A new Federal Reserve Bank of Minneapolis study is handing conservatives fresh ammunition in the minimum wage fight, with critics mocking the findings as obvious after researchers linked $15 wage hikes to job losses and reduced hours in Minneapolis and St. Paul.
“Who could have possibly seen this coming,” wrote RealClearInvestigations senior writer Mark Hemingway quipped on X in response to the study.
The working paper found that the phased minimum wage increases in Minneapolis and St. Paul were associated with a decline in employment, along with reduced hours for some workers that could complicate ongoing national pushes for higher wage mandates.
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The debate comes as progressive leaders continue to advocate for increasing the federal minimum wage to address rising living costs. First passed in 2017, the Minneapolis Municipal Minimum Wage Ordinance was established to increase the minimum wage in phases to eventually meet $15 per hour by July 2024. Minneapolis’ minimum wage rose to $16.37 for all employers on Jan. 1, while neighboring St. Paul’s rate rose to $16.37 for large businesses as part of phased wage increase.
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, two major shocks that also affected Twin Cities businesses during the study period.
“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 Fed analysis found the wage hikes increased hourly pay but reduced available jobs and hours, with researchers estimating that Minneapolis lost 5,425 jobs and St. Paul lost 3,797 jobs between 2017 and 2021 because of the minimum wage increases.
The restaurant sector was hit especially hard, according to the report. Full-service restaurant jobs fell nearly 36% in Minneapolis and nearly 20% in St. Paul between 2018 and 2023, according to the 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,” economists stated.
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Social media critics seized on the findings, arguing the report confirmed long-standing warnings that aggressive wage mandates can reduce jobs and hours.
“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,” wrote an X user. ” But sure, keep telling me economics is just a suggestion.”
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“You know what can fix this? Another wealth (aka middle class) tax,” joked another.
“Boosting minimum wage significantly above the market rate may temporarily benefit incumbents, but it reduces overall hours available, accelerates automation, and harms new-entrants,” said another user. “This happens time and again. This happened in Seattle. And the latest evidence comes from Minnesota.”
“‘Workers are making more, but businesses are cutting back, research shows.’ Oh, really, you don’t say?,” posted a local radio host on X.
“‘Why didn’t anyone warn us?!!’ Oh wait, we did,” wrote Minnesota self-proclaimed “grassroots conservative activist” Michael Holmstrom on X.
The federal wage has remained at $7.25 since 2009 despite calls from left-leaning lawmakers to raise the minimum a step even further to $30 per hour.
Back in 2018, Democratic Minnesota Gov. Tim Walz backed a $15 minimum wage statewide in Minnesota, declaring he would sign such a bill into law as governor. Local leaders sounded the alarm for the increase with backing from coalition of labor activists, progressive city council members, and community groups.
“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 at the time.
The findings come as progressive Democrats continue pushing to raise the wage floor well beyond the long-standing $7.25 federal minimum wage. Rep. Alexandria Ocasio-Cortez, D-N.Y., has argued that a $15 minimum wage is no longer enough for workers, while other left-leaning lawmakers and city leaders have backed proposals ranging from $20 to $25 or more.
Fox News Digital reached out to the office of Gov. Walz and the Cities of St. Paul and Minneapolis for comment.
Fox News Digital’s Amanda Macias contributed to this report.
