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.

A new Economic Policy Institute report proposes tying the federal minimum wage to two-thirds of the national median wage, an evidence-backed benchmark that would deliver meaningful pay increases to the largest number of workers without the job losses critics typically predict. A complementary report also released today from the Roosevelt Institute—a think tank and professional network working to balance power in the economy—provides evidence for this higher wage rate and argues that greater worker protections, including universal just-cause protections and stronger enforcement against wage theft, are foundational to families’ economic security. 

The federal minimum wage—frozen at $7.25 since 2009—is at its lowest real value in 77 years, having lost 30% of its purchasing power over the 17-year freeze, according to EPI’s report. Setting the minimum wage at two-thirds of the median—equivalent to roughly $17.70 today and a projected $20 in 2030—would lift pay for nearly 40 million workers in 2030, about a quarter of the workforce. It would also durably narrow the gap between low-wage workers and the typical worker, with Black workers and women seeing the largest benefits. Indexing the federal minimum wage to median wage growth–which typically outpaces price growth–would lock in these gains, preventing the kind of decades-long slide that has eroded the current floor.

The two-thirds benchmark is also well-supported by economic research. Decades of studies show that minimum wage increases up to two-thirds of the median wage deliver meaningful pay increases and do not result in the kind of job loss critics of a higher minimum wage predict.

EPI’s proposal would eliminate poverty wages and move the federal minimum wage meaningfully toward a living wage in much of the country. Under EPI’s Family Budget Calculator thresholds, a single adult working full time at the proposed wage could cover the expenses of a modest but adequate standard of living in half of U.S. counties, a substantial step toward economic security for tens of millions of low-wage workers.

But in higher-cost states and localities, state and local policymakers can and should set even higher minimum wages to reduce even wider gaps between pay and the cost of an adequate standard of living. And even a strong federal floor cannot, on its own, guarantee economic security: Lifting working families requires a broader agenda of strengthening unions, expanding the safety net, and keeping unemployment low.

“The woefully inadequate federal minimum wage is a major driver of the affordability crisis facing low-wage workers. Meaningfully raising the federal minimum wage and indexing it to median wage growth is the single most direct step Congress can take to lift pay for U.S. workers and their families,” said Ben Zipperer, EPI senior economist and author of the report. 

“A stronger federal minimum wage is needed to put workers within reach of a living wage,” said Patrick Oakford, director of worker power and economic security at the Roosevelt Institute. “But a minimum wage alone won’t provide the foundation workers need to build meaningful economic security. We need common-sense employment policies to address persistent income inequality and limit corporate power, including universal just-cause protections for all employees.”

Union avoidance consultants often work to prevent a union election from taking place—and if that fails, to ensure that workers vote against the union and then stall negotiations over a first collective bargaining agreement. Over the past several decades, large law firms—such as Littler Mendelson, Morgan Lewis, and Jackson Lewis—have developed substantial business specializing in union avoidance services, including for Amazon, Starbucks, and Trader Joe’s. Further, many union avoidance law firms provide employers services beyond these persuader activities, such as representation at National Labor Relations Board (NLRB) proceedings. 

Until now, the role of these law firms has largely gone unexamined because of loopholes in federal reporting laws. Through analyzing Law.com and NLRB case data, the report calculates the revenue law firms generate from employers who try to avoid unions and undermine collective bargaining with their workers. The report also updates previous EPI research on spending on union avoidance consultants. After accounting for overlap between these two totals, the report estimates that spending on attorneys (whether for representation, consulting, or both) and non-attorney consultants is roughly $1.7 billion a year.

This spending on anti-union law firms and consultants has an undeniable impact on workers’ ability to organize and bargain collectively. It is no coincidence that the overall decline in unionization follows decades of federal policy neglect that have weakened U.S. labor law. The loopholes in U.S. labor law, which union avoidance consultants and law firms exploit, routinely frustrate workers’ organizing and collective bargaining, enabling wealthy corporations to prosper at workers’ expense.

