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A rising tide: Who’s affected by a higher minimum wage in Minneapolis?

Service industries employ the most workers at the low end of the pay range

Alyssa Augustine | Media Representative

Published September 14, 2018

Researchers at the Federal Reserve Bank of Minneapolis tapped to study the city’s new minimum wage rule presented their first round of findings to the Minneapolis City Council on September 13.

Principal investigators Loukas Karabarbounis, Jeremy Lise and Anusha Nath documented wage and economic conditions prior to the increase, and highlighted the groups and industries poised to see the biggest overall effects.

The researchers’ baseline analysis of the Minneapolis labor market shows groups that are most affected by an increase in the minimum wage are:

  • Those with less than a high school education
  • Those younger than 25 years old
  • Workers in the administrative services industry
  • Workers in the restaurant and other food services industries; and
  • Workers in retail sales, and cashiers.

More than half the workers in these categories currently earn less than $15 per hour, and the industries and occupations significantly affected make up nearly 20 percent of all jobs in Minneapolis.

A $15 per hour rate is a high-water mark that is currently out of reach for as many as 78,000—or 1 in 4—workers in Minneapolis. But by 2024, as the minimum wage crests at $15 per hour for all firms, those workers stand to see a pay bump—or several—assuming nothing else changes.

Large firms—those with more than 100 employees—have already seen two wage increases this year and are now required to pay at least $11.25 per hour. As of July 1, 2018, small businesses were mandated to pay at least $10.25. The next increase will take place on July 1, 2019, and Minneapolis Fed researchers will submit their second report to the city in October 2019.

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