A Minimum Wage Natural Experiment Has Been Running for Over a Decade
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A Minimum Wage Natural Experiment Has Been Running for Over a Decade<br>When 30 States Raised Minimum Wages, What Happened to Pay and Jobs?
Arin Dube<br>Jun 10, 2026
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The federal minimum wage of $7.25 has not been raised since …. wait for it … 2009. That’s 17 years, if you’re counting. At the same time, after 2013, 30 states have raised their minimum wage above the federal floor. The other 20 have stuck with $7.25 an hour throughout. More than a dozen years later, this divergence has become an unprecedented “natural experiment” in minimum-wage policy — not just in the United States, but anywhere. Teasing out causality in social sciences is hard. But this large, persistent, and still-widening gap between the two groups gives us an unusually informative “laboratory” for testing predictions about the labor-market effects of minimum-wage policy.<br>Let’s have a look.<br>Thanks for reading Arin’s Substack! Subscribe for free to receive new posts and support my work.
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Two halves of the country, one big difference<br>The map below shows the 30 raise states in green, shaded darker for a higher 2025 minimum wage, and the 20 federal-floor states (still at $7.25) in gray.<br>Figure 1. The 30 raise states (green, shaded by 2025 minimum wage) vs. the 20 federal-floor states (gray)
Notes: Raise states raised their minimum wage above the federal floor at some point since 2013; federal-floor states stayed at $7.25 throughout 2013–2025. Source: state minimum-wage statutes.<br>Fig. 2 shows that the gap between the two groups has widened steadily since 2013. In the 30 “raise states,” the average floor climbed from $7.60 in 2010 to $14.44 by 2025. The light green band shows the spread between the lowest and the highest of these floors by year, ranging from $8.75 in West Virginia to $16.66 in Washington in 2025. For the 20 “federal-floor” states, in contrast, the nominal minimum wage remained stagnant at $7.25 throughout the whole period.<br>Figure 2. Minimum-wage levels, 2010–2025: raise states vs. the federal floor
Notes: Green line: population-weighted average minimum wage across the 30 raise states; band: full range, from the lowest to the highest state floor. Gray: $7.25 federal floor. Nominal dollars. Source: state minimum-wage statutes.<br>Did paychecks go up? Did jobs disappear?<br>A natural place to start is the industry most affected by the minimum wage: restaurants and other eating places (NAICS 7225). This low-wage industry is the most heavily studied by economists. The BLS Quarterly Census of Employment and Wages (QCEW) covers nearly every private-sector employer, so we can track the two groups of states year by year. For each year, the QCEW data reports the average weekly earnings and the average headcount employment over a pay period by industry and state (or county).<br>Figure 3 plots the year-by-year gap in restaurant pay and jobs between the raise states and the federal-floor states. The figure indexes everything to 2013, the year before floors started rising: this is the base period. Then it shows the gap in the percentage change in the outcomes (i.e., average restaurant earnings in red, per-capita restaurant employment in blue) from 2013 to another year, like 2019, or 2025. The dots and lines show the actual estimates. The shaded area shows the margin of error (95% confidence interval).<br>What do the data show? First, average restaurant pay diverges steadily from 2014 onward: averaging over 2023-2025, the average wage grew by around 7.7% ( ±3.3%) more in the raise states since 2013. Restaurant employment, by contrast, tracks close to the 2013 baseline throughout, changing by 0.3% ( ±3.3%) over the same period. Dividing the employment change by the wage change gives an “own-wage elasticity” (OWE) near zero, of +0.03. (A quick refresher: an OWE of something like -1 would be a “big negative,” with job losses erasing all wage gains; while something like -0.1 suggests very limited job losses. For more on the OWE see my post here.)<br>Figure 3. Year-by-year restaurant pay and jobs gap: raise states minus federal-floor states
Notes: Each year’s point is the percent gap in restaurant (NAICS 7225) average weekly wage or jobs per resident between the raise states and the federal-floor states, relative to 2013. State and year fixed effects; each state weighted by 2013 population; shaded bands are 95% confidence intervals clustered by state. COVID years 2020–21 are set aside (dashed bridge). Source: BLS QCEW.<br>Checked three different ways — and they all agree<br>The comparison above was the simplest one to make, and also the most transparent. We just plotted the gap in the average per-capita restaurant employment and earnings growth between the two groups of states starting from 2013. But we can also do fancier analyses that have been used by economists studying minimum wages (or similar policies).<br>2010 paperrecent...