“So what can we learn from this study? On the data side, we see that everything is proceeding as planned. Nobody’s paying $50 for a burger at McDonald’s, or $16 for a can of tuna at Safeway. Employers wish their profits were higher, and workers are glad they got a raise, but they wish they made more money. Three years after Seattle started down the road to $15, everything is as it should be. Those apocalyptic claims of destruction and business closures haven’t been proven true. One thing the study didn’t explain was why the sky didn’t fall as promised. Why weren’t workers laid off in droves, or replaced with robots? Why didn’t prices skyrocket? Why does Seattle have more restaurants now than at any point in its history? It’s because those workers who saw a raise now have more money to spend in the city around them. Those restaurant workers are eating in more restaurants. They’re buying more groceries. They’re buying more clothes and cars. That increased consumer demand is creating jobs, and more than paying for the increased minimum wage. The $15 minimum wage established a positive feedback loop that created growth in Seattle by including more people in the economy. In other words, it worked exactly as intended.”
Last fall, I wrote about
the strange case of Minnesota governor Mark Dayton, a left-wing
billionaire heir to the Target fortune who came to power and reversed
his Republican predecessors’ Reagonomic idiocy, instead raising taxes on
rich people, increasing public spending, and creating shared prosperity
for the people of Minnesota.
The results of the experiment continue to surprise and delight:
unemployment is down to 3.7%, private sector earnings are up 1.5% to
$891/week, 47,000 new jobs were added to the economy in the past year,
and the state just declared a $1.8B budget surplus, even as Forbes ranked it 9th in its table of best states for business.
But this is all the more remarkable when compared the fate of the
Republican-run, austerity-fuelled neighboring states, where a succession
of GOP governors and state houses have slashed taxes on business and
the wealthy, eliminated social spending, and attacked trade unionism.
They are running deficits, the people there are earning less
than their Minnesotan cousins, they’re adding fewer (and worse) jobs,
and posting less growth.
Economics is bedeviled by confounding factors: comparing the outcome of
the same intervention in two states will always be complicated by the
other differences in between them. But as controlled experiments go, you
could hardly ask for a better one than the outcomes in Kansas and
Winsconsin – the homes of the “American carnage” that Trump weaponized
in 2016 – and the ones in Minnesota over the same period. If that’s not
enough, we can just compare Minnesota under Dayton to the former
Republican governor Tim Pawlenty, who slashed services, cut taxes, and
drove the Minnesota economy off a cliff, from whose depths Dayton has
now comprehensively rescued it.
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