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Theory and Evidence on the Political Economy of the Minimum Wage Russell S. Sobel West Virginia University This paper examines how closely the minimum wage has been set to the most popularly stated goals of minimum-wage policy. I first estimate these goals: the minimum-wage rate at which the relevant labor demand is unitary elastic—maximizing the total earnings of minimum-wage workers (about $5.35)—and the level that would lift a typical minimum-wage worker’s family out of poverty (about $5.17). I can reject that actual minimum-wage policy has been driven by a desire to achieve these goals and find that a simple interest group model best explains the historical path of the mini- mum-wage rate. I. Introduction The Fair Labor Standards Act of 1938 was designed to achieve spe- cific public policy goals through the use of a federally mandated minimum wage. It is interesting that the House altered the original bill to give Congress, rather than a separate Wages and Hours Board, control over the minimum-wage rate (Seltzer 1995). Thus, since its beginning, the pursuit of these policy goals has been subjected to the political pressures facing Congress. Previous research (Silber- man and Durden 1976; Kau and Rubin 1978; Bloch 1980, 1993; Selt- zer 1995) has found that interest group pressure significantly influ- enced congressional voting on both the passage of the original act I would like to thank Editor Sherwin Rosen and an anonymous referee of this Journal for helpful comments and suggestions. In addition, I am indebted to J. R. Clark, Cliff Hawley, Bill Reece, Bill Trumbull, Sudeshna Bandyopadhyay, Randy Hol- combe, Ron Balvers, Barry Hirsch, and Stratford Douglas, who provided comments and suggestions on drafts of this paper. [Journal of Political Economy , 1999, vol. 107, no. 4]  1999 by The University of Chicago. All rights reserved. 0022-380