“Americans increasingly view unions favorably and recognize them as critical instruments for building a just economy. But many workers cannot join a union because our nation’s labor laws allow employers to derail workers’ unionization efforts with impunity,” said Margaret Poydock, EPI senior policy analyst and co-author of the report. 

“Unionizing is much harder than it should be,” said Teke Wiggin, strategic coordinator at LaborLab and another co-author. “That’s partly because there are no limits on the amount of time and money employers can invest in union avoidance, and because employers are only required to disclose a tiny fraction of anti-union campaign spending due to reporting loopholes. Our finding that employers spend about $1.7 billion on union avoidance attorneys and consultants every year shows that employers take full advantage of these deficits in U.S. labor law.”

In 2025, the Trump administration relentlessly attacked federal government workers and cut federal programs and agencies. Federal employment in the DMV region (Washington, D.C.; parts of Maryland and Virginia) fell by more than 53,800 jobs (-14.2%) between the end of 2024 and 2025. These job losses were only the tip of the iceberg, as scores of area employers whose revenues are connected to the federal government also shed jobs.

The DMV’s employment rate fell by 3.2 percentage points between December 2024 to December 2025, compared with a decline of just 0.4 percentage points for the country over the same period. DMV employment fell at least 2 percentage points for every demographic category of workers, with Black workers suffering the largest employment declines (5.9 percentage points).

Other localities—including many in Southern, Western, and Midwestern states—are at risk of similar economic harms. Trump’s attacks on the federal workforce will harm communities that rely on their employment. The social safety net, which Trump has gutted to pay for tax cuts for the rich, is the dominant driver of economic activity for many communities across the country. And Trump’s anti-immigrant crackdown and deportation agenda is hurting localities with large immigrant populations.

“Trump’s destructive agenda has disproportionately damaged the Washington, D.C. regional economy. But other localities across the country—particularly those with large federal workforces, those that are heavily dependent on federal programs, and those with sizeable immigrant populations—are far from immune. Many could suffer as much, if not more, from the Trump administration’s actions,” said Nina Mast, EPI economic analyst and co-author of the report.

Workers misclassified as independent contractors lose out on critical protections, benefits, and labor rights including the minimum wage, overtime pay, unemployment insurance, the right to form a union, and anti-discrimination protections in most states. Additionally, these workers must bear the full financial costs of Social Security and Medicare contributions, rather than split it evenly with their employer.  

Construction workers, truck drivers, and home health aides are some of the commonly misclassified jobs analyzed in the report. A typical construction worker misclassified as an independent contractor would lose as much as $20,399 in annual income and job benefits compared with what they would have earned as an employee. A typical truck driver, if misclassified as an independent contractor, would lose as much as $23,266 annually. 

Lost compensation due to misclassification varies by state. Estimated annual per-worker costs in lost compensation are as high as $31,326 for truck drivers in New Jersey. On average, misclassified workers stand to lose more in higher-wage states and occupations because W-2 earnings are greater, but losses are substantial in all states—as accompanying state fact sheets show.

Misclassification does not just shift the full burden of social insurance to workers—it also reduces the total revenues received by the social insurance system. The report estimates that social insurance systems can lose up to roughly 30% of per-worker revenue when workers are misclassified as independent contractors. This is because independent contractors do not contribute to unemployment insurance and workers’ compensation systems, and because they may earn less than they would as employees (and lower pay translates directly into lower contributions).

Embedding strong legal definitions—like the ABC test—in state and federal law is fundamental to ensuring that employees are not improperly classified as independent contractors. These strong legal tests must also be paired with strong enforcement mechanisms to uphold workers’ rights and deter employers from violating the law. 

“Illegal misclassification of employees as independent contractors deprives workers of their labor rights, slashes their pay, and undermines funding for crucial social safety net programs,” said Nina Mast, EPI economic analyst and co-author of the report. “Policymakers at the federal, state, and local levels should act to curb misclassification and enforce the rights to which all workers should be entitled.” 

While U.S. manufacturing employment has fallen during the last three decades, the South has retained the largest share of manufacturing employment of any region. In 2024, 35% of U.S. manufacturing employment was in the South. Since 2010, manufacturing employment in the South has grown by 17%, the quickest growth of any region.

