Photo by Ron Lach on Pexels is licensed under Creative Commons.
Congressional Democrats have reintroduced the so-called “Raise the Wage Act,” which would threaten millions of jobs nationwide and decimate the restaurant industry.
The Raise the Wage Act was introduced last week by Senator Bernie Sanders (I-Vt.) and Congressman Bobby Scott (D-Va.), along with 33 other Democrat Senators and 142 Democrats in the House. While earlier versions of the bill proposed a $15-per-hour federal minimum wage, the Raise the Wage Act of 2025 goes further and would mandate a national $17-per-hour minimum wage. The bill would also eliminate the “tip credit,” instead mandating the $17-per-hour rate for tipped employees as well.
The proposed wage mandate is infeasible for many businesses across the country. According to an economic analysis by the Employment Policies Institute (EPI), implementing a $17-per-hour minimum wage would result in the loss of 1.2 million jobs. The effects would be particularly pronounced in the restaurant and bar industry, which accounts for 40 percent of the total job losses.
These drastic unemployment effects are only magnified by the bill’s proposed elimination of the tip credit. Under current law, employees who rely on tips can be paid a lower base rate of pay from their employer in addition to the tips they earn. If the worker’s tips are not enough to put their total earnings above the federal minimum wage, the employer is already required to make up the difference.
The current system works for tipped industries like restaurants, and their employees nearly universally agree: According to one survey of 1,000 restaurant workers, 97 percent said they prefer the tipping system to a flat wage.
Under the Raise the Wage Act’s proposals, the mandated base rate of pay for tipped workers would spike to $17 an hour, representing a massive 700 percent increase in direct labor costs for employers. According to EPI’s analysis, this provision of the bill would result in an additional 447,000 job losses, bringing the total number of lost jobs to 1.65 million. The hospitality industry would account for nearly one million of these job losses.
Implementing a high, one-size-fits-all artificial wage floor on a nationwide basis also fails to take into account the economic situations and cost of living in different states and localities. According to EPI’s study, the most severe job losses from the Raise the Wage Act would be felt in Texas (337,088 jobs), Pennsylvania (130,059 jobs), North Carolina (98,316 jobs), and Georgia (97,375 jobs).
Economic studies have consistently shown that sharp increases to the federal minimum wage would lead to job losses, which is why in 2022 a survey of economists found that 62 percent were opposed to a $15-per-hour minimum wage hike, with 50 percent “strongly” opposing it. Economists, employers, and the employees themselves all agree: The Raise the Wage Act is bad for workers.
Americans for Tax Reform urges members of Congress to protect American workers by opposing the job-killing “Raise the Wage Act.”
