Study warns $25 federal minimum could wipe out nearly 5 million jobs, hit Sun Belt hardest

In an interview, Employment Policies Institute research director Rebekah Paxton warned that a federal minimum wage of $25 per hour would devastate the labor market, erasing nearly five million jobs across the United States. Her model flags Texas, Pennsylvania, Florida, Ohio and Tennessee as the states facing the largest absolute job cuts, largely because they currently rely on the $7.25 federal floor. The plan would also abolish the tip credit, requiring tipped employees to receive the full $25 hourly wage.

Paxton argues that businesses cannot absorb the tripled labor costs without reducing staff or hours, especially in the restaurant and hospitality sectors, which account for over a third of the projected losses. Advocates such as One Fair Wage argue the wage hike is essential to combat a growing affordability crisis, citing other studies that find limited impact on overall employment. The debate reflects a broader clash between progressive lawmakers pushing the Living Wage for All Act and free-market analysts warning of inflation and hiring freezes.