Paul was rolling out wage increases on a similar progression. Paul businesses will follow suit by 2026.ĭuring the time period the Fed was studying - from 2017 through 2021 - Minneapolis’ minimum wage increased to $12.50 for firms with fewer than 100 employees and $14.25 for larger firms. Paul’s minimum wages are still increasing each year. Minneapolis will require all businesses to meet the new minimum wage - $15.19 per hour, which will be adjusted for inflation once a year - by next January. These findings came from a period when the minimum wage in each city was not yet $15 an hour. Each analysis yielded a similar conclusion. They also analyzed the effects of the minimum wage hikes on similar businesses within ZIP codes in the Twin Cities and theorized that civil unrest would’ve affected most businesses within a neighborhood in comparable ways. that experienced similar pandemic lockdowns. They compared the Twin Cities to others across the U.S. Paul to data pulled from ZIP codes across Minnesota cobbled together into a “synthetic control” - essentially, statistical alter-egos of the Twin Cities where minimum wage increases were never enacted, that can be used for comparison purposes. Researchers compared both Minneapolis and St. Paul - like the COVID-19 pandemic and shocks to local businesses from the rise of remote work or the civil unrest after George Floyd’s murder - are still skewing Nath’s results, despite her team’s attempts to weed these factors out of their analysis.īut Nath said her team’s analysis does control for the effects of both the pandemic and civil unrest. Skeptics have wondered whether forces beyond the minimum wage increases in Minneapolis and St. Minnesota’s unemployment rate is under 3% and remains below the national unemployment rate. “Minnesota’s economy is booming and our unemployment is low,” continued Burnham’s statement, which was co-signed by a consortium of other labor unions. “Raising the minimum wage puts money in the pockets of the lowest paid workers, often women and people of color.” “The pandemic showed that the workers we deem ‘essential’ are often the people who are paid the least, with the most precarious schedules, and they often work for big corporations who are now seeing skyrocketing profits,” Minnesota AFL-CIO president Bernie Burnham said in a statement. The papers could become new fodder for groups who opposed the Twin Cities’ push for the $15 minimum wage - a wage floor that some progressives and labor groups argue still isn’t high enough to ensure working class families can make ends meet. The wage hikes accounted for the loss of an estimated 5,000 jobs in Minneapolis and another 3,800 jobs that dried up in St. The research, which Nath conducted with two University of Minnesota economists, has yet to be published in a peer-reviewed journal.Īcross all industries, both cities saw hourly wages increase by an average of less than 1% and a roughly 2% drop in the number of jobs. “These were larger effects than what even we expected - though we had no idea before we went into the study what we would find,” said co-author Anusha Nath, a senior research economist at the Fed. ![]() In “limited-service” (fast food) restaurants, both hours and earnings fell by more than half after the increase took effect. Paul’s restaurant industry, the city’s 2018 minimum wage hike was responsible for drying up nearly one-third of available jobs, the study found. By this comparison, Minneapolis also saw a 20% drop in hours worked and a 13% dip in aggregate worker earnings.Īcross St. Take Minneapolis’ retail sector, for example: The minimum wage increase led to 28% fewer retail jobs than researchers would’ve expected from a similar city during the same five-year period. Paul to data culled from other Minnesota cities from 2017 through 2021 - were eye-popping, especially in low-wage industries. Still, the size of the impacts the researchers measured - by comparing Minneapolis and St. Many economists have reached similar conclusions about minimum wage increases in the past. Paul has successfully boosted the average worker’s hourly pay in both cities, but it has also led to sharp drops in the numbers of available jobs and hours worked, new research from the Federal Reserve Bank of Minneapolis has found. ![]() The push to raise the minimum wage to $15 an hour in both Minneapolis and St.
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