Wonkbook: Will Seattle’s $15 minimum wage experiment spread across the nation?

June 4

Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara. To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here.


(Photo by David Ryder/Reuters)

Wonkbook’s Number of the Day: 2.9 million. That's the number of Americans whose applications for Medicaid as part of the health-care overhaul still haven't been processed.

Wonkbook’s Chart of the Day: The decreasing value of the minimum wage, visualized and animated.

Wonkbook's Top 5 Stories: (1) Seattle's minimum wage experiment; (2) climate rule's hurdles; (3) turning around the VA; (4) health-care technical difficulties; and (5) the legal-but-illegal NSA program.

1. Top story: The likely limited spread of Seattle's minimum-wage boost

Seattle's new minimum wage sets a standard for big cities. "The City Council here went where no big-city lawmakers have gone before on Monday, raising the local minimum wage to $15 an hour, more than double the federal minimum, and pushing Seattle to the forefront of urban efforts to address income inequality. The vote, economists and labor experts said, accentuates the patchwork in wages around the country, with places like Seattle — and other cities considering sharply higher minimum pay, including San Diego, Chicago and San Francisco — having economic outlooks increasingly distinct from those in other parts of the nation. Through much of the South, especially, the federal minimum of $7.25 holds fast." Kirk Johnson in The New York Times.

Will Seattle's hike spread? Depends. "The agreement came together with remarkable speed because Seattle Mayor Ed Murray appointed a committee of labor, business, and community leaders to hash things out on their own with a firm deadline....The looming deadline for everyone was to head off a battle of ballot initiatives in the fall....Not every state has the type of binding ballot proposals that posed a real threat if talks had collapsed....Seattle also lacks much in the way of mega-retailers and major fast-food chains, so the largest national companies weren’t involved in negotiating the compromise....Don’t forget that Seattle is quite progressive, too....So many factors converged to make Seattle a trailblazer that its path will be tricky to follow." Karen Weise in Bloomberg Businessweek.

Charts: The decreasing value of the minimum wage, visualized. Philip Bump in The Washington Post.

Background reading: Focus of minimum wage debate goes local. Ricardo Lopez in the Los Angeles Times.

How the minimum-debate could tilt the Senate control battle. "Democrats who are trying to get an initiative raising the minimum wage on the ballot in Arkansas tell me they have now collected more than the requisite number of signatures — which, if certified, could boost turnout for Dem Senator Mark Pryor, possibly helping determine control of the Senate in this fall’s elections....A minimum wage ballot initiative could give Pryor a turnout boost among core voter groups who tend to drop off in midterms, and any single race could sway the battle for the Senate....Dems hope it will give core voters a reason to vote amid a bad national environment." Greg Sargent in The Washington Post.

Guess who isn't an ally of Seattle minimum-wage hike advocates: Piketty. "Thomas Piketty, the economist and author of Capital in the Twenty-First Century, has ignited the economic left in a way that hasn't been seen since the first flames of the Occupy movement. The nerdy, unassuming Frenchman has become the patron saint of the class struggle. But did everyone read every page of Piketty's entire 600-page tome before quoting it? Nope, if Seattle's new minimum-wage law is any evidence." Heidi Moore in The Guardian.

Charts: What if the rise in income inequality had never happened? Josh Zumbrun in The Wall Street Journal.

CASSELMAN: When living wage is minimum wage. "Ultimately, low-wage workers are the victims of a broader trend of stagnant wages that stretches back long before the most recent recession. Adjusted for inflation, average hourly wages of all non-managerial workers rose less than 1 percent between 2002 and 2007, when the recession began, compared to nearly 7 percent growth in the five years before that. Economists aren’t sure what’s behind that stagnation: outsourcing, automation, the decline of unions, changes to the tax code, or, more likely, a combination of several factors. But whatever the causes, anemic earnings growth means more people are trying to get by on low wages." Ben Casselman in FiveThirtyEight.

SCHAEFFER: A feel-good policy that will backfire in the end. "Certainly a raise of this magnitude sounds compassionate. News stories profiled the likes of Somali immigrants and working mothers who were excited about this wage hike.  But while boosting the minimum wage is promoted as a way to alleviate poverty and makes many of us 'feel good,' it’s likely to backfire on the very workers it’s intended to help....Far better for states and communities to focus on targeted assistance programs to help those who are truly in need and then get out of the way to ensure greater economic growth and job creation for all." Sabrina Schaeffer in Forbes.

