How big are the job losses from a minimum wage increase?
The size of the employment effect varies widely, but large minimum wage hikes consistently produce measurable job losses. In Spain, a 22% increase in the minimum wage in 2019—affecting 7% of all dependent employees—led to a clear reduction in low-wage employment. The decline came mostly from fewer new hires on permanent contracts, not from firing existing workers [1]. This means the job losses were concentrated among people trying to enter the labor market, not those already employed.
In Seattle, researchers tracked the effects of raising the minimum wage to $11 in 2015 and $13 in 2016. They found that total hours worked in low-wage jobs (those paying less than twice the original minimum) fell by an amount equivalent to an employment elasticity of -0.2 to -2.0. In plain terms, for every 10% increase in the minimum wage, low-wage hours dropped by 2% to 20%. The biggest losses hit inexperienced workers, and the reductions came mainly from cutting hours rather than eliminating jobs entirely [3].
A review of all published U.S. studies on the topic found a clear preponderance of negative employment estimates, especially for teenagers, young adults, and less-educated workers. The evidence was strongest when researchers looked directly at workers whose wages were affected by the policy [5]. This suggests that while not every study finds job losses, the overall weight of the evidence points to a negative effect.
Who gets hurt most by minimum wage increases?
The burden of job losses falls disproportionately on younger, less experienced, and less-educated workers. In Russia, a minimum wage increase raised the unemployment rate specifically among young workers and also pushed more people into informal (off-the-books) jobs [2]. Similarly, the Seattle study found that the reduction in hours was largest for inexperienced workers—those with the least job tenure and lowest skills [3].
The reason is straightforward: employers are more likely to cut back on hiring or reduce hours for workers who are easiest to replace or who require the most training. In Spain, the job losses came almost entirely from a drop in new hires on open-ended contracts, not from firing existing staff [1]. This means minimum wage hikes can make it harder for young people and low-skilled workers to get a foot in the door.
The U.S. literature review confirms this pattern: the negative employment effects are strongest for teens and young adults, as well as for workers with less education [5]. So while a higher minimum wage may help some low-wage workers earn more, it can also shut others out of the labor market entirely.
Why do some studies find little or no unemployment effect?
The answer lies in how employers adjust. Instead of firing workers, businesses can reduce hours, slow hiring, or shift workers to informal arrangements. In Seattle, the main adjustment was a reduction in hours worked, not a loss of jobs—meaning the headline 'no job loss' can hide a real reduction in work [3]. In Russia, when employers could not easily replace workers with machines (low capital-labor substitutability), they responded by hiring workers informally, off the official books [2].
Another factor is the type of minimum wage system. In China, where minimum wages are set monthly rather than hourly, an increase can actually lead to longer working hours and higher hourly wages, with employment effects that depend on how much market power the employer has. If a firm has strong monopsony power (meaning it can set wages below competitive levels), a minimum wage increase can even raise employment [6]. This helps explain why results differ across countries and industries.
Finally, the size of the increase matters. Small, gradual hikes may have negligible effects, while large jumps—like Spain's 22% increase—produce clear job losses [1]. The Turkish study, which found a positive causal link between minimum wage and unemployment from 2014 to 2022, noted that Turkey's minimum wage had risen more than tenfold in that period, creating significant labor market rigidity [4]. So the 'no effect' findings often come from modest increases in flexible labor markets, not from large hikes in rigid ones.
Sources used in this answer
Minimum wages in a dual labor market: Evidence from the 2019 minimum-wage hike in Spain
Spain's 22% minimum wage hike in 2019 reduced low-wage employment, mainly by cutting new hires on permanent contracts, not by firing existing workers.
Minimum wage and unemployment in Russia: A new look on an old construct
In Russia, minimum wage increases raised youth unemployment and informal employment, with stronger effects in industries where capital can replace labor.
Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle
Seattle's minimum wage increases led to a 0.2% to 2.0% drop in low-wage hours per 10% wage hike, concentrated among inexperienced workers.
Determining the relationship between unemployment and minimum wage in Turkey
In Turkey from 2014 to 2022, minimum wage increases had a positive Granger causal relationship with unemployment, suggesting higher wages led to more joblessness.
Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?
A review of U.S. studies found a clear preponderance of negative employment effects from minimum wages, especially for teens, young adults, and the less educated.
The effects of monthly minimum wages on the labor market
In China, monthly minimum wage increases can raise hours and wages, with employment effects depending on employer market power and overtime regulations.