A federal mandate to raise the minimum wage to $25 per hour by 2031 for large employers and by 2038 for smaller businesses could lead to the elimination of over 5 million jobs nationwide, according to research from the Employment Policies Institute (EPI).
The proposed legislation would also eliminate the federal tip credit, requiring employers to pay tipped workers a direct cash wage of $25 per hour. Rebekah Paxton, research director at EPI, stated in an interview with Fox News Digital that states with large workforces currently adhering to the federal minimum wage of $7.25 per hour would experience the most significant impacts.
States projected to suffer the largest absolute job losses include Texas, Pennsylvania, Florida, Ohio, and Tennessee. These states have seen substantial population growth in recent years, particularly in the Sun Belt region, with Florida, Georgia, and North Carolina experiencing significant influxes of new residents.
Paxton explained that a doubling or tripling of labor costs for businesses in these areas could force owners to reduce staff or cut working hours. The EPI projects that the restaurant and hospitality industry, including approximately 1.2 million tipped workers, would account for more than one-third of the projected job losses.
The push for a $25 federal minimum wage is backed by a coalition of over 100 advocacy organizations and labor unions, including One Fair Wage. Proponents argue that the current federal minimum wage, unchanged since 2009, is insufficient to cover the rising costs of living, citing increases in rent, groceries, healthcare, and childcare.
Saru Jayaraman, president of One Fair Wage, indicated that the issue resonates across the political spectrum, with a desire for a wage that allows families to be supported by a single income. The organization advocates for the Living Wage For All Act, which aims to establish a national standard that reflects worker-led demands.
While proponents assert that phased increases, when benchmarked against a portion of the median wage, have shown little effect on overall employment in past studies, free-market economists and business groups caution that such rapid mandates could fuel inflation and hinder entry-level hiring. Some localized initiatives, such as "30 by '30" ballot drives in California and New York, are also seeking to raise minimum wages in high-cost cities toward $30 per hour for major employers by the end of the decade.