then, the exemption threshold has increased about once a decade. The most recent update set the exemption threshold at $35,568 annually. This increase was years in the making, with efforts to increase the overtime threshold going on since 2016. But not everyone was aware of the change. When asked about the proposed increase in late 2019, 50% of employees and 27% of employers weren’t aware of it. 

The majority (61%) of employers supported the proposed increase. And 77% of employees supported the proposed increase. Interestingly, salaried employees were more supportive of the increase than hourly employees. More than likely, those making more than the then-current annual threshold ($23,660) were working over 40 hours regularly, without overtime pay. 

 

Rest and meal breaks: from none to state-mandated breaks

Long workdays of 10 or more hours were common in the 1920s. But workers didn’t receive rest or meal breaks. With the FLSA, workdays got shorter, but breaks weren’t a requirement. Even today, there are no federal regulations on breaks for employees. However, about 20 states maintain their own break laws, with nine mandating both lunch and rest breaks. 

Luckily, many employers understand the benefit of rest breaks. Only 3% of employers surveyed said they do not permit employees to take breaks. And of the 93% of employers who provide breaks, 16% said they don’t pay for rest or meal breaks. Another 34% said they deduct time from employee paychecks for meal breaks automatically. Unfortunately, automatic deductions can lead to off-the-clock work and employee wage theft. 

 

Comparing 1920 with 2020

A lot can change in 100 years. But are workers today better off than they were in the Roaring ‘20s? Yes, and luckily for the American labor force, a lot of things have changed. Thanks to the FLSA, American workers have a safety net in place for pay, overtime, and more—one that didn’t exist back in 1920. 

However, not all of the safety nets in place are up with the times. The minimum wage has stagnated, breaks are not required, and the overtime rule took three years to pass. Things have changed for the better, but that evolution was slow. Hopefully, the next 100 years will see even more progress for the betterment of all workers and employers in the U.S.