An abbreviated timeline cut and pasted from “Working Class Hero”, in The Nation:

Given the corporate sponsorship of contemporary King day celebrations, it may come as a surprise that the holiday began as a union demand in contract negotiations. In 1968, just four days after King’s assassination, Representative John Conyers introduced a bill to make the slain leader’s birthday a national holiday.

As black union leader William Lucy testified before Congress, King’s prolabor politics gave the holiday a “special significance” for the organized working class. Those politics had emerged from King’s close collaboration in the 1950s and early 1960s with union activists like Bayard Rustin, A. Philip Randolph and Cleveland Robinson, a leader of the New York City-based Distributive Workers of America (DWA). Lucy highlighted that King was shot while supporting a strike in Memphis by members of Lucy’s union, the American Federation of State, County and Municipal Employees (AFSCME).

Unions provided the financial and social capital to extend the movement nationwide. That support was coordinated by DWA leader Robinson, a close friend of the King family. King’s widow, Coretta Scott King, invited Robinson and Conyers to kick off the campaign for a national holiday at a 1969 birthday rally at the new King center in Atlanta. At the rally, Conyers recounted his bill’s defeat in Congress and expressed hope for more support the following year. Robinson called for direct action, declaring, “We don’t want anyone to believe we hope Congress will do this. We’re just sayin’, Us black people in America just ain’t gonna work on that day anymore.”

By 1973, with the King holiday bill still languishing in Congress, working-class blacks were doing just what Robinson recommended. “I have been told by people in plant after plant in Detroit,” Conyers testified in Congress that year, “that on January 15th, if it is not in the bargaining contract, one does not come to work anyway. It is a holiday already.”

In 1976 the King center strengthened its alliance with unions by focusing MLK birthday celebrations on the demand for full employment–a centerpiece of the AFL-CIO’s legislative agenda. Thousands of people joined that year’s King day march in Atlanta, with union members as the largest contingent. The event solidified a coalition that helped elect Jimmy Carter President that year. In exchange, President Carter endorsed the national holiday bill and ordered a commemorative stamp to honor King’s fiftieth birthday in 1979.

At the national level, Senator Jesse Helms of North Carolina led a vitriolic attack on the holiday movement and the “epidemic” of “illegal strikes of municipal employees” that seemed to drive it. Helms claimed that another national holiday would be too costly, and inveighed against King as a lawbreaker “subject to influence and manipulation by Communists.”

[I]n 1980, superstar Stevie Wonder dedicated his hit song “Happy Birthday” to King. In 1982 the King center received large donations from Coca-Cola, the Miller Brewing Company and other megacorporations. The center also gained admission to the Combined Federal Campaign, allowing it to solicit donations from federal employees and members of the military. Coretta Scott King presented Congress with 6 million signatures in favor of a King day bill, the largest petition in favor of an issue in US history. Congress passed the bill, and on November 3, 1983, President Reagan signed it into law.

Take it away Wiki:

[The holiday] was observed for the first time on January 20, 1986.

On January 18, 1999, for the first time, Martin Luther King Day was officially observed in all fifty U.S. states. The day is marked by demonstrations for peace, social justice and racial and class equality, as well as a national day of volunteer community service.

On January 16, 2006, Greenville County, South Carolina, will be the last county in the U.S. to officially adopt Martin Luther King Day as a paid holiday.