Study finds minimum wage increase led to restaurant job loss in the Twin Cities

A new study from The Federal Reserve Bank of Minneapolis shows minimum wage increases are partially to blame for the loss of restaurant jobs in the Twin Cities. Minneapolis and Saint Paul both instituted incrementally higher minimum wages in 2018 and 2020 respectively, and both with no tip credit. The target minimum wage of $15/hour won’t go into effect for all city businesses until 2024 in Minneapolis and 2028 in St. Paul.

From the study: “The analysis suggests that wages [in Minneapolis] increased about 4 percent more for full-service and 9 percent more for limited-service restaurant workers than they would have in the absence of the policy. At the same time, the total number of jobs declined by 12 percent more at full-service restaurants and 18 percent more at limited-service restaurants. The investigators calculate that this translates to roughly 1,700 fewer jobs at full-service and 1,200 fewer jobs at limited-service restaurants over the 27 months analyzed.”

The study says that in 2018 and 2019 minimum wage at Minneapolis restaurants rose between four and nine percent more than if there wasn’t a minimum wage increase policy for the city.  Restaurant jobs also dropped by 12 and 18 percent during those two years.

Click here for the full study from the Federal Reserve Bank of Minneapolis

To read the StarTribune article click here. (subscription required)