Congress Moves to Raise Federal Minimum Wage to $20 by 2029

Small businesses that rely on minimum-wage or near-minimum-wage labor would face significantly higher payroll costs as wages nearly triple from $7.25 to $20.00 over three years. While higher wages could reduce turnover and boost consumer spending, many small employers — especially in restaurants, retail, and agriculture — could face tough choices about hiring, hours, and prices. The phase-in schedule gives businesses time to adjust, but the increases are steep.

Higher minimum wages could lift some workers above income thresholds for SNAP eligibility, potentially reducing their food assistance benefits. While earning more money is generally positive, some families near the eligibility cliff could lose benefits that are worth more than their wage increase. Over time, the net effect for most low-wage workers would likely be positive since higher wages generally outweigh lost benefits.

The Earned Income Tax Credit is calculated based on earnings — as wages rise, some workers move into the phase-out range of the EITC, reducing the credit they receive. Low-income workers who see their wages increase to $20.00/hour could see reduced EITC payments, partially offsetting their wage gains. However, most workers would still come out ahead overall with significantly higher take-home pay.

Farms and ranches that employ seasonal or low-wage workers covered by the FLSA would face sharply higher labor costs as the minimum wage rises to $20.00. Agricultural operations, which often operate on thin profit margins, could be significantly impacted. However, many farmworkers are exempt from federal minimum wage requirements under existing FLSA exemptions, so the scope is limited to those workers who are covered.

Some low-wage workers currently on Medicaid could see their incomes rise above eligibility thresholds as the minimum wage increases. In states without Medicaid expansion, this could cause some workers to lose coverage. In expansion states with higher income limits, the effect would be smaller. Higher wages are generally positive, but losing healthcare coverage is a significant concern for affected workers.