Federal $25 minimum wage mandate would destroy nearly 5M jobs, hit booming Sun Belt hardest: study

A federal $25 minimum wage mandate would destroy millions of jobs across the country and hit several of the Sun Belt states that have seen a significant influx of new residents in recent years, an economist warned in an interview with Fox News Digital.

The warnings come in response to recent legislative efforts from progressive members of Congress pushing to raise the federal minimum wage floor to $25 per hour by 2031 for large employers, while smaller businesses would reach that rate by 2038. The proposal would also eliminate the federal tip credit, raising the direct cash wage requirement for tipped employees up to $25 per hour.

Rebekah Paxton, research director at the conservative Employment Policies Institute (EPI), warned that a $25 federal mandate would be a total “job killer.”

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The EPI projects that the policy would slash nearly five million jobs nationwide. The group expects states including Texas, Pennsylvania, Georgia, North Carolina and Florida to suffer the largest absolute job losses.

“Some of the top states that are going to be impacted by a $25 minimum wage include Texas, Pennsylvania, Florida, Ohio, Tennessee … These states have a massive workforce. They also currently abide by the federal $7.25 minimum-wage rate, so a $25 minimum wage represents more than tripling the current minimum wage applicable in those states,” Paxton told Fox News Digital.

Texas, North Carolina and Florida have been among the primary beneficiaries of post-COVID migration. While major metropolitan areas, including Cook County, Illinois, and Los Angeles County, experienced population declines, U.S. Census figures show the Southeast is booming, with many of the fastest-growing counties in the nation concentrated in Florida, Georgia and North Carolina.

“When you’re talking about doubling or tripling the minimum wage, you’re talking about doubling and tripling labor costs for businesses in those areas,” Paxton added. “There may be some businesses that try to absorb that through higher prices, but ultimately what we know from economists, business owners, and workers themselves is that it doesn’t always work.”

“In a lot of ways, it means business owners are going to have to slash jobs and reduce the number of hours that folks are able to work,” she explained. “Our report shows that that’s going to cost almost five million jobs across the country.

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More than one-third of the projected job losses are concentrated in the restaurant and hospitality industry, including 1.2 million tipped workers, according to the report.

The federal government is facing renewed pressure from left-leaning activists to mandate a $25-an-hour minimum wage as the national affordability crisis continues to squeeze working-class families. The federal minimum wage has sat at $7.25 per hour since 2009.

One Fair Wage, part of a national coalition of more than 100 advocacy organizations and labor unions pushing for the $25 floor, told Fox News Digital that voters across the political spectrum are mobilized by the issue.

“We’re seeing so many MAGA voters excited about a $25 minimum wage,” said Saru Jayaraman, president of One Fair Wage. “We see people across the political spectrum — and frankly, the vast majority who are not politically affiliated at all — saying, ‘I don’t care about Republicans, Democrats, or Independents; what I care about is can I feed my family and who’s going to deliver for me?’”

The federal push, anchored by legislative proposals like the Living Wage for All Act, is backed by progressive lawmakers including Rep. Alexandria Ocasio-Cortez, D-N.Y., and progressive organizing allies who support proposals such as Medicare for All, wealth taxes and immigration enforcement reform.

The movement is also pursuing aggressive localized initiatives. In California and New York, local chapters and union partners have introduced “30 by ’30” ballot drives and municipal resolutions aimed at bringing minimum wages in high-cost cities like Oakland and New York City toward $30 per hour for major employers by the end of the decade.

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While proponents argue that steep wage hikes are necessary to keep pace with living costs, free-market economists and business groups caution that rapid government wage mandates will accelerate inflation and freeze entry-level hiring.

Responding to the Employment Policies Institute’s claims, One Fair Wage told Fox News Digital that “America is in an affordability crisis because work does not pay enough.”

“The federal minimum wage has remained $7.25 since 2009, while rent, groceries, health care, and child care have continued to rise. Raising paychecks is as essential as lowering prices,” a spokesperson for One Fair Wage said.

One Fair Wage added that “one job should be enough to live on” and that “Congress should pass the Living Wage For All Act and make that standard the law.”

“Workers across the country are organizing for $25 and $30 because that is what it takes to live. The Living Wage For All Act turns that worker-led demand into a national standard. The largest corporations move first, smaller businesses have years to adjust, and federal subminimum wages end — ensuring tipped workers receive the full minimum wage with tips on top,” the organization said.

“That projection is inconsistent with decades of minimum-wage research,” it continued. “The Economic Policy Institute estimates that a federal minimum wage equal to two-thirds of the national median wage would raise pay for nearly 40 million workers. Research from UC Berkeley economist Michael Reich and the Roosevelt Institute finds that ambitious, phased increases at this level raise incomes broadly with little effect on overall employment.”