The Economic Experiment That Upended Reality

In 2011, proposing a minimum wage of $15 an hour was considered madness, not only by conservatives but also by progressive economists and Democratic politicians. The idea that raising the minimum wage would kill thousands of jobs seemed like a law of nature: if labor costs more, companies buy less of it. It was the economic equivalent of gravity, an axiom taught in all economics departments and repeated like a mantra by leaders of both parties. But here comes the twist: In 2014, Seattle actually raised the minimum wage to $15. There was no apocalypse. Restaurants didn't close. Jobs didn't disappear. One hundred thousand workers received higher wages and spent them, and the city's economy continued to grow. San Francisco followed. Then New York, California, and even conservative states like Missouri, Nebraska, Florida, and Alaska. Everywhere, the catastrophic predictions turned out to be wrong. The argument is this: the "iron law" that raising minimum wages destroys employment was a dogma, not a truth. The data has shown that the link between higher minimum wages and job loss does not exist, and this discovery forces us to rethink the entire framework of the dominant economy, the one that for years has justified ever-increasing inequalities as the inevitable price of growth. Alan Krueger and David Card, the first economists to question this "law," were ridiculed. Nobel laureate James Buchanan dismissed their work by saying: "Fortunately, only a few economists are willing to throw away two centuries of teachings." Yet, the facts are stubborn. A study by the University of Massachusetts led by Arindrajit Dube analyzed 138 increases in the minimum wage at the state level between 1979 and 2016: no job losses. In 42 large metropolitan areas straddling the border, employment grew, sometimes even more where the wage had been raised. In Germany, when the first national minimum wage was introduced in 2015, there were fears of 900,000 fewer jobs. Nothing of the sort happened. In the United Kingdom, the minimum wage has risen to two-thirds of the median wage, one of the highest ratios in the world, with no negative effects on employment. And what about the fear of inflation? A 2020 Berkeley study, using data from supermarket scanners, calculated that a 10% increase in the minimum wage led to a one-time 0.36% increase in food prices: imperceptible. Not only that: the Federal Reserve Bank of Chicago found that low-income households, after a one-dollar-per-hour increase, spend an average of $2,800 more per year, giving a direct boost to the economy. And a 2025 study by the IZA Institute of Labor Economics showed that increases in the minimum wage reduce poverty and the difficulty of purchasing food, not only for those who earn less but for the entire working-age population. The root cause of the failure of the neoliberal paradigm lies in three scientific revolutions. First: the old theory assumed that people were perfectly selfish calculators, but Daniel Kahneman and Richard Thaler have shown that this is not the case. We are social animals: we cooperate, we reciprocate, and we punish those who cheat, even to our own detriment. Treating workers as replaceable cogs is simply wrong. Second: markets are not perfect, self-regulating machines, but complex and adaptive ecosystems. When workers earn more, they spend more: customers increase, and so do jobs. Third: the moral justification for inequality — the idea that wages reflect a person's true value — has crumbled. Today, workers receive far fewer job offers than in the 1980s, not because they are worth less, but because employers have more power and less competition. The key point is that inequality is not the price of growth, but its downfall. The IMF has studied almost every country in the world, finding that less inequality means faster and more lasting growth. The authors call this new approach "market humanism": markets must serve human well-being, not the other way around. The right question is no longer "how much will a higher minimum wage hurt the economy?", but "what level of minimum wage generates the best results for the entire system — for workers, for demand, for trust?". The truth is that large middle classes do not come out of nowhere, but are deliberately built with worker protections, public investment, and progressive taxes. Here is the perspective that is still missing: it is not enough to demolish an old paradigm; we must have the courage to really bury it and build a new one that puts human dignity at the center. The sentence that remains is this: the idea that raising the minimum wage destroys jobs is dead, and with it the entire system that kept it alive. If you think this story has changed how you see the economy, you can indicate it on Lara Notes with I'm In: it's not a simple like, it's your way of saying "this idea is now part of how I think." And if this discovery about the power of data becomes a conversation with someone — at the table, at work, in the car — on Lara Notes you can tag the person with Shared Offline, so there is a record of a dialogue that matters. All this comes from The Atlantic, and it just saved you 4 minutes.