The Second New Deal was a wave of federal legislation passed between 1935 and 1938 that moved President Franklin Roosevelt’s response to the Great Depression away from short-term emergency relief and toward permanent structural reform. Where the earlier New Deal programs tried to stop the economy’s freefall, this second phase built lasting institutions: Social Security, federal union rights, a national minimum wage, and a centralized Federal Reserve. At least seven major laws came out of this period, and most of the framework they created still governs American workplaces, retirement, and banking today.
Why Roosevelt Shifted Course in 1935
Two forces pushed the administration to change direction. The 1934 midterm elections gave Democrats larger majorities in both chambers of Congress, a rare gain for a sitting president’s party, and handed Roosevelt an unusually free hand to legislate. At the same time, the Supreme Court began dismantling the First New Deal. In May 1935, the Court unanimously struck down the National Industrial Recovery Act in A.L.A. Schechter Poultry Corp. v. United States, ruling that Congress had delegated too much lawmaking authority to the executive branch without meaningful standards.
That decision forced Roosevelt to rebuild on firmer constitutional ground. The laws that followed relied on the federal taxing power, the commerce clause, and direct federal spending rather than the broad industrial codes the Court had rejected.
The Emergency Relief Appropriation Act and the WPA
Congress passed the Emergency Relief Appropriation Act in April 1935, funding what became the largest employment program in American history. The statute appropriated a base $4 billion and authorized redirecting up to $880 million more from unused balances in earlier recovery programs, bringing available funds to roughly $4.88 billion.1GovInfo. Emergency Relief Appropriation Act, 49 Stat. 115 The money was divided across highways, rural rehabilitation, housing, the Civilian Conservation Corps, and educational assistance for professional and clerical workers, with broad presidential discretion over how to allocate it.
The most visible result was the Works Progress Administration, created by executive order in May 1935. The WPA put unemployed Americans directly on the federal payroll instead of routing funds through state relief agencies. Workers built roads, bridges, schools, and airports. The agency also funded writers, artists, musicians, and theater workers whose professional careers had collapsed with the economy. Over eight years, the WPA employed more than 8 million people before Congress wound it down in 1943 as wartime production absorbed the labor force.
The National Labor Relations Act
The National Labor Relations Act of 1935, known as the Wagner Act, changed the balance of power between employers and workers. Codified at 29 U.S.C. §§ 151–169, it established a federal right for employees to form unions, choose bargaining representatives, and negotiate collectively over wages, hours, and working conditions.2Office of the Law Revision Counsel. 29 USC Ch. 7 – Labor-Management Relations Before this law, employers could freely fire, threaten, or blacklist workers who tried to organize.
The act also created the National Labor Relations Board to enforce these rights. The NLRB investigates unfair labor practice complaints and runs secret-ballot elections when workers seek union representation. Its protections reach beyond formal union activity to cover “concerted activity,” meaning employees acting together to address workplace concerns, including openly discussing wages with coworkers or raising safety issues collectively.3National Labor Relations Board. Concerted Activity An employer cannot legally discipline workers for those discussions.
The Social Security Act
The Social Security Act of 1935, codified at 42 U.S.C. Chapter 7, created the first national insurance system to protect Americans from poverty in old age, disability, and unemployment.4Office of the Law Revision Counsel. 42 USC Ch. 7 – Social Security The original law had three pillars: monthly retirement benefits for workers 65 and older, a joint federal-state unemployment insurance program, and grants to states for assistance to dependent children and the blind.
Funding came from a payroll tax split equally between employees and employers. That choice tied benefits to workforce participation rather than treating them as general welfare, and it gave the program a dedicated revenue stream separate from the annual appropriations process. Employers were required to withhold the tax and remit it to what was then called the Bureau of Internal Revenue, now the IRS.
The program has expanded significantly since 1935, and the full retirement age has gradually risen from 65 to 67 for anyone born in 1960 or later.5Social Security Administration. Retirement Age and Benefit Reduction The underlying structure, though, is the same one Congress built in 1935.
The Banking Act of 1935
The Banking Act of 1935 restructured the Federal Reserve System to move authority over monetary policy from the regional Reserve banks to Washington.6Office of the Law Revision Counsel. 12 USC 228 – Banking Act of 1935 Before the law, regional Federal Reserve banks held significant independent power over credit conditions in their districts, which had contributed to inconsistent responses during the banking crises of the early 1930s.
