A new Economic Policy Institute FAQ addresses common misconceptions around the economics of raising minimum wages. The FAQ surveys the evidence to provide essential facts, including: 

Raising the minimum wage boosts workers’ incomes without meaningfully increasing unemployment, according to the vast majority of high-quality economic research.  

Increasing the minimum wage does not meaningfully raise prices. Economists find that raising the minimum wage only slightly increases prices at affected businesses—because low-wage labor is often a small share of total business expenses and minimum wage increases can be offset through reduced profits, lower worker turnover, and higher productivity.  

The economic benefits of raising the minimum wage far exceed these price increases. For low-wage workers, the wage boost from the higher minimum wage more than compensates for increased prices of the goods and services they buy. These workers, in turn, spend more overall because of their additional income, which can boost the overall economy. 

Even in many areas with lower costs of living, the minimum wage is far too low. According to EPI’s Family Budget Calculator, there is almost no U.S. county where a single adult worker can achieve a modest but adequate standard of living earning less than $15 an hour. 

Businesses do not move in response to minimum wage increases. Businesses commonly affected by minimum wage changes (such as restaurants and retail) want to locate where there are consumers with money to spend. Because raising the minimum wage boosts the spending power of low-income households, it can strengthen the local customer base for these direct-to-consumer businesses even as it raises their labor costs. 

Boosting the minimum wage for tipped workers does not hurt the restaurant industry. Economic research on the restaurant industry finds that tipped minimum wage increases boost wages for workers without affecting employment. 

The vast majority of workers impacted by the minimum wage are not teenagers. EPI’s analysis of the 2025 Raise the Wage Act found that only 14% of the workers that would be impacted by the policy were younger than 20 years old.  

“Minimum wage increases are one of the simplest ways to raise workers’ incomes— without triggering the job losses or price increases that critics predict. The failure to adequately raise the federal minimum wage over time has left millions of workers being paid less today than they could have been earning,” said Sebastian Martinez Hickey, EPI’s state economic analyst.