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Democrats are pushing major minimum-wage increases after their midterm victories, but economists warn the proposals could come with unintended consequences for small businesses and inexperienced workers.
Pennsylvania Gov. Josh Shapiro is pledging to more than double his state’s $7.25 minimum wage, while Illinois Gov. JB Pritzker is calling for a federal increase as Democrats make affordability a central part of their governing agenda.
The renewed push comes as Seattle, which has one of the nation’s highest minimum wages, faces concerns about rising business costs and employment opportunities — raising questions about the tradeoffs of higher wage mandates.
“We’re going to more than double Pennsylvania‘s minimum wage,” Shapiro wrote in an X post this month. “Codify abortion rights into our state Constitution. Fund mass transit. Build more housing. These are the commonsense things that Pennsylvanians want done.”
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Pennsylvania Gov. Josh Shapiro speaks during a re-election campaign kickoff event in Philadelphia, Pennsylvania, on Thursday, Jan. 8, 2026. (Rachel Wisniewski/Bloomberg via Getty Images)
“And with a Democratic trifecta, we will deliver on all of them,” he continued.
Shapiro’s proposal would raise Pennsylvania’s minimum wage from $7.25 to $15 an hour, an increase of roughly 107%, prompting questions about how small businesses would absorb the additional labor costs.
Tom Savidge, an economist with the American Institute for Economic Research, warned in an interview with Fox News Digital that steep wage increases could force small businesses to raise prices, reduce workers’ hours or cut back on hiring.
“A federal minimum wage hike will worsen the affordability crisis,” Savidge told Fox News Digital. “A one-size-fits-all mandate ignores regional differences in wages and business costs. It risks higher prices, fewer hours, and fewer jobs, especially for inexperienced workers. Politicians can mandate higher wages, but they cannot mandate that businesses can afford to pay them.”
“Small businesses employing minimum-wage workers cannot absorb such a sharp increase without adjusting elsewhere,” he added. “Some may raise prices, cut hours, or stop hiring. A higher minimum wage means little to workers who cannot find a job.”
The debate comes as Democrats seek to deliver on campaign promises to make life more affordable, even as businesses in cities with higher minimum wages report growing financial pressures.
Seattle, where the minimum wage is currently $21.30 an hour and will rise to $22.14 in January, offers one example of the economic questions surrounding such policies. While proponents have asserted that minimum wage increases will be a boon to employees, some Seattle business owners have previously raised concerns about facing additional cost burdens, KOMO News reported in December 2025.
Rising labor costs have been among the financial pressures cited by Seattle restaurant owners who have closed locations, alongside higher food prices, declining customer demand and other operating expenses, Fox News Digital previously reported.
A January survey by The Intentionalist found that 67% of 136 independent small businesses surveyed in Seattle and surrounding Washington communities reported greater financial strain than during the pandemic, with respondents pointing to rising labor costs, rent, insurance and weaker customer demand.
A 2022 study published in the American Economic Journal: Economic Policy found that Seattle’s 2015 and 2016 minimum-wage increases boosted pay for longer-tenured workers but reduced hours worked, particularly among less-experienced employees, and limited opportunities for people entering low-wage jobs.
However, a separate 2017 study by University of California, Berkeley researchers found that Seattle’s earlier minimum-wage increases raised wages in the food-service industry without a statistically significant decline in restaurant employment.
Savidge went on to say that steep minimum wage increases often benefit major corporations over Main Street businesses.
“Higher minimum wages can favor big corporations over small businesses,” he explained. “Large corporations can spread higher labor costs across more sales, invest in automation, or relocate operations. Small businesses have fewer options.”
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Gov. Josh Shapiro of Pennsylvania, at the Democratic National Convention, speaks with activists from New Hampshire at a delegation breakfast, on Aug. 21, 2024 in Chicago, Illinois. (Paul Steinhauser/Fox News)
Despite concerns about the potential economic consequences, Shapiro has made raising Pennsylvania’s minimum wage one of his first priorities after Democrats won control of both chambers of the state legislature.
“Half a million workers in Pennsylvania still make less than $15 an hour — you can’t live off of that in 2026,” Shapiro said. “Now, we’re finally able to change that. The very first bill that I will sign into law with our new Democratic majority this January will be to raise our minimum wage — and make sure every Pennsylvania worker has a livable wage. It’s long overdue.”
His comments come after Democrats secured a trifecta in Harrisburg in the 2026 midterms after flipping the Pennsylvania state Senate.
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When reached for comment, Shapiro’s office referred Fox News Digital to the governor’s comments on raising the minimum wage during an interview with former CNN host Don Lemon released on Sunday.
“Some of your some of your viewers and listeners are going to think it’s crazy, but job number one is going to be raise the minimum wage to 15 bucks an hour, and now your listeners like, ‘What do you mean 15 bucks an hour?'” Shapiro said during the interview. “Everybody’s at 15 bucks an hour. Well, we’re not in Pennsylvania. We’ve been stuck at $7.25 an hour for decades, right? Because the Republicans in the state senate, every time we’ve sent a bill over there, have blocked it.”
Illinois Gov. JB Pritzker speaks during a press conference at the UI Health Mile Square Health Center on Feb. 28, 2025. (Eileen T. Meslar/Chicago Tribune/Tribune News Service via Getty Images)
The minimum-wage push is also gaining traction beyond Pennsylvania.
Illinois Gov. JB Pritzker, who signed legislation in 2019 gradually raising his state’s minimum wage to $15 an hour, is now calling on Congress to increase the federal minimum wage as part of his post-election economic agenda.
“Americans made their voices heard and this is an opportunity for Congress to immediately address the challenges of working people – higher wages, lower costs, rooting out corruption,” Pritzker said in a statement. “The people of Illinois cannot afford to wait.”
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Savidge told Fox News Digital that Pritzker and Shapiro’s minimum wage proposals “risk giving large corporations a competitive advantage while squeezing out smaller competitors.”
Critics question whether higher wage mandates translate into better overall economic outcomes, particularly for workers with little job experience.
Adam Gorcyca, a policy researcher at the Illinois Policy Institute, warned that employers may respond to higher labor costs by reducing hours, limiting hiring or raising prices.
“Mandating higher wages doesn’t immediately guarantee workers will take home more money,” Gorcyca added. “Employers often respond to these policies by cutting back hours, slowing hiring or raising prices. It can help select workers, while also making it harder for entry-level or younger workers.”
Gorcyca also questioned whether Illinois’ minimum-wage increases had delivered broader employment gains, pointing to the state’s slow pandemic recovery as evidence of its economic struggles.
“In Illinois, Gov. J.B. Pritzker passed a minimum wage hike in 2019, slowly increasing the state’s minimum wage to $15 an hour by 2025,” he said. “While he has campaigned that it was the ‘right thing to do,’ the state doesn’t have a stronger labor market for workers. In fact, Illinois was one of the slowest to recover from the pandemic.”
Pritzker’s office did not respond to Fox News Digital’s request for comment on Tuesday.
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The push is also emerging as a priority for congressional Democrats.
House Minority Leader Hakeem Jeffries, D-N.Y., said Monday that the federal minimum wage needs to be raised and that he plans to discuss the issue with members of both chambers of Congress.
“It’s a conversation that I look forward to having with not simply the members of the House Democratic caucus, but with the Senate as well, to see what is possible,” Jeffries said. “It certainly needs to be increased. It’s a disgrace that the minimum wage hasn’t been raised in 20 years and is currently $7.25 per hour.”
