Minnesota’s minimum wage hike leads to significant job losses among young workers, study finds

By Pat Gray of The Blaze.

"Minnesota’s minimum wage has slowly crept up to $2.40 higher than the federal minimum wage over the last several years, and it’s proving to be a disaster for younger workers in the state, according to a new study.

Economics professor Noah Williams, director of the Center for Research on the Wisconsin Economics at the University of Wisconsin, crunched the numbers by comparing jobs and economic data in Minnesota since the state began increasing its minimum wage.

In 2010, the state raised its wage to keep up with the federal minimum wage and only continued to increase it from there. As of January, the state’s minimum wage is $9.65.

This, in turn, has led to stagnant job growth compared to their neighbors in Wisconsin, Williams reported.

Williams said that employment growth rates in the fast-food sectors in Minnesota and Wisconsin began to diverge once Minnesota began tinkering with its minimum wage.

Before that, both states’ labor markets in which the minimum wage is most relevant (jobs for young, low-skilled workers) were similar."

See also Study: Minnesota’s Minimum Wage Hikes Lead to Job Losses for Younger Workers by Andrew Burger of The Washington Free Beacon. Excerpts:

"Employment in fast-food restaurants in Minnesota and Wisconsin were growing at the same rate in 2014. The rate of growth in employment in the fast-food sectors in Minnesota and Wisconsin began diverging around the same time Minnesota began raising the minimum wage, Williams said.

"In total, from July 2014 to May 2018, employment at fast-food restaurants grew by 4.8 percent in Minnesota, but by 8.8 percent in Wisconsin," he said. "While other factors may have played a role, the timing of the trend break suggests that the minimum-wage increases in Minnesota accounted for much of this four percentage-point gap."

An employment study by the Citizens’ League showed that many large employers, such as Allina Health, Ecolab, HealthPartners, and Securian, already pay the majority of their workers at least $15 per hour, John Phelan, chief economist for the Center of the American Experiment, said. Two other large employers, U.S. Bank and Wells Fargo, recently announced that they will soon be raising their minimum wage to $15 for all employees, he added.

"The people who will be hit by this measure are not these big businesses, but the independent bookseller whose margins are being squeezed by Amazon, the immigrant store owner competing with Target and Walmart, or the nonprofit trying to give a disabled worker a break," Phelan told Watchdog.

There are many differences between the two states' economies, but the sectors of their labor markets for which the minimum wage is most relevant – mainly young and lower-skilled workers – were very similar prior to Minnesota’s minimum wage hikes, Williams said.

"The differences that have arisen since then thus are likely to be largely driven by the minimum wage hikes," he said.

Youth employment in both Minnesota and Wisconsin – workers under the age of 24 – was fairly consistent before the minimum-wage increases began. Youth employment increased slightly in Minnesota and declined slightly in Wisconsin in the 2012-2014 period, Williams added.

Youth employment in Minnesota has dropped an average 9 percent, or by 35,000 young workers, in Minnesota in the subsequent three years. It has increased by 10.6 percent, or 43,000 jobs, in Wisconsin over the same period, Williams highlighted."