Do higher wages kill jobs? (with Mayor Eric Garcetti and Alan Krueger)

Episode Summary

Executive Summary: This episode argues that the claim “higher wages kill jobs” is a political myth, not an economic fact. Through Seattle/SeaTac and Los Angeles minimum-wage cases, economist Alan Krueger’s research, polling, and Mayor Garcetti’s policy experience, the show contends that raising wages boosts local spending, supports workers, and does not reduce employment in any meaningful way.

Main Topics: Debunking the 'wages kill jobs' claim (Priority: 5/5): The hosts frame this as the core lie of trickle-down economics: low wages are defended by warning that higher pay will destroy employment, even though the episode says evidence does not support it. SeaTac and Seattle as real-world wage experiments (Priority: 5/5): The episode revisits the SeaTac $15 campaign and Seattle's wage increases as natural experiments showing that higher wages did not cause the predicted job collapse or business exodus. Los Angeles minimum wage implementation (Priority: 4/5): Mayor Eric Garcetti discusses LA's phased $15 minimum wage, arguing that higher pay increased consumer spending, lowered unemployment, and supported business growth. Alan Krueger and empirical economics (Priority: 5/5): Krueger explains the New Jersey-Pennsylvania study with David Card, emphasizing that careful data analysis found no job loss from minimum-wage increases and helped reshape the field. Public opinion and narrative change (Priority: 3/5): Richard Kirsch describes how polling evolved as the minimum wage debate shifted from abstract fear to a story about workers supporting families and spending money locally. A broader progressive labor agenda (Priority: 4/5): The conversation ends by proposing 'progressive labor standards'—higher requirements for big firms, potentially including a $30 wage floor for giants like Walmart.

Key Arguments: Claims that minimum-wage hikes 'always kill jobs' are unsupported by empirical evidence and function mainly as a tactic to keep wages low. Raising wages can increase local demand because low-wage workers spend extra income quickly in their communities. SeaTac and Seattle serve as natural experiments: restaurants and employment continued to grow after wage hikes. Los Angeles saw unemployment fall and labor-force participation rise after adopting a $15 minimum wage. Alan Krueger and David Card's studies showed no meaningful job loss after minimum-wage increases in New Jersey versus Pennsylvania. The debate is less about facts than power: opponents resist wage hikes because they threaten profits and status hierarchies. Public support for $15 wages has grown substantially as the issue has been framed around family well-being and local economic benefits. A future strategy could be to hold the largest corporations to the highest labor standards, since they can absorb much higher wages.

Data Points: Federal minimum wage: $7.25/hour - Current U.S. federal wage floor discussed early in the episode Federal tipped minimum wage: $2.13/hour - Shown as an extreme low wage for tipped workers Seattle/restaurant worker wage: $15/hour plus tips - Described as the wage for restaurant workers in Seattle after local reforms Alabama tipped worker wage comparison: $2.13/hour plus tips - Used to illustrate the stark interstate wage gap Wage gap ratio: 700% difference - Comparison between Seattle and Alabama tipped-worker pay SeaTac/Seattle area employment growth: +3.6% year over year - Used to argue that employment did not fall after wage increases Los Angeles minimum wage (current at time of interview): $13.25/hour - Mayor Garcetti says LA is phased toward $15/hour Los Angeles minimum wage target: $15/hour in two years - LA's planned final wage level Los Angeles raise impact: $3.4 million raise every hour of work - Garcetti's estimate of aggregate wage gains for more than 500,000 families Families affected in Los Angeles: More than 500,000 families / 550,000 Angelenos - Population expected to benefit from wage increases Los Angeles unemployment change: Down 14% the first year - Garcetti's claim about post-increase labor market improvement Los Angeles labor force participation rate: 66.9 - Reported as having increased after the minimum wage hike Minimum wage in New Jersey before increase: $4.25/hour - Baseline in Krueger/Card's study Minimum wage in New Jersey after increase: $5.05/hour - The 80-cent increase studied in the 1994 paper Minimum wage increase size in New Jersey: $0.80 - Increase from $4.25 to $5.05 Poll support for $15 minimum wage: 55% to 60% - Richard Kirsch cites national/battleground-state support levels Support among Republican women: 57% - Kirsch notes cross-partisan support Number of minimum wage increases since 1938: 22 - Krueger says the U.S. has repeatedly tested the policy over time

Pivotal Quotes: "If you can get people to believe the claim that raising wages always kills jobs... you have explained the economy to them in a way that makes them fear raising wages." — Nick Hanauer: Opening thesis on why the anti-wage narrative is politically powerful "The minimum wage increase in New Jersey didn't lead to job loss of anything. It led to stronger job growth in New Jersey than Pennsylvania." — Alan Krueger: Summary of the landmark New Jersey-Pennsylvania study "The reason that we keep litigating this issue... is because the people who want to keep wages low and profits high have found that line of argument is the most effective thing they've ever found." — Alan Krueger: Explanation of why the minimum wage debate persists despite evidence

Implications: The episode suggests wage policy should be judged by evidence, not ideology. For workers, higher minimums can raise living standards without harming jobs; for businesses, demand may improve. Future reforms may target the largest firms first.