A federal mandate to increase the minimum wage to $25 per hour could result in the elimination of nearly five million jobs nationwide, with Sun Belt states and areas like Ohio and Pennsylvania expected to bear the brunt of the losses, according to an economist at the Employment Policies Institute (EPI). The proposal, backed by progressive lawmakers and advocacy groups, aims to raise the federal minimum wage to $25 by 2031 for large employers and by 2038 for smaller businesses. It would also eliminate the federal tip credit, increasing the direct cash wage for tipped employees to $25 per hour.
Rebekah Paxton, research director at EPI, stated that such a mandate would be a significant "job killer." The institute projects that states with a large workforce and currently lower minimum wages, such as Texas, Pennsylvania, Florida, Ohio, and Tennessee, would experience the most substantial absolute job losses. These states are among those that have seen considerable population growth in recent years, particularly in the Southeast.
Paxton explained that doubling or tripling the minimum wage would significantly increase labor costs for businesses in these growing regions. While some businesses might absorb these costs through higher prices, economists and business owners anticipate that job cuts and reduced working hours would be a likely consequence.
The restaurant and hospitality industry, including approximately 1.2 million tipped workers, is expected to account for over one-third of the projected job losses.
Advocates for the wage increase, such as the organization One Fair Wage, argue that a higher minimum wage is necessary to address the current affordability crisis, as the federal minimum wage has remained at $7.25 per hour since 2009. They contend that one job should be sufficient for a living wage and that proposals like the Living Wage for All Act aim to establish this as a national standard. One Fair Wage also disputes the EPI's job loss projections, citing research from the Economic Policy Institute and UC Berkeley economist Michael Reich, which suggests that phased increases in the minimum wage can raise incomes with minimal impact on overall employment.