HILTZIK: The minimum wage is hardly radical at all. "The $15 minimum is nearly 50% higher than the federal minimum of $10.10 an hour being pushed by President Obama and implemented by his executive order for new federal contracts — but it's not as radical as some doubters claim. For one thing, inflation will pare it down by the time it's fully implemented in 2021 (though it will be indexed to inflation after that). For another, in a high-wage city like Seattle, $15 is not as far out of line as it might seem on first glance. As calculated by Arindrajit Dube, a minimum-wage expert at the University of Massachusetts, it's about 59% of the median wage in the city." Michael Hiltzik in the Los Angeles Times.

Top opinion

THOMA: How bad data hurts economics. "To make progress in economics, it is essential that theoretical models be subjected to empirical tests that determine how well they can explain actual data. The tests that are used must be able to draw a sharp distinction between competing theoretical models, and one of the most important factors is the quality of the data used in the tests....Progress in economics is frustratingly slow, and a key reason for this is the lack of quality data — sometimes the data does not exist at all....While the passage of time will increase the amount and span of economic data, the data will never be as good as it is for disciplines that have access to experimental data, and the ability to move economic theory forward will suffer as a result." Mark Thoma in The Fiscal Times.

ORSZAG: Toward a progressive tax policy. "In the hoopla over whether Thomas Piketty’s data on growing global inequality are correct, an important question about how to address the problem has been obscured. Piketty describes his own global wealth tax idea as more of a 'useful utopia' than a practical policy suggestion. Is there anything more plausible that can be done?...Neither a progressive consumption tax nor an inheritance tax may be politically viable in the U.S. at the moment, but everything in life is relative. Compared with a global wealth tax, they seem eminently doable." Peter R. Orszag in Bloomberg View.

WINSHIP: Nuance on wealth inequality. "The fair-minded take-away is that we don’t know whether or not wealth concentration in the hands of the top one percent has risen, though it is safe to say that it has risen in the rest of the top ten percent. Zucman and Saez may prove right that the top one percent’s share has increased, but even in that case their estimates may overstate the rise. If you think I am reaching a tortured conclusion, again consider that the most careful analysis of wealth inequality trends up until 2014 (the Kopczuk-Saez study) showed wealth inequality flat to declining through 2000. It received a small fraction of the attention that the Zucman-Saez results are getting, for reasons that are useful to ponder." Scott Winship in Forbes.

BERNSTEIN: The cost of inequality to growth in households' income. "Occasionally I run into people who want to argue that the increase in inequality is just the benign outcome of 'just desserts' as economist Greg Mankiw frames it. It may boost those at the top, but not at the expense of others. By this metric, not so. The growth of unequal outcomes has been and will continue to be costly to those on the wrong side of the divide." Jared Bernstein in The Huffington Post.

COHN: Why the Obamacare subsidy errors (probably) aren't that big of a deal. "Could the problem actually be a lot worse than Administration officials think — or are letting on? Sure. Even if it's not, there are undoubtedly some people getting the wrong amount of financial assistance. Those who are getting too much will have to pay the difference, presumably by next year's tax deadline. Those who are not getting enough are entitled to more assistance — and in many cases they need it, because they are extremely poor. The amounts might not be big in most cases. But there are bound to be some exceptions....The question is how widespread the problems are — and how long it takes the Administration to fix them." Jonathan Cohn in The New Republic.

Random acts of kindness interlude: Formerly homeless man helps homeless people.

2. The EPA climate rule has more hurdles than a track meet

What challenges does the EPA climate rule face? "The carbon rule that the Environmental Protection Agency issued Monday is President Barack Obama’s last best hope for a legacy on climate change, and could fulfill environmentalists’ hopes for dramatically lessening the United States’ reliance on coal. But first, the proposed rule has to overcome some obstacles: the courts, the states, opponents in Congress and whoever occupies the White House after 2016. The rule’s other big enemy could be the clock." Erica Martinson in Politico.

The EPA rule could change majorly if states aren't up to the task. "The Obama administration will revise its proposal to fight climate change in the next year if individual states show they can’t meet the targets, the head of the Environmental Protection Agency said. Gina McCarthy, administrator of the agency that wrote the proposal issued yesterday, said she expects 'significant' revisions in the state emission goals before a final rule is issued next year." Mark Drajem in Bloomberg.

The collective action hurdle: Will other nations join in? "America's push to cut carbon-dioxide emissions is partly intended to spur other large emitters — especially China — to cut their own emissions more aggressively to tackle climate change. But will it work? Other countries already have national policies aimed at cutting carbon-dioxide emissions, and they are much further along than the U.S....Persuading other countries to follow suit won't be easy. Many developing countries are on a long-term path of trying to industrialize their economies and continue to resist big domestic cuts in carbon emissions." Gautam Naik in The Wall Street Journal.

