The Political Economy of Minimum Wage Setting: The Factories and Shops Act of Victoria (Australia), 1896-1913

Andrew J. Seltzer

No 2, CEH Discussion Papers from Centre for Economic History, Research School of Economics, Australian National University

Abstract: The Victorian Factories and Shops Act of 1896, the second minimum wage law in the world, empowered administrative agencies ("Special Boards") to set trade-specific minimum rates based on age, sex, and occupation. Much like modern debates, Victorian supporters of minimum wages argued that they would protect vulnerable workers while opponents argued that they would increase employers’ costs, resulting in unintended consequences for workers. Evidence from the actual minimum wages passed under the Act suggests that Boards were loosely constrained by market factors, but also that they had some discretion in minimum wage setting. This discretion was used differently by individual Boards; some essentially followed the market for their trades while others set minimum rates that were binding for at least some workers. To the extent that rates were binding, they tended to reduce inequality among adult male workers, particularly after a 1907 Federal ruling established a living wage for employers with operations in multiple states. However, minimum wages also increased inequality across groups, increasing wages of adult men relative to those of women and youths. The Act formally institutionalised gender-based pay differences, a practice that continued in Australian minimum wage setting for over 70 years.

Keywords: Minimum wages; Australia; Protective Legislation (search for similar items in EconPapers)
JEL-codes: J88 N37 N47 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-his, nep-hpe and nep-lab
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