What to expect as the minimum wage goes up in the Twin Cities

When Chipotle raised its minimum wage to $15, it also hiked food prices by 4 percent.

“It made sense in this scenario to invest in our employees and get these restaurants staffed and make sure that we have the pipeline of people to support our growth,” Chipotle CEO Brian Niccol said at the Baird Global Consumer, Technology & Services Conference. “And then with that, we’ve taken some pricing to cover some of that investment.” 

Chipotle is not the first restaurant to raise prices to cover the increasing cost of labor, nor will it be the last.

One study, for example, found that minimum wage hikes coincide with price increases for McDonald’s Big Mac. In some instances, of course, costs are absorbed by workers through job losses, or reduced work hours and benefits. Nevertheless, the minimum wage hike never comes with zero costs.

In 2017, Minneapolis enacted an ordinance to gradually raise the minimum wage to $15 starting in 2018. Starting tomorrow, big businesses will be required to pay $14.25 per hour. This is up $1 from last year’s $13.25. Small businesses will pay $12.50, up 75¢ from the previous $11.75. The minimum wage will reach $15 next year for large businesses, and in 2024 for small businesses.

Similarly, both big and small businesses are facing a $1 minimum wage hike in St. Paul. They will be required to pay $12.50 and $11 per hour, respectively. For micro businesses — zero to five employees — the minimum wage goes up by 75¢ to $10.

When the Minneapolis minimum ordinance was passed in 2017, Minneapolis council member Lisa Bender hailed it as a victory for workers. But since then, even more research evidence has been released showing that minimum wage hikes more often than not lead to job losses or other costs like irregular schedules and short hours, and they close the workforce to young and unskilled workers.

We should not expect any different as the minimum wage goes up in St. Paul and Minneapolis tomorrow. That minimum wage hike is bad policy has been well demonstrated numerous times.