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Los Angeles will raise minimum to $15 an hour

Supporters applaud on May 19 as the Los Angeles City Council votes to raise the minimum wage in the city to $15 an hour by 2020, making it the largest city in the nation to do so. (AP Photo/Damian Dovarganes )
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The movement to raise the minimum wage to $15 an hour claimed a major victory on Tuesday in Los Angeles. It looks like labor advocates will get what they want in the country's second largest city.

But will a minimum of $15 an hour actually be a good thing for workers? Or will their bosses find they have to lay them off once they're forced to pay them so much more?

Dylan Matthews made the case against a $15 hourly minimum at Wonkblog a couple of years ago, and Matt Bruenig of Demos offered this rebuttal. The debate hasn't changed much since then, except for one crucial thing: The economic recovery has made a lot of progress.

Whether a higher minimum wage stimulates the economy overall could depend on whether the economy is running at full steam. If it isn't, then as workers' wages increase, they'll spend more money, giving retailers more business and allowing employers to put people back to work. By now, though, far fewer people are out of a job, and the  unemployment rate has fallen to an apparently normal 5.4 percent.

That said, there are still a lot of people who are working less or not at all. The unemployment figure doesn't include that group, because they're not looking for a job or because they're working part time.

And we also really don't know what effect the $15 hourly minimum will have on wages and workers in general, although Wonkblog's Lydia DePillis, reviewing the evidence from Puerto Rico, finds that employers are less likely to let go of their workers than many industry lobbying groups have warned.


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What's in Wonkbook: 1) Minimum wage 2) Opinions, including Barro and Salam on Republicans and taxes 3) 34 million cars will be recalled, and more

Chart of the day: Wall Street is back. "The number of people working in the securities business nationally has returned to 2007 levels, as has the gap between the compensation of Wall Street workers and that of everyone else. The financial sector as a whole is reporting profits that are as large a share of the overall economy as in the early 2000s and more than double their average level over the 70 years ended in 1999." Neil Irwin in The New York Times.

1. Top story: Los Angeles to raise minimum wage

Los Angeles will raise the minimum wage to $15 an hour. "The Los Angeles City Council voted on Tuesday to increase the minimum wage in the nation's second-largest city to $15 an hour by 2020 from the current $9, in a victory for labor and community groups that have pushed for similar pay hikes in several U.S. municipalities The council's 14-1 vote on the measure, which must come back before the panel for final approval, would require businesses with more than 25 employees to meet the $15 pay level by 2020, while smaller businesses would have an extra year to comply. Officials said the plan, which comes on the heels of similar minimum wage hikes in other major cities including Seattle and San Francisco, would increase pay of an estimated 800,000 workers in the city." Alex Dobuzinskis for Reuters.

This was a big win for labor. "The vote was the latest show of organized labor’s clout at City Hall. During nearly a year of often emotional debate, labor leaders never gave ground on their central demand that the minimum wage rise to at least $15. The City Council ultimately favored that approach over Garcetti’s proposal to raise the minimum wage to $13.25 by 2017. ... Backed by well-organized labor activists at the national level, the campaign to raise the minimum wage has become a focus of Democrats seeking to revive their party’s focus on income inequality. Once Los Angeles’ wage hike is finalized, the city will join other West Coast cities that have enacted higher minimum wages in the last two years." Peter Jamison, David Zahniser and Alice Walton in the Los Angeles Times.

Economists aren't sure what $15 an hour will mean for workers. "Various economists have studied the effects of the higher minimum wage, disagreeing on what the impact will be. ... At the end of the day, while there are piles of evidence on how minimum wage increases impact wages and employment in cities, nobody quite knows what happens when a city goes all the way up to $15, since that's still far higher than what anybody else has tried." Lydia DePillis in The Washington Post.

2. Top opinions 

BARRO: Will Republicans keep contradicting themselves on taxes? "In 2012, Mitt Romney made a promise that would come back to haunt him: that he could cut federal income tax rates by 20 percent across the board; eliminate enough tax deductions and credits to do this without increasing the deficit; and not raise taxes on people making less than $200,000. The problem for Mr. Romney was that the math didn’t work. ... There are a few ways the 2016 Republican candidates can avoid the Romney middle-class tax trap. They can break with party tradition and abandon the position that there should be significant tax-rate cuts for top earners. They can forthrightly defend the idea that people with low and middle incomes should pay more. They can abandon the promise of revenue neutrality — so a tax cut for the rich does not need to be offset by tax increases elsewhere. They can be as vague as possible. So far, we have seen contenders use all these options except the first." The New York Times.

SALAM: The flat tax relies on bad economics and bad politics. "Implementing a revenue-neutral flat tax on consumption would almost certainly benefit households with a large amount of investment income more than middle-income households that rely on wages. Whatever enthusiasm voters might have for the flat tax in theory might quickly evaporate in a campaign, when opponents of the flat tax will point out that it will greatly reduce the tax burden on (say) people like Mitt Romney. ... Republicans should put Earned Income Tax Credit expansion and other measures to improve work incentives for low-income households at the heart of their tax-reform agenda. When Republicans debate lowering the top rate of tax with Democrats, they lose. When they emphasize tax reforms that encourage work and that help middle-income families climb the economic ladder, they win." National Review.

