In 1934, a group of researchers ventured into the streets of São Paulo to examine the living conditions of the city’s workers and were shocked by the reality they encountered. An Italian immigrant requested their assistance, asking for two baskets of food. Some families agreed to participate in the study only after the researchers personally contributed money to help them purchase food. Others declined to cooperate for fear of reprisals from their employers.
The survey was initiated by the newly established Free School of Sociology and Politics of São Paulo, founded in 1933. Among the families who shared their income and expenditure data, 27% earned insufficient wages to ensure each family member received 2,500 calories per day—at the time, considered the minimum necessary for survival.
While most workers could consume enough to sustain their energy levels, many had fallen into commercial debt, and few maintained a balanced diet. “Low incomes force working families to choose foods they consider undesirable, but which become the only options available to provide them with the necessary energy,” stated the study’s final report, published in Revista do Arquivo Municipal de São Paulo in June 1935.
The study was led by American sociologist Horace Bancroft Davis (1898–1999), one of the first professors hired by the São Paulo school, and had an immediate impact at a time when Brazil was just beginning its industrialization and was still debating how to best implement social protection laws, such as the one that would establish the minimum wage.
Diário de Notícias (RJ) – Hemeroteca, Brazilian National LibraryGetúlio Vargas signs the minimum wage decree in 1940Diário de Notícias (RJ) – Hemeroteca, Brazilian National Library
“The debates surrounding the minimum wage in Brazil have always been closely tied to the issue of subsistence,” notes economics professor Victor Cruz e Silva from the Federal University of Paraná (UFPR). “Other countries, such as the United States, were already concerned with sharing the economy’s productivity gains with workers, but it took some time for this to become a significant issue in Brazil, as we still needed to ensure basic survival conditions for our workers.” The first country to set a minimum wage by law was New Zealand, in 1894.
In an article published in September in the Journal of the History of Economic Thought, Cruz e Silva highlighted the work coordinated by Davis as the first to apply rigorous research methods and statistical analysis to the study of workers’ living conditions in Brazil. The researchers sent questionnaires to 221 working-class families and succeeded in obtaining detailed information about food consumption from 75 families, who recorded the data in notebooks over a three-month period.
At the same time, doctors conducted similar investigations into the diets of poor families using simpler questionnaires, yielding comparable results. The study that generated the greatest impact, also published in 1935, was led by Josué de Castro (1908–1973) from Pernambuco, who later published the book Geografia da Fome (Geography of hunger) in 1946. He found that workers in Recife consumed an average of 1,646 calories per day, far below the recommended amount and half the average observed by Davis in São Paulo, which was 3,235 calories per day (see Pesquisa FAPESP issue nº 324).
Shortly after, Samuel Harman Lowrie (1894–1975), another American sociologist who taught at the São Paulo school, applied Davis’s methodology to study the conditions of São Paulo’s public cleaning service workers. He collected data from 306 families and conducted an extensive survey on the evolution of food prices in the city, using records from the former São Paulo Commodities Exchange and the municipal body overseeing open-air markets.
Guilherme Gaensly / Collection from the Moreira Salles InstitutePort of Santos, early twentieth century: shipping coffee, the foundation of Brazil’s economyGuilherme Gaensly / Collection from the Moreira Salles Institute
Lowrie concluded that civil servants earned enough to support their families but showed that food prices were rising faster than their salaries. He recommended that the city government adjust wages accordingly. For Lowrie, it was essential not only to address this wage gap but also to meet other basic needs and prevent children and teenagers from leaving school and entering the workforce early to support their families.
These studies, though based on small sample sizes, made significant contributions to the debates on minimum wage by highlighting three central aspects, according to Cruz e Silva: the insufficient income of many workers to ensure a healthy diet, regional disparities, and the need for a mechanism to protect workers from food price inflation.
Getúlio Vargas (1882–1954) advocated for the institution of a minimum wage in Brazil even before assuming leadership of the provisional government established by the 1930 Revolution. However, it took him a decade to fulfill this commitment. The 1934 Constitution included the minimum wage as one of the rights guaranteed to workers, and the first step toward its implementation was taken in 1936 when Congress passed a law outlining the procedures for determining its value. Years of discussion followed before it was finally enacted in May 1940.
“The pressure from unions in urban centers was mounting, but there was strong opposition from business owners. The political turmoil of the period led Vargas to delay the decision, balancing between the two opposing forces,” comments historian Paulo Fontes from the Federal University of Rio de Janeiro (UFRJ), who studies the history of the labor movement in Brazil. The final decision was only made during the Estado Novo (1937–1945), a regime that granted Vargas dictatorial powers and subjected both employer and employee unions to strict government control.
According to the 1934 Constitution, the minimum wage was to be “capable of satisfying, according to the conditions of each region, the normal needs of the worker.” A 1936 law specified five of these needs: food, housing, clothing, hygiene, and transportation.
Brazilian National LibrarySugarcane cutters in Campos dos Goytacazes (RJ), undated: Guaranteed minimum wage was only extended to rural workers in the 1960sBrazilian National Library
The Ministry of Labor organized a census survey to investigate living conditions across the country, collecting data on income and spending from 834,000 low-income workers in more than 1,000 municipalities. In calculating food expenses, a basket of 13 essential products, as outlined in a 1938 decree, was considered—meat, milk, beans, rice, flour, potatoes, tomatoes, bread, powdered coffee, bananas, sugar, cooking oil, and butter.
