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

A new study from the Minneapolis Federal Reserve has found that the Twin Cities’ push to raise the minimum wage to $15 was associated with job losses and reduced hours, potentially harming the low-wage workers it aimed to help.

The research examined the period following the wage increases and determined that Minneapolis lost nearly 5,500 jobs and St. Paul lost almost 3,800 jobs between 2017 and 2021. According to the study, these effects persisted even after accounting for disruptions from the COVID-19 pandemic and the social unrest following the death of George Floyd.

The findings were discussed on a financial news panel, where participants highlighted ongoing efforts in blue cities to raise minimum wages to address income inequality and rising living costs.

Brian noted the study as part of a broader challenge for businesses, combining higher operating costs with reduced safety and foot traffic. He described a recent visit to a Twins game in downtown Minneapolis, calling the area surprisingly empty with an abandoned building nearby covered in posters. “It’s this compound effect of all these things,” he said.

Jackie pointed to the consequences for business operations, using examples from both Minneapolis and New York City. She argued that sharply higher wages, such as a hypothetical $30 minimum, would drive up consumer prices—like a McDonald’s Happy Meal reaching $30—while destroying jobs and economic activity. “At a certain point, you actually destroy what’s being created by raising that minimum wage,” she said.

Taylor advocated for market-driven wages over government mandates. “This is why I love the free market,” he explained. “If I’m the employer and I’m trying to hire someone… the market would figure that out.” He contrasted this with top-down policies that force wage levels, leading businesses to adapt by cutting jobs or hours.

Dagen questioned why policymakers do not review existing research on minimum wage experiments. She cited a study indicating that raising the federal minimum wage to $15 per hour would eliminate about 1.5 million jobs nationwide. In Seattle, a second increase to $13 per hour cut hours for low-wage jobs, with total payroll for those workers falling and employees losing an average of $74 per month, she said.

The panel also referenced California’s fast-food wage hikes, which led to roughly 8,000 jobs evaporating, along with reductions in hours for remaining workers. Participants observed the rise of kiosks and automation in restaurants as a direct response to higher labor costs. “If you raise the wage too high, the restaurant owner will say… I’m not going to get a worker. I can get a kiosk,” Jackie noted.

Brian questioned the logic behind specific wage targets, asking why figures like $16.37 are chosen instead of round numbers and suggesting that pushing wages even higher, such as to $100 per hour, would quickly reveal the limits of such policies.

The discussion underscored a recurring debate: while wage hikes are promoted as a solution for workers facing higher living costs, the accumulated evidence from multiple cities suggests they can lead to fewer employment opportunities and reduced total earnings for low-wage workers.