As part of his economic plan for the coming year, Arizona Senator Ruben Gallego proposed a slew of misguided workplace mandates. The flagship recommendation? A $20 minimum wage.
Sen. Gallego’s platform claims his plans would boost affordability for American workers. Basic economics tells a different story.
Economists have studied the impacts of minimum wage hikes for decades, and the vast majority find these hikes increase business costs and force employers to reduce staff and raise prices. A recent Journal of Labor Economics study found the “Fight for $15” push in states like New York, California, and Washington, D.C. eliminated hundreds of thousands of jobs, especially for entry-level workers. The federal nonpartisan Congressional Budget Office estimated if similar mandates were applied nationwide, it could slash millions of jobs.
Gallego’s proposal ignores these history lessons. Now, he’s proposing Congress raise the minimum wage even higher, up to $20 per hour with no base wage system for restaurant workers. The hikes would not stop there: Gallego proposes increasing the minimum wage up to two-thirds of the overall national median wage, which encompasses industries like tech and management that are less impacted by minimum wage mandates. That means the federal minimum wage mandate for all businesses could reach $25 an hour or more in later years.
EPI finds a $20 federal minimum wage could lead to:
- 2.3 million lost jobs, including over a million jobs lost in the restaurant industry;
- Increased automation, according to 91% of surveyed American economists;
- Higher cost of living, according to 80% of surveyed economists;
- A more difficult business environment especially for small businesses, according to 94% of surveyed economists.
The Senator from Arizona does not have to look far to see these minimum wage consequences playing out in real life. California implemented a $20 minimum wage for franchised fast food restaurants in April 2024. Since then, the state saw tens of thousands of lost jobs and roughly 14% higher menu prices.
Policies that push prices higher and eliminate job opportunities won’t deliver on promises to restore affordability.