CORN: The intelligence official who briefed President Bush on Iraq says the administration misled the public. "In recent days, as Jeb Bush bumbled a question about the Iraq War, he and other GOPers have peddled the fictitious tale that his brother launched the invasion because he was presented lousy intelligence. But now there's a new witness who will make the Bush apologists' mission even more impossible: Michael Morell, a longtime CIA official who eventually became the agency's deputy director and acting director. Appearing on MSNBC's Hardball on Tuesday night, Morell made it clear: The Bush-Cheney administration publicly misrepresented the intelligence related to Iraq's supposed WMD program and Saddam's alleged links to Al Qaeda." Mother Jones.

WOLF: The price of bonds is finally going down again. "Is the three-and-a-half decade long bull market in the highest-rated government debt over? If so, would that be a good thing or a bad one? The answer to the first question is that it seems quite likely that the yield of 0.08 per cent (8 basis points) recorded on the 10-year Bund in April was a low point. The answer to the second question is that it would be a good thing: it would suggest confidence that the threats of deflation and eurozone disintegration are fading." The Financial Times.

ALI: Moderate bike gang members condemn the shootout in Waco, Tex. "This tragedy stemmed from the criminal actions of a fringe minority that does not represent the democracy-loving values of the majority of tolerant biker gangs devoted to freedom, denim, mutual understanding and leather accessories. ... People are demanding: When will moderate bikers take responsibility for crimes committed by these violent extremists? ... Let me be clear: There is no such thing as a single, monolithic 'biker gang community.' There is a diversity of biker gang communities: white men with goatees, bushy beards, trimmed mustaches; white men with cropped hair, long hair, ponytails; white men with leather jackets, denim jackets, leather vests; white men with shotguns, handguns, brass knuckles, knives and so forth. ... Innocent citizens — the moderate majority — are bearing the burden of... intrusive, unnecessary and ineffective anti-biker policies. White bearded hipsters have logged a huge rise in complaints of police abuse." The New York Times.

3. In case you missed it

Millions of drivers could be in cars with a potentially lethal defect. "Nearly 34 million cars and trucks nationwide were declared defective Tuesday because of deadly air bags made by auto-parts giant Takata, in what is expected to be the biggest recall of any consumer product in U.S. history. The expanded recall doubled the number of vehicles believed to have the air bags, which can blast out sharp metal shrapnel when deployed, a flaw that has been linked to six deaths and more than 100 injuries. The nationwide recall effort is expected to be a logistical nightmare for the auto industry, costing billions of dollars and potentially overwhelming automakers, parts suppliers and dealerships already struggling to find enough safe replacement parts." Drew Harwell in The Washington Post.

Divisions among Republicans could mean the end of major surveillance programs. "Congressional Republicans remain sharply divided over the fate of the federal government’s bulk collection of private telephone records. As a result, national security officials are preparing for the possibility that the legal authority underpinning those collection programs could expire in less than two weeks. Senate Majority Leader Mitch McConnell (R-Ky.), who favors a long-term continuation of the existing phone-data surveillance program, said Tuesday that he plans to allow a vote on a House-passed bill aimed at reforming the program. That bill passed by a wide margin in the House, with nearly 200 Republican votes, but McConnell opposes it and suggested Tuesday that it would not gain the necessary 60 votes to proceed in the Senate." Mike DeBonis and Ellen Nakashima in The Washington Post.

Clinton calls for deregulation of community banks. She said she wants "to help small businesses expand their access to credit — and hire more workers — by relieving small community banks of some regulatory hindrances. ... She said community banks had been hard hit by the 2010 Dodd-Frank financial regulation law. ... Mrs. Clinton drew a distinction between relieving the pressure on smaller banks and deregulating big Wall Street banks, a policy that she faulted some Republicans for supporting. 'What was meant to rein in "too big to fail" has actually fallen harder on them,' she said of community banks. 'That's why they need relief, because they were not part of the problem but in some ways are paying a disproportionate price.' " Amy Chozick in The New York Times.

The Texas legislature moves ahead with an open-carry bill, despite the violence in Waco. "'This bill does not have anything to do with what went on yesterday,' said state Sen. Joan Huffman, a Houston Republican who leads the Senate State Affairs Committee, during a previously scheduled hearing on gun legislation. ... Huffman's comments came after several witnesses, including Austin Assistant Police Chief Troy Gay, brought up the shootout during their testimony on the bill. Gay told senators that the 'chaotic situation' in Waco could have been made much worse by the confusion an open carry law would bring to responding police officers." Morgan Smith in the Texas Tribune.

Medicaid enrollments are well beyond projections under Obamacare. "More than 12 million people have signed up for Medicaid under the Affordable Care Act since January 2014, and in some states that embraced that piece of the law, enrollment is hundreds of thousands beyond initial projections. Seven states have seen particularly big surges, with their overruns totaling nearly 1.4 million low-income adults. ... Some conservatives say the costs that will fall on the states are just too big a burden, and they see vindication in the signup numbers, proof that costs will be more than projected as they have warned all along." Rachana Pradhan at Politico.

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