Minnesotans believe that hard work should pay off, and that people who work full time should be able to support their families. But slow wage growth and growing income inequality contradicts some of our country's most deeply held values. Nationally, wages for low- and mid-wage workers have increased only modestly since the late 1970s.

To counter these trends and ensure that hard work translates into the better living standards workers deserve, the cities of Minneapolis and St. Paul passed ordinances that phasing in higher minimum wages; in Minneapolis, large employers must pay workers $15 per hour starting July 2022.

The Federal Reserve Bank of Minneapolis recently produced studies estimating the impact of minimum wage increases on jobs in Minneapolis and St. Paul ("Higher wages, fewer restaurant jobs," Nov. 12). But these studies draw conclusions that aren't supported by the evidence, in part because they don't distinguish between the effects of minimum wage increases and other changes in employment happening around the same time — including the pandemic's substantial disruption of the restaurant industry.

A growing base of research from across the country shows that minimum wage increases have minimal effects on jobs, and are vital to improving living standards for low-wage workers.

As the Economic Policy Institute has shown, these Minneapolis Fed studies have multiple flaws. For example, they fail to take into account the pandemic. Unemployment claims in the third week of March 2020 went up over 2,700% from the week before, yet the Fed chose to include the first three months of 2020 in their analysis. The vast majority of the full-service restaurant job losses that the study attributes to the Minneapolis minimum wage increase occurred during the pandemic and racial justice protests in 2020.

The methodology in the studies also suggests that the 2018-19 minimum wage increases caused large employment changes in low-wage sectors in 2014 and '15 — three to four years before they even went into effect.

In countless studies based on real data, the growing consensus of economists is that minimum wage increases may have small impacts on total jobs, but the net impact is a significant income increase for low-wage workers, especially Black and brown workers who are disproportionately employed in low-wage industries. In a review of the academic research, economist Arindrajit Dube, the world's leading expert on minimum wages, wrote that "the weight of the evidence suggests any job losses are quite small."

However, the academic debates aren't really the ones that matter. Low-wage workers need a raise. Too many Minnesota jobs pay less than what it takes to support a family. The Economic Policy Institute's Family Budget Calculator puts the monthly cost of a modest but adequate standard of living for a two-adult, two-child family in the greater Twin Cities metro area at $8,223. Minnesota's current statewide minimum wage for large employers, $10.08 an hour, doesn't come close to meeting those needs. This basic-needs budget only includes necessary expenses such as food, child care, transportation, housing and health care.

While policy actions like the expanded federal Child Tax Credit and health insurance premium subsidies enacted in 2021's American Rescue Plan can help close the gap between earnings and basic needs, wage growth remains key to improving living standards for workers and their families.

For workers in lower-paying jobs, the gap between earnings and basic needs can be insurmountably wide. In 2020, 20% of Minnesota workers made less than $15 an hour, which isn't enough to meet a basic needs budget for even a single worker without children, let alone raise a family. This is, in part, because there are just not enough living-wage jobs.

At the end of 2020, eight of the 10 occupations with the highest number of job openings in Minnesota didn't pay a median wage high enough to cover the basic needs of a single worker with no children. These included jobs in food preparation and service, home health and personal care, and administrative support.

When workers' wages don't keep up, they struggle to afford child care, transportation, housing and health care — the basic building blocks of the standard of living they want to provide to their families.

Minneapolis and St. Paul should be proud that their minimum wage increases are helping working families, and they should reject the flawed conclusions of the recent Federal Reserve studies. Indeed, all of Minnesota should follow the lead of those cities and raise the minimum wage.

Dave Kamper is a senior state policy coordinator for the Economic Policy Institute. Clark Goldenrod is deputy director at the Minnesota Budget Project.