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Minimum Wage Increases Hurt Lower-Skilled Workers

by July 30, 2025
July 30, 2025

Jeffrey Miron and Jacob Winter

automation

States and cities throughout the US continue to raise their minimum wages, and some members of Congress are pushing for a federal increase. There have long been debates, however, about whether these policies cause unemployment.

A recent study sheds new light on this question by examining

whether minimum wage increases in the United States expanded companies’ innovation in automation technology.

The authors found

that a larger percentage increase in a state’s minimum wage led to a larger increase in the number of automation patent applications by firms headquartered in that state.

Additionally,

[a]fter minimum wage hikes, a 10 percent increase in automation patents was associated with a 1.6 percentage point decline in the share of employment held by workers without any college education who performed routine tasks … and a 1.2 percentage point decline in the share of wages paid to these workers.

The authors conclude by suggesting

that minimum wage increases make lower-skilled jobs more vulnerable to automation—harming the very workers legislators intended to help.

More broadly, minimum wage hikes generate a range of counterproductive effects; good intentions are not enough.

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