At least they may come to the table. "President Barack Obama's proposal to curb U.S. greenhouse gas emissions might improve the chances of completing a global climate treaty but is unlikely to defuse demands by China, India and others for Americans to do more." Joe McDonald in the Associated Press.

Explainer: Ambitious, but not enough. Brad Plumer in Vox.

The toxic politics of climate change also could serve as a hurdle... "For the next year, the battle will be fought in the court of public opinion, with everything from grassroots lobbying to cable TV sound bites to onslaughts of political ads. Conservatives will organize around two main messages: that forcing power plants away from reliably low-cost coal will drive up the price of energy and jeopardize our energy supply, and that higher-cost energy will hamper economic growth." Ben Adler in Grist.

Wonky fact-check aside: No, the rule isn't an economy killer, or a national energy tax. Ben Geman in National Journal and Glenn Kessler in The Washington Post.

...and there will be legal challenges.... "The final say on U.S. EPA's broadly written power plant rule will undoubtedly be made by a court....Even before yesterday's announcement, the most contentious issue in this rule has been whether EPA has the authority to regulate beyond an individual power plant and allow states to switch fuel sources, increase renewable energy capacity and push for demand-side efficiency — options two through four." Tiffany Stecker in ClimateWire.

...plus, GOP actions to limit cap-and-trade... "The spread of carbon trading systems could be limited by politics. New Jersey Governor Chris Christie, a Republican, withdrew from the Northeast trading group known as the Regional Greenhouse Gas Initiative in May 2011, calling it a costly failure. Jan Brewer, Arizona’s Republican governor, cited concerns about costs when she decided to take the state out of the western trading system that California is now implementing." Jim Snyder and Christopher Martin in Bloomberg.

...and legislation. Maria Gallucci in International Business Times. (Granted, its odds of becoming law without a GOP president and Congress aren't good.)

But the legal challenges would likely face an Obama-friendly court. "The fate of President Barack Obama's new regulations for curbing greenhouse gas emissions from existing U.S. power plants likely lies in the hands of a Washington, D.C., appeals court he largely reshaped through a series of key appointments....Though there's no guarantee judges vote along party lines, the court's composition makes it more likely the regulations would face sympathetic judges in a likely court challenge." Lawrence Hurley in Reuters.

How the rule could cause a government-shutdown fight. "President Obama’s new climate change rule could result in a partial government shutdown this fall if Republicans attempt to block the regulations through the appropriations process....They used the tactic last year in an omnibus spending bill....Senate Democratic leaders would almost certainly reject an appropriations the bill that blocked the climate rules, however, so passage of a bill with an EPA rider could lead to another government shutdown battle." Erik Wasson in The Hill.

No, the rule wouldn't kill coal. "While it stifles increases in demand, the blow isn’t fatal as has been portrayed by industry advocates, including Senator Mitch McConnell, the U.S. Senate minority leader from Kentucky, who has equated Obama’s rules with a 'war on coal.' Utilities are seen by analysts as boosting consumption of the fuel at their most efficient plants to ensure power-grid reliability." Mario Parker in Bloomberg.

Another challenge: There's a downside to natural gas. "Conventional wisdom, strongly promoted by the natural gas industry, is that natural gas drives down American emissions of carbon dioxide, by substituting for carbon-rich coal. The climate stabilization plan announced by the Obama administration on Monday relies on that. But in other ways, cheap natural gas drives emissions up....Some of the factors are hard to quantify, making it uncertain whether, in the long term, natural gas’s net effect is positive for climate control." Matthew L. Wald in The New York Times.

Other environmental/energy reads:

Remember when the GOP supported cap-and-trade? Chris Arnold in NPR.

U.S. imposing some tariffs on importers of Chinese solar panels. Diane Cardwell in The New York Times.

PORTER: Paltry start in curbing emissions. "Tim Jackson, professor of sustainable development at the University of Surrey in Britain, uses a nifty back-of-the-envelope calculation to underscore the challenge of giving the world’s poor a shot at prosperity while preventing a global climate disaster....Professor Jackson calculates, by 2050 the world economy could emit at most six grams of carbon dioxide for every dollar it produced. We are nowhere near that efficient. Advanced nations emit 60 times that much, according to the Energy Information Administration. Developing nations emit 90 times that much. It’s enough to make a sustainable development expert despair." Eduardo Porter in The New York Times.

