For 17 years, the federal minimum wage has remained stuck at $7.25 an hour, a 77-year low in real terms. That freeze has cost low-wage workers roughly 30% of their purchasing power, even as housing, healthcare, and childcare costs have soared. Now, a coalition of economists and advocates is pushing Congress to link the wage floor to the national median—a move they say would lift pay for 40 million workers.
The proposal, backed by the Economic Policy Institute and the Roosevelt Institute, would set the federal minimum at two-thirds of the national median wage. By 2030, that formula would deliver about $20 an hour. Supporters argue it's the single most effective tool to address what they call America's wage-driven affordability crisis.
“The affordability crisis is fundamentally a wage crisis,” said Heidi Shierholz, president of the Economic Policy Institute. “Raising the minimum wage is the clearest, fastest, and most evidence-backed tool we have.”
Decades of research have undercut the old warning that higher minimum wages kill jobs. Studies now show businesses adapt through productivity gains, modest price increases, and lower turnover. A recent analysis of a proposed $25 minimum wage found that even that level, while still inadequate for some high-cost areas, would not trigger mass layoffs.
Critics often point to potential price hikes. But researchers note that California's fast-food wage increase from $16 to $20 per hour in 2024 raised menu prices by just 17 cents on a $6 hamburger. Low-wage labor accounts for a small fraction of total business costs, and large corporations can absorb increases by trimming oversized profits.
The federal minimum wage was established during the New Deal to stop a race to the bottom. “When employers build a business model around poverty wages, workers pay the price,” said Elizabeth Wilkins, president and CEO of the Roosevelt Institute. “Responsible employers are pressured to follow suit.”
Beyond the wage floor, advocates stress the need for complementary policies: robust union protections, full-employment macroeconomic targets, and an adequate social safety net. But they see the minimum wage as the most immediate lever. “If you are looking for a single button to press to improve affordability for the largest number of people, raising the minimum wage is right there,” Shierholz added.
The political landscape remains uncertain. While states have moved ahead—often through ballot initiatives—Congress has not acted. The White House has shown little appetite for major wage legislation, and a bipartisan housing bill has stalled. Meanwhile, mayors across the country are waiting for federal tools to address local costs of living, including wage floors.
As the 17-year freeze drags on, the gap between what workers earn and what they need to live continues to widen. The question now is whether Congress will finally act—or let the federal minimum wage fall even further behind.
