Democrats are advancing sizable minimum-wage increases after their midterm wins. Supporters say the changes would help workers keep up with living costs; economists warn they could also leave small businesses with difficult choices about prices, staffing and hours.
Pennsylvania Gov. Josh Shapiro wants to raise his state’s minimum wage from $7.25 to $15 an hour, more than doubling it. Illinois Gov. JB Pritzker, whose state is already moving toward a $15 minimum, is urging Congress to raise the federal rate as well.
Shapiro has made the proposal a priority now that Democrats control both chambers of Pennsylvania’s legislature. He says roughly 500,000 workers in the state earn less than $15 an hour, and argues that the current minimum is not enough to live on in 2026. He has said the first bill he signs with the new Democratic majority will raise the wage.
The proposal is part of a broader agenda that Shapiro says includes expanding abortion rights, funding public transit and building more housing. He has described those goals as common-sense priorities for Pennsylvanians.
Tom Savidge, an economist at the American Institute for Economic Research, said a sharp increase could be hard for smaller employers to absorb. Businesses might raise prices, reduce workers’ hours or slow hiring, he said, with inexperienced employees especially vulnerable. A wage requirement, Savidge argued, cannot ensure that every business can afford the higher payroll.
He also warned that wage mandates may give large companies an advantage. Bigger firms can spread added labor costs across more sales, invest in automation or move operations. Small businesses, he said, generally have fewer ways to adjust.
Seattle offers one example of the debate. Its minimum wage is $21.30 an hour and is scheduled to rise to $22.14 in January. Some local business owners have said higher labor costs are adding to financial pressure, alongside expenses such as food, rent and insurance, and weaker customer demand.
A survey published in January by the small-business organization The Intentionalist found that 67% of 136 independent businesses in Seattle and nearby Washington communities felt more financial strain than during the pandemic. Respondents cited labor costs, rent, insurance and reduced customer demand.
Research on Seattle’s wage increases has reached mixed conclusions. A 2022 study found that the city’s 2015 and 2016 increases raised pay for workers with more experience but reduced hours worked, particularly for less-experienced employees. The researchers also found fewer opportunities for people trying to enter low-wage work. A separate 2017 study by researchers at the University of California, Berkeley, found higher wages in food service but no statistically significant drop in restaurant employment.
Concerns about the effects on entry-level workers have also surfaced in Illinois. Adam Gorcyca, a policy researcher at the Illinois Policy Institute, said employers may respond to higher wage requirements by trimming hours, hiring less or raising prices. The policy could benefit some workers while making it harder for younger people and others with limited experience to find a first job, he said.
Illinois gradually raised its minimum wage to $15 an hour by 2025 under a law Pritzker signed in 2019. Gorcyca argued that the increase has not produced a stronger labor market in the state, which he said was among the slowest to recover from the pandemic.
Pritzker is now asking Congress to raise the federal minimum wage, saying workers need higher pay and lower costs. His office did not respond to a request for comment on the proposal.
The issue is also drawing attention in Congress. House Minority Leader Hakeem Jeffries said Monday that the federal rate should increase and that he plans to discuss the matter with House and Senate Democrats. The federal minimum wage has remained at $7.25 an hour since 2009, he said.
Democrats are presenting wage increases as part of a wider effort to address affordability. The central question, though, is how much of the higher wage reaches workers—and what businesses may have to change to pay it.
