The effect of the minimum wage on employment is one of the most studied topics in economics. Despite recent claims that an increased minimum wage leads to widespread employment losses or business closures in the restaurant industry, a careful look at multiple sources undercuts recent suggestions (a) that there have been mass closures of restaurants in Denver, or (b) that Denver’s increased minimum wage has caused restaurant closures. In this issue brief, we examine recent and longer-term trends in Denver’s restaurant industry, finding that the recent apparent losses seen in data from the Bureau of Labor Statistics are due to other circumstances, where those losses can even be confirmed to exist.
There is no doubt the minimum wage leads to increased labor costs among employers. However, economic research does not support the assertion that Denver’s higher minimum wage is the cause of the loss of restaurants Denver has seen over in 2024. Denver’s minimum wage has been increasing at a rate greater than the state’s since 2020—so negative impacts of this policy should be evident in the data starting around that time. We look at data from Denver’s Department of Excise and Licensing, the U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW), and unemployment insurance data to better understand how the restaurant industry has fared in Denver over the last few years.