The Federal Reserve Board published a FEDS Note assessing whether US minimum wage increases translate into higher apartment rents. Using apartment building-level asking rents and highly granular local minimum wage schedules, the analysis finds only a small and temporary rent response to minimum wage increases, including for lower-cost properties. The note combines monthly RealPage rent data for thousands of multifamily properties starting in 2010 with monthly statutory minimum wage schedules, assigned at the census block level, and applies an event-study design. It identifies 72 state and sub-state “minimum wage events” between 2013 and 2019, with a within-metropolitan-area specification using 22 events represented in 4,666 apartment buildings. Estimated within-core-based statistical area effects show a marginally statistically significant rent elasticity of 0.02 in the month of the event, rising to a cumulative 0.031 the following month, before attenuating and becoming statistically indistinguishable from zero. For low-cost buildings (RealPage market ranks C or D), the contemporaneous elasticity is 0.029 and the two-month cumulative elasticity is 0.053, which also fades back to pre-event levels. A nationwide comparison specification using simple time effects covers 68 events and 32,643 buildings but shows suggestive pre-trends, raising concerns about unobserved cross-region heterogeneity. The note concludes that earlier findings of large, persistent rent effects may be overstated and points to further research needs, including approaches that can incorporate a wider set of minimum wage events while maintaining credible treated-control comparisons.
Federal Reserve Board 2025-02-14
Federal Reserve Board research finds minimum wage hikes have small and short-lived effects on apartment asking rents
The Federal Reserve Board's FEDS Note finds that US minimum wage increases result in only small and temporary rent increases, particularly for lower-cost properties. The analysis, using granular rent and wage data from 2010 to 2019, shows a marginal rent elasticity that fades quickly. The note suggests that previous findings of significant rent effects may be overstated and calls for further research with broader event coverage.