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 â raising questions about the tradeoffs of higher wage mandates.
“Were going to more than double Pennsylvanias 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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“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 .
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 f
