By Andrew Moran
New legislation, introduced on April 28, proposes raising the federal minimum wage to $25 by 2031.
Four members of Congress—Reps. Jesús García (D-Ill.), Analilia Mejia (D-N.J.), Delia Ramirez (D-Ill.), and Lateefah Simon (D-Calif.)—submitted the Living Wage for All Act.
Under the bill, large companies would be required to pay a minimum wage of $25 per hour by 2031. For small businesses, the wage floor would be implemented gradually, reaching that threshold by 2038.
It would also eliminate sub-minimum wages for tipped, young, or disabled workers.
Many cities and states have increased their minimum wages to well above the federal level of $7.25, which has been unchanged since 2009. Some have also adopted a $15 minimum wage.
Over the past year, several attempts have been made to raise the federal minimum wage. Last summer, Sens. Josh Hawley (R-Mo.) and Peter Welch (D-Vt.) introduced legislation to raise the nationwide minimum wage to $15 per hour, to no avail.
Rep. Mejia says not raising the federal minimum, despite inflationary pressures over the years, is “unacceptable.”
“Housing, gas, and grocery costs have all surged, yet the federal minimum wage hasn’t been raised since 2009. This is unacceptable,” Mejia said in a statement. “No one working full time should be struggling to survive. We need an economy that reflects the realities of 2026, not one stuck over a decade ago.”
The legislation has received the support of several of their colleagues, including Reps. Dan Goldman (D-N.Y.), Ro Khanna (D-Calif.), Rashida Tlaib (D-Mich.), and Pramila Jayapal (D-Wash.).
Minimum wage laws have been a contentious issue for economic observers, labor activists, small businesses, and public policymakers.
Critics argue the policy can raise prices and reduce employment opportunities.
“The latest proposal to raise the federal minimum wage to $25 an hour is out of touch with economic reality. Economists have long studied the impacts of minimum wages, and overwhelmingly find they cause lost jobs, higher prices, and shuttered businesses,” MinimumWage.com, a project of the Employment Policies Institute, said in a May 1 report.
Conversely, proponents say a higher wage can help address poverty and ensure more Americans keep up with inflation.
Sandra Fluke, president of Voices for Progress, an advocacy group of business leaders, entrepreneurs, and philanthropists, says the proposed bill puts money into the pockets of working Americans and supports local businesses.
“This moment reflects a growing recognition that affordability is not just about lowering prices — it’s about ensuring people are paid enough to live on, so we can build an economy that works for everyone, not just those at the top,” Fluke said in a statement.
Small businesses have pushed back against local efforts to drastically raise the minimum wage.
In Illinois, lawmakers are exploring a hike to up to $27 an hour by 2032, then rising every year after in line with the consumer price index.
Noah Finley, the Illinois state director of the National Federation of Independent Business, says small business owners are already “sounding the alarm about the unintended consequences” of this proposal.
“Small employers are already managing a variety of rising business costs; the last thing they need is a government-imposed labor cost increase that will only result in fewer jobs and small businesses in the state,” Finley said in a March 24 statement.
What the Research Says
The historical economic literature on the minimum wage is expansive.
Many economists argue that establishing a wage floor above the market rate creates distortions, primarily by curtailing job opportunities for young people, inexperienced people, and low-skilled workers.
Others say a government-mandated minimum wage is worthwhile and can lead to stronger earnings for working-class individuals.
New papers on the subject have been released in recent years.
A study released in February, for example, found that minimum wage laws were accompanied by an acceleration in automation. Researchers determined that a 10 percent hike in the minimum wage boosts robot adoption by about 8 percent.
A 2024 paper concluded that the effects on employment can vary. A higher minimum wage might not be negative across the board, but the harms are more pronounced in low-margin retail and restaurant industries, and in regions with already struggling labor markets.
This was observed in the Golden State.
In September 2023, California Governor Gavin Newsom signed a $20 fast-food wage law. Since then, the industry has shed approximately 20,000 jobs.
Meanwhile, a January 2024 Congressional Budget Office analysis concluded that a $17 minimum wage made effective by 2029 could lead to higher earnings, but more low-wage workers would be at risk of losing jobs and experiencing lower real (inflation-adjusted) income.
Ultimately, as more states and cities take action, economists will have a new body of data available in examining the effect of various minimum wage laws, wage indexation measures, and related phase-ins on employment, prices, and businesses.
