The Oklahoma Senate is considering Senate Bill 35, legislation that would raise the minimum wage in Oklahoma from $7.25 per hour to $15.00 per hour, effective November 1, 2025.

It is not uncommon for some state lawmakers to advocate for quick “fixes” in response to perilous economic situations, such as minimum wage hikes. However, minimum wage increases in any state typically negatively impact businesses and individuals. Lawmakers in The Sooner State would benefit from considering all of the effects associated with such hikes.

A paramount concern surrounding increases in the minimum wage is the overall effect upon employment levels. Minimum wage hikes produce unintended consequences that often inflict even more pain upon the very people they are supposed to benefit. Though well-intentioned, minimum wage hikes are a substantial reason for the utilization of self-checkout kiosks by grocery chains and fast-food restaurants, which disproportionately eliminate jobs for vulnerable and low-income individuals.

A 2017 paper from the National Bureau of Economic Research studies the effects of the aforementioned scenario, utilizing data collected from 1980 to 2015. The authors conclude that “increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers… Our work suggests that sharp minimum wage increases in the United States in coming years will shape the types of jobs held by low-skilled workers, and create employment challenges for some of them.”

Corroborating this argument, a new study released by the Berkeley Research Group (BRG) proves that California’s $20 per hour minimum wage for fast food workers has led to job losses, higher food prices, and increased automation in the industry.

The BRG study found that California’s fast-food restaurants lost 10,700 jobs between June 2023 and June 2024, making it the worst-performing year outside of a recession and the coronavirus pandemic. Additionally, food prices at local restaurants have increased by 14.5 percent, nearly double the national average, since AB 1228—the legislation mandating this wage increase—went into effect.

Further, a study by the Congressional Budget Office examines how increasing the federal minimum wage to $15 per hour in 2025 would adversely affect employment and household incomes. While the study does find that a minimum wage increase boosts some workers’ wages, it also leads to job loss for many others, with small businesses often bearing the brunt of economic pain.

A minimum wage increase in Oklahoma would force small businesses to reallocate their costs to cover the increase in employees’ wages, ultimately forcing them to alter spending elsewhere to offset their newly increased labor costs. More times than not, this results in reduced hiring, a reduction in work hours, and increased prices for consumers. This is often the small margin between staying open and bankruptcy for small businesses, which typically operate on slim margins to begin with.

In fact, a recent report from the Employment Policies Institute (EPI) found that a minimum wage hike would cost the U.S. economy approximately two million jobs. The EPI study notes that of those two million jobs, those most likely to vanish are in the restaurant and hospitality industries already steamrolled by the COVID-19 pandemic. Forcing small businesses in these industries to raise their labor costs would inflict even more harm upon the few that have managed to survive.

The country’s continued macroeconomic vulnerability is also important to consider. While unemployment rates have improved since their pandemic lows, the labor force participation rate has not rebounded in the same way. According to the U.S. Bureau of Labor Statistics, there were 7.6 million unfilled jobs on the last business day of December, according to their early February 2025 Economic News Release.

As for inflation, the January 2025 Consumer Price Index report exposed that over the last 12 months, the all-items index increased 3.0 percent before seasonal adjustments.

Price increases in shelter, medical expenses, energy, gasoline, and food are felt by all Americans, with Oklahoma being no exception. According to World Population Review, the average monthly cost of groceries per person in Oklahoma was $346.37 in 2024.

Given the ongoing economic disorder, it is unsurprising that lawmakers may be turning to minimum wage laws to provide relief for their struggling constituents. Yet, these efforts are both ineffective and counterproductive ways of combating the problem, as they will drive up the costs of goods and services while putting many out of a job altogether.

Although attempts to bolster a minimum standard of living and protect wage workers are laudable, the overall economic effects of forced minimum wage hikes accomplish neither of those worthy goals. Arbitrary minimum wage hikes, out of sync with the laws of supply and demand, would do little to lift struggling individuals and families in Oklahoma from poverty while also destroying jobs and likely increasing government dependence.

Because of this, it is crucial for lawmakers to consider the serious consequences a minimum wage increase can have on employment rates and economic growth as Senate Bill 35 moves through the legislative process.

Heartland Impact can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Cameron Sholty, at csholty@heartlandimpact.org or 312/377-4000