The act made three key changes. It reorganized the Federal Reserve Board into the Board of Governors of the Federal Reserve System, with seven members serving staggered fourteen-year terms, and removed the Secretary of the Treasury and the Comptroller of the Currency from the board.7Office of the Law Revision Counsel. 12 USC Ch. 3 – Federal Reserve System It formally established the Federal Open Market Committee, giving the seven governors a majority over the five regional bank representatives so that national policy would take priority over regional interests. And it granted the board authority to set reserve requirements for member banks, a direct tool for influencing how much banks could lend.
The Revenue Act of 1935
Widely called the Wealth Tax Act, the Revenue Act of 1935 reshaped the federal tax code to place a heavier burden on the highest earners and largest corporations. The law raised the top individual income tax rate to 75 percent on income above $5 million, a rate aimed at extreme wealth concentration.8Internal Revenue Service. Theme 2 Taxes in US History – Lesson 5 The Wealth Tax of 1935 and the Victory Tax of 1942 Estate tax rates also went up, limiting the transfer of large fortunes across generations.
On the corporate side, the act replaced the flat corporate income tax with a graduated system. Roosevelt argued that the flat rate unfairly burdened smaller firms while advantaging concentrated corporate power, and he pushed Congress to adopt rates that started lower for small businesses and scaled upward for the largest corporations. The law also imposed a tax on excess corporate profits to discourage monopolistic accumulation. Specific rates have changed many times since, but the principle of progressive federal taxation established here remains central to the modern tax system.
The Public Utility Holding Company Act
The Public Utility Holding Company Act of 1935 targeted the massive utility conglomerates that had grown unchecked during the 1920s. By the early 1930s, a handful of holding companies controlled most of the nation’s gas and electric service through complex corporate pyramids, layers of subsidiaries that let executives extract profits while sitting beyond the reach of state regulation. The act declared these structures injurious to investors, consumers, and the public, and directed the Securities and Exchange Commission to oversee their simplification.9U.S. Securities and Exchange Commission. Public Utility Holding Company Act of 1935
The most contested provision, nicknamed the “death sentence” clause, required the SEC to break up holding companies that could not demonstrate a legitimate economic reason for their corporate structure. Companies were forced to reorganize into geographically integrated systems, eliminating the distant holding-company layers that had made effective oversight impossible. Congress repealed the act in 2005 after decades of energy deregulation, though the SEC and the Federal Energy Regulatory Commission retained oversight authority over utility holding companies.
The Rural Electrification Act of 1936
In 1936, nearly 90 percent of American farms lacked electric power because extending lines to sparsely populated areas was unprofitable for private utilities.10U.S. Department of Agriculture. Celebrating the 80th Anniversary of the Rural Electrification Administration The Rural Electrification Act addressed this by creating the Rural Electrification Administration, which offered low-interest federal loans to cooperatives and local organizations willing to build electrical infrastructure in underserved areas.
The federal government did not build or operate the power systems itself. Instead, locally owned cooperatives borrowed federal funds to string lines, install transformers, and connect farms. That model spread electricity across rural America within a generation. Hundreds of rural electric cooperatives still serve communities today.
The Fair Labor Standards Act of 1938
The Fair Labor Standards Act was the last major law of the Second New Deal, and it established the first national floor for wages and ceiling for working hours. Codified at 29 U.S.C. Chapter 8, the law set an initial minimum wage of 25 cents per hour for workers in interstate commerce, capped the standard workweek at 40 hours, and required time-and-a-half pay for overtime.11Office of the Law Revision Counsel. 29 USC Ch. 8 – Fair Labor Standards It also banned oppressive child labor, effectively prohibiting minors from working in hazardous industries and restricting work in manufacturing and mining.
The FLSA still governs wages and hours for most American workers. The federal minimum wage sits at $7.25 per hour as of 2026, though many states set higher rates.12U.S. Department of Labor. State Minimum Wage Laws Employees are classified as exempt or non-exempt based on their duties and salary, with non-exempt workers entitled to overtime and minimum wage protections.
What Remains Today
Taken together, the Second New Deal replaced a patchwork of emergency measures with permanent federal responsibilities. Retirement income became a national insurance program. Union organizing became a protected legal right. Wages, hours, and child labor became subjects of federal law. Monetary policy moved to a centralized board in Washington. Every one of these institutions is still in operation, and the day-to-day rules that govern American paychecks, retirement accounts, and workplace disputes trace back to this four-year burst of lawmaking.