Minneapolis Fed Study Links $15 Minimum Wage to Job Losses in Twin Cities

A working paper from the Federal Reserve Bank of Minneapolis found that the phased minimum wage increases in Minneapolis and St. Paul to $15 per hour were associated with a decline in employment along with reduced hours for some workers. The study estimated that Minneapolis lost 5,425 jobs and St.

Paul lost 3,797 jobs between 2017 and 2021 because of the wage increases. Researchers said the employment declines persisted even after accounting for the COVID-19 pandemic and violent riots in the wake of the killing of George Floyd in Minneapolis.

"We find that the increase in the minimum wage substantially decreased employment in restaurants, retail, and health, even after accounting for potential confounding effects from the pandemic and civil unrest," the report said. The Minneapolis Municipal Minimum Wage Ordinance was first passed in 2017.

It raised the minimum wage in phases to reach $15 per hour by July 2024. As of Jan. 1, the minimum wage in Minneapolis reached $16.37 for all employers while St. Paul's rate for large businesses also rose to $16.37.

The restaurant sector was hit especially hard according to the report. Full-service restaurant jobs fell nearly 36 percent in Minneapolis and nearly 20 percent in St. Paul between 2018 and 2023. The analysis found the wage hikes increased hourly pay but reduced available jobs and hours.

Economists stated that establishments with larger exposure of their labor costs to the minimum wage experienced larger increases in their wage and larger declines in their jobs, hours, and wage bill. The federal minimum wage has remained at $7.25 since 2009.

Some progressive leaders continue to advocate for increasing it to address rising living costs with proposals ranging from $15 to $30 per hour. In 2018, the governor of Minnesota backed a $15 minimum wage statewide and said he would sign such a bill into law.

At the time he stated that while $15 was an important place to start it still was not enough for families to make ends meet in many places across the state.