BRYCE: Repeating mistakes of the past. "The hard reality is that the EPA’s new rules will have negligible impact when it comes to soaring global carbon dioxide emissions and surging global demand for coal. Just as important, the new rules are merely repeating the policy mistakes of the past and, in doing so, risk making the U.S. too dependent on a single fuel source. And this new policy mistake is happening even though the U.S. leads the world in carbon dioxide reductions." Robert Bryce in National Review.

CHAIT: Echoes of Obamacare in conservative reaction. "When the Obama administration launched its health-care reform project five years ago, conservatives were held back by the sheer lack of interest in the issue they had accumulated over the decades. Conservative intellectuals had paid hardly any detailed attention to the specific problems of health-care economics and found themselves grasping for generalized right-wing bromides. (They have played vigorous catch-up in the years since.) The same rough dynamic can be seen now as Obama launches a major climate change initiative." Jonathan Chait in New York Magazine.

Kids say the darndest things interlude: 21 kids who are too literal for their own good.

3. Can the new VA head or Congress turn things around?

You're fired! "Next in the dock are VA’s Senior Executive Service members. Congress is considering legislation that would treat them like second-class federal employees by stripping them of certain civil service protections or weakening those protections almost to the point of meaninglessness. The House and a Senate panel have approved legislation that would allow the secretary to fire or demote the department’s SES staffers, who would have no appeal rights. On Thursday, the Senate Veterans’ Affairs Committee will hold a hearing on somewhat more reasonable legislation that would provide for appeals, albeit significantly truncated." Joe Davidson in The Washington Post.

Charts: Actually, the VA already fires its employees much more than other agencies do on average. Josh Hicks in The Washington Post.

Could civilian care fix the VA mess? Congress weighs in. "A few opponents of the recently proposed legislation say it's already hard enough to lure top executives to the VA, and these bills could drive them into higher-paying jobs elsewhere. Another private sector solution on the table is a sort of voucher system, which Sen. John McCain has been pushing....To address the crisis in wait times, the VA is ramping up a system that would explicitly allow veterans to get private care if they've been waiting more than 30 days for medical attention. Some in Congress have put forth measures to do the same. But that's something the VA already has the authority to do — in fact, in 2013 the department spent $4.8 billion on care outside the VA system." Quil Lawrence in NPR.

Reid to Republicans: Let's at least try to make a deal. "Senate Majority Leader Harry Reid, D-Nev., offered Senate Republicans a vote on a House-passed veterans bill in exchange for allowing a vote on a Senate Democratic bill Tuesday, but questions over amendments could stifle action....It’s unclear if McCain’s bill will be part of the picture as Reid has been reluctant to allow many amendments to legislation on the floor." Humberto Sanchez in Roll Call.

Hey, Senate: What about those stalled VA nominees? "As the turmoil over the VA scandal unfolds, three top posts in the Department of Veterans Affairs remain vacant because of congressional foot-dragging toward full Senate confirmation. A fourth key job — the department's inspector general — has remained vacant for nearly half a year. The White House itself has yet to even name a nominee for that post. There is plenty of blame being tossed around." Billy House and Michael Catalini in National Journal.

The Cleveland Clinic's top doc could be the VA chief nominee. "The White House is considering nominating the chief executive of the Cleveland Clinic to be the next secretary of the Department of Veterans Affairs, people familiar with the matter said. Delos 'Toby' Cosgrove has led one of the nation's most prestigious hospital systems and is a decorated Vietnam veteran." Damian Paletta, Christopher Weaver and Janet Adamy in The Wall Street Journal.

Why Cosgrove? "When Cosgrove took leadership of the clinic in 2004, it had notoriously low patient satisfaction rating despite delivering excellent care. Clinic leadership, in an October 2013 interview, detailed the steps it took to boost patient-satisfaction scores. Namely, the clinic created an online portal to allow patients to schedule appointment, expanded access to electronic medical records and made it easier for patients to communicate electronically with doctors....The clinic’s cardiac unit has been ranked tops in the country each year since 1994 by the U.S. News & World Report." Jason Millman in The Washington Post.

Young whippersnappers interlude: Teens react to '90s Internet.

4. Health care is currently experiencing technical difficulties; please stand by

2.9 million Obamacare Medicaid enrollees still don't have application processed. "Those delays — due to technological snags with enrollment websites, bureaucratic tangles at state Medicaid programs and a surge of applicants — betray Barack Obama’s promise to expand access to health care for some of the nation’s most vulnerable citizens. As a result, some low-income people are being prevented from accessing benefits they are legally entitled to receive. Those who face delays may instead put off doctors appointments and lose access to their medicines, complicating their medical conditions and increasing the eventual cost to U.S. taxpayers." Rebecca Adams in Roll Call.