Yet, Southern workers and communities have failed to substantially benefit from new manufacturing investments. Instead, a long-standing Southern economic development model has prioritized corporate power and profits over communities.

The report shows that community benefits agreements (CBAs) are one key tool to ensure that new industrial investments generate good manufacturing jobs that pay a living wage, expand pathways to unionization, and deliver broadly shared economic benefits for local communities. CBAs are legally enforceable private agreements between a company or developer and a coalition of labor unions and community groups that ensure new or expanding facilities generate good jobs, protect local resources, and invest in community needs. Because CBAs are private agreements between labor-community coalitions and project owners, they do not rely on government action and can therefore shape economic outcomes of major projects even in otherwise hostile political environments.

The fights to secure these gains can also help forge strong, durable labor-community coalitions needed to reshape the political fabric of Southern communities and increase working people’s influence over broader state or regional economic policy decisions.

“Community benefits agreements are powerful tools for Southern labor and community groups to build the shared power necessary to reshape local and eventually regional economies. Strong CBAs can secure measurable economic benefits like higher wages, respect for workers’ rights to unionize, local or targeted hiring, protection of natural resources, and more affordable housing,” said Sebastian Martinez Hickey, EPI’s state economic analyst and co-author of the report. “These economic gains are beneficial in themselves, but the formation of a community benefits coalition can also help build the labor-community power necessary to change the Southern status quo.”

Two years ago, the California Fast Food Council—composed of worker, industry, and government representatives—instituted a $20 minimum wage for workers at large chain fast-food restaurants. But the Council has not raised the minimum wage further, and inflation has steadily eroded fast-food workers’ real wages since then. The authors argue that a 3.5% raise—the maximum adjustment the Council can recommend—would be a necessary yet modest step because it will only partially offset the average 4.2% cost of living increase since April 2024.

In fact, lower-income households have faced higher inflation than the overall inflation rate, largely because housing has been a higher share of their budgets. This means that indexing based on the overall inflation rate would fail to fully restore the affordability lost to fast-food workers since the enactment of the $20 wage standard, making such an adjustment even more modest—and necessary.

One impediment to this adjustment is opposition from fast-food restaurant operators, who argue that raising workers’ pay to $20 harmed their businesses and that they cannot absorb any further increases. However, the weight of empirical evidence shows that the $20 minimum wage has raised wages while not causing significant job loss. And compared with the initial setting of wage standards, indexed changes are very small and therefore unlikely to push up prices. Failing to adjust for inflation is essentially a backdoor method for unraveling the wage standard that policymakers passed into law.

“Automatically adjusting minimum wages for inflation is necessary for protecting affordability for low-wage workers,” said Josh Bivens, EPI chief economist and co-author of the report. “The California Fast Food Council should prioritize a cost-of-living adjustment in 2026 to prevent rising prices from erasing workers’ gains. A failure to regularly index for inflation provides a windfall to low-wage employers at the expense of their frontline employees.”

Unfortunately, many families today struggle to make ends meet because their pay hasn’t risen nearly as fast as it could have with a growing economy over the last five decades. This is a direct result of bad policy choices advancing corporate interests at the expense of typical workers. An accompanying Wage Calculator reveals how much higher workers’ pay could be if wages had kept up with productivity growth since 1979. For a worker making the median annual wage of $53,383, their wage would be $76,315 if it had risen in line with productivity gains.

San Francisco tops the list of most expensive metro areas, according to the Family Budget Calculator. A two-parent, two-child household needs an annual income of $231,305 to afford a modest yet adequate standard of living. While the median family income in San Francisco is the second highest in the country ($176,777), this still isn’t enough to pay for the basics.

Gibson County, Tennessee, is the least expensive metro area in the country. A two-parent, two-child household needs an annual income of $82,005 to afford a basic budget, but the median family income falls short at only $71,228 per year. An interactive map compares costs of living across the country.

The Family Budget Calculator can be used to assess a living-wage level and illustrates that states like Oklahoma need a higher minimum wage. But it’s not just Oklahoma—the Family Budget Calculator shows that nowhere in the country can a minimum-wage worker meet the requirements of their local family budget on their wages alone.

