A tale of two Midwestern states: In 2014, Minnesota started implementing minimum wage increases, while Wisconsin did not. Minnesota instituted phased-in hourly increases on August 1 of each year through 2016, and indexed them to inflation based on economic conditions beginning January 2017. At the beginning of 2018, Minnesota’s minimum wage increased to $9.65 per hour for large employers (up from $9.50 per hour), and to at least $7.87 per hour for small employers (up from $7.75 per hour).
Wisconsin did not follow Minnesota’s example.
And this is what happened:
A 2017 paper released by The National Bureau of Economic Research pointed out how minimum wage increases reduced the hours working in low-wage jobs. The paper stated, “This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to as much as $11 in 2015 and to as much as $13 in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly wage rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent.”