In the murky waters where economics and politics mix, one question has long remained one of the cloudiest and most contested: Are higher minimum wages good or bad for the nation’s progress, and even for workers’ own prosperity?

Depending on your point of view—or, more likely, the side you live on—you might think the answer is obvious: Of course higher wages are good for people. Or, no, they hurt businesses, and therefore people’s job prospects. But this is one of those debates that is repeatedly conducted on the surface, where perceptions that seem self-evident, but are wrong, rule the day.

To break down any delusions we might have about the minimum wage, it might help to begin with a review of the historical record.

Back in 1933, when a newly elected president named Franklin D. Roosevelt started talking about the nation’s first federal minimum wage, FDR conjured what seemed like a basic moral imperative. “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country,” Roosevelt said. “By living wages,” he added, “I mean more than a bare subsistence level—I mean the wages of decent living.”1

Five years later, in 1938, Congress finally delivered—but only with crumbs, passing a minimum wage of 25 cents an hour (the equivalent of about $5/hour today). Yes, this was the Great Depression and prices were low. But still, just to cover basic daily costs in the late 1930s, you had to make more than twice that much—about 65 cents an hour, or just over $1,300 a year.

In the decades since the Depression, the federal government increased the minimum wage over and over, a total of 22 times. After each one of those raises, however, the minimum wage still fell below the cost of living at the time, usually by a wide margin.2 After 1968, the increases got so small that they amounted to a series of wage cuts—because inflation was rising more dramatically than the wage hikes. In real purchasing power, a worker today makes about $2 an hour less than someone did nearly 60 years ago.

This trend, as most of us know, hit bottom in 2009, when the federal government stopped raising the minimum wage at all. That has left this wage stuck, for the last 17 years, at $7.25, or $15,000 a year. That’s roughly a third of what an average American, with no children, has to spend just to survive from day to day. Add two children and the minimum wage covers less than a fifth of someone’s necessities.3

At this point, with a wage floor frozen at poverty wages for almost two decades, the country’s workforce has essentially been strip-mined. In 2024, according to the U.S. Bureau of Labor Statistics, approximately 82,000 people were paid $7.25 an hour, and 760,000 people worked for less than that. Another 40 million people, according to Oxfam America, work for less than $12 an hour. These statistics suggest that about half of all wage-earners, or a quarter of the entire workforce,4 isn’t earning enough to pay for more than 50 percent of their monthly necessities.

Given these conditions, it seems self-evident that workers would benefit from a law requiring higher pay. But every time an increase in the federal minimum wage is seriously addressed, it meets with opposition from the business community. (In fairness, the opposition is not across the board, but it’s always led by business’s most powerful voices: the lobbyists for the biggest players in each industry.) Their arguments are always the same: Higher wages will force employers to lay off workers, and raise prices to unaffordable levels; many businesses will even have to close. Some go so far as to oppose a minimum wage at any level, seeing it as a threat to America’s tradition of free enterprise.

As Ronald Reagan put it, in 1980, when he was a California governor running for president, “The minimum wage has caused more misery and unemployment since the Great Depression.” Nine years later, Penn. Congressman William Goodling chimed in with some specifics. “When the minimum wage goes up,” he said, “the very people we say we want to help—the young, the unskilled, the disadvantaged—are the first people to get laid off.” Decades later, the Cato Institute’s James A. Dorn elevated the critique, saying “Economic freedom, not minimum-wage socialism, is the key to reducing poverty.”5

None of these doomsday scenarios has ever panned out. And the captains of industry know it. The restaurant business is a prime example.

In the chart below (from a National Employment Law Project report), we see a 2007 statement from Peter Kilgore, Senior Vice President of the National Restaurant Association, predicting disaster if the minimum wage were increased; then, five years later, crowing about restaurants’ profits—which are clearly laid out in the chart—and predicting more growth to come.

What’s particularly notable about this example is that Kilgore’s first prediction was made just before the 2008 recession hit—in other words, on the expectation, presumably, of normal business in the coming years. By 2012, as Kilgore’s second statement makes clear, the restaurant industry had been forced to cope with the economic downturn as well as the new, higher wage adopted three years earlier. Despite having to pay those higher wages, the nation’s restaurants saw more than $1 billion in sales growth in those three years.

This story has played out so often over the decades—in industry after industry, and in study after study—that minimum wage increases shouldn’t even have to be debated anymore. At this point, the record is both consistent and clear: Yes, some businesses have suffered from minimum wage increases, particularly those that were struggling to begin with, but these stories are always in the minority. Most businesses have prospered by paying higher wages, especially those that were relatively stable.6 And from all indications, plenty of other companies could afford to do the same.

You can also look at the minimum wage debate through state data, which might be even more telling. After years of waiting in vain for federal action on the minimum wage, more and more states have been raising minimum wages on their own. And virtually every state that has done so has seen increases in its measures of well-being, including its level of economic output.

While this looks like a promising movement, it’s carrying a lot of dead weight. In the 30 states that have taken action, the new minimum wages range from $8.75 in West Virginia to $14 in Hawaii (and $17 in Washington, D.C.). Yet in every case, the new wage still falls well short of that state’s cost of living. Using the same states as examples, those costs, which cover just the basics for survival, range from $26 an hour in West Virginia to nearly $70 an hour in Hawaii.

These and other states could certainly be more generous, and that would help. But we’d still end up with a patchwork economy, with labor costs varying from region to region. This skews supply and demand dynamics, where the government actually creates advantages for one state that its neighbors can’t enjoy.

There is a good alternative, however: a solid, nationwide wage floor—in other words, a minimum wage that finally covers basic costs of living. This wouldn’t entirely eliminate the patchwork, but it would at least lessen the mismatches. It would also create a national workforce that can afford to shop for more than the bare necessities. And that boosts the economy as a whole.

The good news is that this message is starting to rise to the surface. Almost every day, there’s more news about the “affordability crisis” faced by working-class Americans. And, as we have seen in recent special elections, this issue is shaping voter turnout.

Elected officials who are now in Washington might not fully understand this trend, but a growing number of their challengers do. As part of my work with The Patriotic Millionaires, an organization that advocates for a tax cut for wage-earning Americans (paid for with higher taxes on the ultra-wealthy), I get a chance to talk to these candidates all the time. And many seem committed to making life affordable for working Americans—arguing the case with a level of seriousness and intensity that we’ve not seen in decades.

This gives me great hope. In the coming months, I will introduce you to some of these up-and-coming world-changers, so that you might feel hopeful too.