Democrats seize on midterm wins to push massive minimum wage hikes, but economists see trouble ahead

Shapiro's proposal would raise Pennsylvania's minimum wage from $7.25 to $15 an hour, an increase of roughly 107%. 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. This raises questions about the tradeoffs of higher wage mandates.

Shapiro wrote in an X post this month. He also pledged to codify abortion rights into the state Constitution, fund mass transit, and build more housing. He added that with a Democratic trifecta, the state would deliver on these promises.

Economists warn of unintended consequences

Tom Savidge, an economist with the American Institute for Economic Research, warned that steep wage increases could force small businesses to raise prices, reduce workers' hours, or cut back on hiring.

Savidge told Fox News Digital. He argued that a one-size-fits-all mandate ignores regional differences in wages and business costs. He said 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. He said some may raise prices, cut hours, or stop hiring. A higher minimum wage means little to workers who cannot find a job.

Seattle offers a case study

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.

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. Respondents pointed 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.