The Economic Experiment That Upended Reality

In the fall of 2011, one of us gave a presentation on the idea of a $15 minimum wage to a gathering of the Democracy Alliance—one of the most influential networks of left-leaning donors and advocates in the country. It did not go well. Heads shook. Some people in the audience laughed out loud. Later, when we raised the idea with Democratic members of Congress, progressive economists, and liberal think tanks, the reception was similar. They thought we’d lost our minds.These were not people who disagreed with our goal of fighting inequality. But they were unwitting captives of an economic paradigm that said a $15 minimum wage had to be crazy. That paradigm, which we call the neoliberal consensus, generally holds that markets, left largely to themselves, allocate resources efficiently. One of its iron laws is that anything that forces employers to raise wages kills jobs. It was basic supply and demand: Make something (labor) more expensive, and you’ll get less of it. If you accepted that premise, then a $15 minimum wage was an act of economic madness that would harm the very people we were intending to help. Such is the power of a dominant paradigm that, in the 1990s, after the economists Alan Krueger and David Card published work suggesting that minimum wages didn’t necessarily kill jobs, the Nobel laureate James Buchanan declared, “Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores.”In 2014, Seattle went ahead and implemented a $15 minimum wage anyway. And all the apocalyptic predictions failed to come true. The restaurants did not close. The jobs did not disappear. Instead, 100,000 workers got raises, and spent them. Seattle’s economy, far from collapsing, continued to boom. San Francisco soon passed its own $15 minimum wage. Then came minimum-wage hikes in state after state, including not just liberal New York and California but also Missouri, Nebraska, Florida, a