The census revealed that incomes were higher in capital cities, where the cost of living was also elevated, while workers in rural areas faced greater difficulties. The average per capita income of families in the sample residing in capitals was 56% higher than that of families living in rural areas. Food expenditures accounted for 55% of the household budget in large urban centers, while in rural areas, they represented 68% of the total budget.
The decree that established the first minimum wage in 1940 divided the country into 50 subregions, setting 14 different wage levels. In general, the reference point was the average salary of low-skilled workers in the market, as determined by the census. The wage floors ranged from 90,000 réis, applicable to the poorest areas in the North and Northeast, to 240,000 réis, the amount set for the city of Rio de Janeiro, which was then the capital. However, it remains unclear whether these wages were sufficient to meet the basic needs outlined by the legislation. While census researchers asked people to estimate their spending, they did not collect data on the prices of food and other essentials, and the government did not yet have comprehensive statistics on this.
Access to this information was limited. The labor market was highly informal, and effective protection was not extended to rural workers until the 1960s. “The news took a long time to reach the majority, especially the poorest,” says economics professor Thales Zamberlan Pereira from the Getulio Vargas Foundation (FGV) in São Paulo, who studied wage disparities across Brazil’s regions at the start of the twentieth century. “Even among industrial workers, who were more organized, unionization rates were still very low at that time, which weakened their bargaining power.”
The legislation stipulated that the value of the minimum wage could be reviewed by regional commissions three years later, in 1943. There were two readjustments that year to compensate for the inflation accumulated since the start of the decade, but the purchasing power of the minimum wage was quickly eroded again. Rising prices and growing union unrest prompted the government to implement more frequent readjustments starting in 1951, when the wage value was once again adjusted.
Public Domain / Collection from the Moreira Salles Institute | Léo Ramos Chaves / Pesquisa FAPESPA street market in Rio de Janeiro in 1923 and a current market in São Paulo: Access to healthy and sufficient food is one of the basic needs that the minimum wage aims to addressPublic Domain / Collection from the Moreira Salles Institute | Léo Ramos Chaves / Pesquisa FAPESP
“The minimum wage gradually became more central to the labor agenda,” says economist Renato Perim Colistete from the School of Economics and Administration at the University of São Paulo (FEA-USP), who studied the evolution of wages, productivity, and profits in Brazilian industry during the second half of the twentieth century. “Unions recognized that increases in the minimum wage led employers to raise wages for other job categories above the minimum, rewarding slightly more qualified workers. This became an important element in their negotiation strategies with companies.” This effect is still observed in Brazil today, according to various studies.
After the 1964 coup d’état, the military governments dismantled the tripartite commissions of the Vargas era, abolished regional minimum wages, and suppressed wages for an extended period. Wage recovery only began after the implementation of the Real Plan in 1994 and was further accelerated from 2007 onwards, when a new policy, negotiated between the government and trade unions, guaranteed real wage increases in addition to annual inflation adjustments.
According to the Inter-Union Department of Statistics and Socioeconomic Studies (DIEESE), the real value of the minimum wage declined by half between 1986 and 1994. In the following three decades, however, its purchasing power nearly doubled. In 1995, one minimum wage was sufficient to purchase a basic food basket, consisting of the same products listed in the 1938 decree, which is still in effect. The current value of the minimum wage, adjusted in January to R$1,518, allows for the purchase of 1.8 food baskets.
The appreciation policy made a significant contribution to reducing income inequality in the country, which decreased during this period, without producing substantial negative effects on the labor market, as many economists had feared due to concerns about rising labor costs for companies. “The best available studies show that, even during periods when unemployment and informal employment increased following minimum wage adjustments, the negative impact was small,” says economist Miguel Foguel from the Institute for Applied Economic Research (IPEA), linked to the Ministry of Planning. Foguel evaluated the policy’s effects in his master’s thesis, defended at the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) in 1997, and in later works.
The primary concern among economists today is the increasing cost of the appreciation policy for the government’s finances. “The economic growth of the early 2000s created favorable conditions for this policy, allowing for a significant recovery in the purchasing power of the minimum wage without generating inflation and other negative effects. However, sustaining the costs of this policy has become more difficult,” says sociologist Pedro Ferreira de Souza from IPEA, author of Uma História da Desigualdade: A Concentração de Renda entre os Ricos no Brasil (1926–2013) (A history of inequality: Income concentration among the rich in Brazil [1926–2013]; Hucitec, 2018). The 1988 Constitution expanded the scope of the minimum wage in Brazil by defining it as the floor for Social Security pensions and retirement benefits for the elderly and people with disabilities, no longer just a reference for active workers. Studies show that this linkage produced significant distributive effects but also considerably increased the weight of Social Security in the federal budget.
The story above was published with the title “The first step” in issue in issue 349 of march/2025.
Scientific articles
BRITO, A. et al. The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach. Journal of Post Keynesian Economics. Vol. 40, no. 4. Sept. 21, 2017.
COLISTETE, R. P. Salários, produtividade e lucros na indústria brasileira, 1945–1978. Revista de Economia Política. Vol. 29, no. 4. Dec. 2009.
CRUZ E SILVA, V. Sense and sensibility: A history of the early Brazilian cost-of-living indexes in pursuit of a minimum wage, 1935-1939. Journal of the History of Economic Thought. Vol. 46, no. 6. Sept. 26, 2024.
DAVIS, H. Padrão de vida dos operários da cidade de São Paulo. Revista do Arquivo Municipal de São Paulo. Vol. 13, no. 2. June 1935.
PEREIRA, T. A. Z. The North-South divide: Real wages and welfare in Brazil during the early 20th century. Revista de Historia Económica. Vol. 38, no. 1. May 14, 2019.