Additional reading: How CQ-Roll Call did the analysis. Rebecca Adams in Roll Call.

In 5 states, troubled exchanges see costly fixes. "Five states that launched health exchanges under the Affordable Care Act expect to spend as much as $240 million to fix their sites or switch to the federal marketplace, a Wall Street Journal analysis shows....Funds may come from the states, remaining federal grants and new federal requests. The fresh spending is fueling a pitched debate in some states that could shape how residents buy their health insurance." Stephanie Armour in The Wall Street Journal.

The health-data revolution's awkward adolescence. "The crowd in a hotel ballroom in Washington, D.C., was rocking on Monday, the 2,000 people shrieking with excitement over federal health-care databases. That could only happen at Health Datapalooza, the annual summit for data geeks, doctors, researchers and patients who want to use data to transform health care — or at least make a buck. Both of those goals are proving to demand a lot more than just coming up with a nifty API and getting the venture capitalists to buy in. Speakers at the Datapalooza gave plenty of examples of how people are trying to use data to make medical care safer, swifter and less expensive. But almost all of these projects are still works in progress." Nancy Shute in NPR.

ICYMI: Why 'transparency' isn't enough for health-care price data. Dan Keating in The Washington Post.

Health care companies have a cybersecurity problem. "Major data breaches at Target (TGT) and Neiman Marcus last year put the spotlight on how poorly retailers guard sensitive information from cyber thieves. Yet health-care and pharmaceutical companies rate even worse than retailers in terms of security performance, according to a new analysis of Standard & Poor’s 500-stock index companies by BitSight Technologies." Dune Lawrence in Bloomberg Businessweek.

Other health care reads:

Will Obamacare cut the $84.9B we spend on the uninsured? Sarah Kliff in Vox.

Despite law, rape victims sometimes pay for medical services. Michelle Andrews in Kaiser Health News.

Animals interlude: Video of some hedgehogs doing hedgehog things.

5. The legal, illegal NSA program?

Judge doubts phone-surveillance program is legal, but upholds it anyway. "A federal judge in Idaho upheld the NSA's controversial phone surveillance program Tuesday. But Judge B. Lynn Winmill seemed to invite the Supreme Court to overturn his decision. He suggested that the program, which collects data on millions of U.S. phone calls, likely violates the Fourth Amendment's prohibition of unreasonable searches and seizures. Winmill upheld the program because he concluded that his hands were tied by current Supreme Court precedent." Brendan Sasso in National Journal.

New NSA chief: Don't worry, we're not intentionally using face recognition on Americans. "The new director of the National Security Agency on Tuesday acknowledged that the agency uses facial-recognition tools but said the intent is primarily to identify terrorists and help prevent attacks — adding that such technologies are not broadly directed against Americans. 'We do not do this on some unilateral basis against U.S. citizens,' said Adm. Michael S. Rogers." Ellen Nakashima in The Washington Post.

Other tech reads:

Can we automate cybersecurity? Kenneth Chang in The New York Times.

A bitter Silicon Valley primary. Joshua Green in Bloomberg Businessweek.

How one TV show may have crashed the FCC's website. Tony Romm in Politico.

Dancing interlude: Professional dancers copy a baby.

Wonkblog roundup

Here’s why the head of the Cleveland Clinic could help Obama fix the VA. Jason Millman.

Phil Mickelson’s inside information may have been perfectly legal. Matt O'Brien.

Study finds strong evidence for discriminatory intent behind voter ID laws. Christopher Ingraham.

This computer programmer solved gerrymandering in his spare time. Christopher Ingraham.

Coal companies have bigger problems than the Obama administration. Max Ehrenfreund.

Et Cetera

Fed officials growing wary of market complacency. Jon Hilsenrath in The Wall Street Journal.

Senate confirms 3 commissioners to derivatives agency. Silla Brush in Bloomberg.

As the number of unvaccinated Americans grows, measles and whooping cough make a comeback. Sarah Mimms in National Journal.

Obama calls wave of children across U.S.-Mexican border an "urgent humanitarian crisis." Katie Zezima and and Ed O’Keefe in The Washington Post.

Shield-law supporters sense momentum after House vote. Andrew Taylor in the Associated Press.

Senators set new bid for overhaul of pricey food aid rules. Patricia Zengerle in Reuters.

The highway funding crisis has lawmakers scrambling. Billy House in National Journal.

Got tips, additions, or comments? E-mail us.

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.

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