New Analysis Reveals Democrats’ $15 Minimum Wage Would Cost Millions of Jobs

Proposal would wipe out over one million jobs in hospitality industry, already hard-hit by COVID
  • Publication Date: October 2020

Washington, D.C. (Oct. 19, 2020)— Today, the Employment Policies Institute (EPI) released a new study highlighting the consequences of raising the federal minimum wage to $15 an hour. This policy is a key component of House Democrats’ “Raise the Wage Act,” which passed the House last year. Now, the policy is part of Democrats’ national platform, and is backed by the party’s presidential candidate Joe Biden.

In this study, economists Dr. David Macpherson, Professor at Trinity University, and Dr. William Even, Professor in the Farmer School of Business at Miami University, use a methodology developed by the nonpartisan Congressional Budget Office. This study builds on the CBO’s 2019 report, including updated assumptions that account for changes since 2019, including the COVID-19 outbreak. For the first time, it also provides state-by-state estimates of the impact.

Key findings from the study include:

  • The Raise the Wage Act would result in two million lost jobs across the United States;
  • The Arts, Entertainment, and Recreation and Accommodation and Food Services sectors will account for half of the jobs lost;
  • Employees aged 16-24 will see the highest proportion of job losses, with the majority of jobs being held by women;
  • Nearly one-third of tipped workers affected by minimum wage will experience job loss (693k jobs), a significantly higher share than non-tipped workers.

The study also includes a map highlighting states that will experience the most job losses under a federal $15 minimum wage. By 2027, Texas is projected to lose over 370,664 jobs, followed by Pennsylvania (143,402 jobs lost), North Carolina (121,528), Ohio (108,312), and Georgia (106,427). Other hard-hit states include South Carolina (55,304), Alabama (53,227), Kentucky (54,954) and Iowa (33,080).

“Business owners across the country are already facing a great loss after the economic downturn caused by the coronavirus,” said Michael Saltsman, Managing Director of the Employment Policies Institute. “Increasing labor costs through a federal $15 minimum wage would only bring businesses—and the people they employ–closer to the point of no return.”