“The Family Budget Calculator is a stark reminder that many employers do not pay workers enough to meet their family’s basic needs. Raising wages is a critical, but often overlooked, component of solving the affordability crisis,” said EPI senior economist Elise Gould.

Despite the strength of the economy the Trump administration inherited, their subsequent policy agenda has weakened growth in spending by households, businesses, and governments. Federal workforce cuts, deportations and a slowdown in immigration, and chaos in trade policy have all suppressed demand growth, raising the risk of a near-term recession. Many of these weaknesses have so far been obscured by strong spending associated with AI investment. But this AI investment could be a shaky foundation for future growth, and if it contracts, the weaknesses generated by the administration’s policy choices so far could become glaring.

In the long run, these policies—as well as deficit-financed tax cuts—will also erode the economy’s ability to supply goods and services without inflation. For example, the administration’s mass deportations agenda is slowing the growth of the future U.S. labor force.

Most of all, Trump administration policies will raise inequality—the worst blow to families’ affordability. The 2025 Republican-led tax cuts favor the rich, while the spending cuts included in the same Republican megabill will sharply lower incomes for the bottom half of U.S. households in coming years. At the same time, the administration’s assaults on typical workers’ bargaining power and leverage—and its support for corporations with significant market power—will push income away from low- and moderate-income families and toward the top.

“Disastrous policy choices that led to excess unemployment, slower growth in the economy’s productive capacity, and rising inequality have made life less affordable for typical families in recent decades. The Trump administration’s policies double down on the worst policy decisions of this period and will make ordinary families reliably poorer in the future, even if an outright recession or spiking inflation does not happen,” said Josh Bivens, EPI chief economist and author of the report.

In 2025, 16.5 million workers in the United States were represented by a union—an increase of 463,000 from 2024 and the highest number of unionized workers in the U.S. in 16 years. The share of workers represented by a union grew slightly from 11.1% to 11.2%.

Unionization rose in both the private and public sectors. Strikingly, union density among federal workers rose from 29.9% to 31.1%, the largest single-year increase since 2011. This increase represented a gain of 40,000 unionized workers—notable given that federal government employment fell as the Trump administration slashed federal jobs.

“Unionization grew in 2025 despite the nation’s broken system of labor law and the most anti-union president in history. And in response to the Trump administration’s aggressive attacks on federal employees and their unions, federal workers increasingly turned to collective representation,” said Heidi Shierholz, EPI president. “This increase is a testament to working people’s resolve and the fact that unions are recognized as critical instruments for building a fair economy.”

Other key trends analyzed by EPI include:

• Private-sector unionization rate grew but remained much lower than the public sector. Private-sector union coverage increased by 227,000 in 2025, pushing the unionization rate up from 6.7% to 6.8%. There were particularly large gains in health care and social assistance, retail trade, and educational services. In contrast, the traditionally blue-collar industries of mining, manufacturing, and transportation and utilities saw declines. Construction was the one heavily blue-collar sector to see gains. Meanwhile, the public sector gained 236,000 unionized workers, with union density rising from 35.7% to 36.4%.
• The South accounted for close to half (46%) of all net gains nationwide. The region added 214,000 unionized workers, compared with 249,000 in the rest of the country combined.
• Younger workers and people of color continued to drive the increase in unionization. Union coverage among workers under age 45 increased by 428,000, compared with an increase of 35,000 among workers age 45 and over. Unionization among people of color overall increased more (up 289,000) than among white non-Hispanic workers (up 174,000). This was driven by sizable increases in unionization among both Hispanic and Asian workers, but Black workers experienced a decline (though, at 12.7%, Black workers continued to have the highest unionization rate of all major racial and ethnic groups.)

Despite increases in 2025, EPI calculates—based on survey data—that more than 50 million nonunionized workers would join a union if they could. This is a testament to how easy it remains for employers to exploit our weak and outdated labor laws to stop union organizing, and how impressive it is that workers are organizing and winning even in a deeply hostile environment.