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

A new study from the Federal Reserve Bank of Minneapolis links $15 minimum wage increases in Minneapolis and St. Paul to job losses and reduced hours, giving conservatives new evidence in the national debate over wage hikes.

The working paper found that the phased increases, which reached $16.37 per hour on Jan. 1 for all employers in Minneapolis and for large businesses in St. Paul, led to employment declines. Researchers estimated Minneapolis lost 5,425 jobs and St. Paul lost 3,797 jobs between 2017 and 2021 due to the hikes.

The effects persisted even after accounting for the COVID-19 pandemic and riots following George Floyd's killing 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 stated.

Restaurants took the biggest hit. Full-service restaurant jobs fell nearly 36 percent in Minneapolis and nearly 20 percent in St. Paul between 2018 and 2023, according to Fed data cited by the Minnesota Star Tribune. "We demonstrate 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 economists wrote.

The Minneapolis Municipal Minimum Wage Ordinance, passed in 2017, set a path to $15 per hour by July 2024. The federal minimum wage has stayed at $7.25 since 2009.

Social media users mocked the findings. RealClearInvestigations senior writer Mark Hemingway quipped on X, "Who could have possibly seen this coming."

One X user wrote, "They swore the $15 minimum wage would be magical for everyone: higher pay, thriving businesses, cheaper happy hours. Instead, thousands of jobs are gone, restaurants gutted, and now we're all paying more for the same thing as before except for worse service. But sure, keep telling me economics is just a suggestion."

Another posted, "Boosting minimum wage significantly above the market rate may temporarily benefit incumbents, but it reduces overall hours available, accelerates automation, and harms new-entrants. This happens time and again. This happened in Seattle. And the latest evidence comes from Minnesota."

A local radio host wrote on X, "'Workers are making more, but businesses are cutting back, research shows.' Oh, really, you don't say?"

Minnesota activist Michael Holmstrom posted, "'Why didn’t anyone warn us?!!' Oh wait, we did."

In 2018, then-candidate Tim Walz, now Minnesota's Democratic governor, supported a statewide $15 minimum wage. "My advocacy for a housing wage is directly tied to my support for a $15 minimum wage. $15 is an important place to start, but in many places across Minnesota, that still isn’t enough for families to make ends meet," he wrote on Facebook.

Progressive Democrats continue to push for hikes beyond $15. Rep. Alexandria Ocasio-Cortez, D-N.Y., has said $15 is no longer enough, while others back $20 to $25 or more.

Fox News Digital reached out to Gov. Walz's office and the cities of St. Paul and Minneapolis for comment.