This week’s decision by the Los Angeles City Council to raise the local minimum wage to fifteen dollars an hour by 2020 is part of an intriguing development in urban politics and social policy. Reacting to grassroots campaigns carried out by labor unions and other progressive groups, some of the biggest cities in America are now defying several decades of economic orthodoxy, as well as challenging a set of social norms that regarded low-wage jobs as unavoidable and acceptable.

For years, efforts to raise the minimum wage at the federal and local levels faltered, despite the fact that, over the past few decades, it has failed woefully to keep up with inflation. (The federal minimum wage is currently $7.25 an hour.) But something is different now. Last June, Seattle’s City Council voted to raise the minimum wage from $9.32 an hour to fifteen dollars an hour by the end of 2017 for large businesses, a huge hike by the standard of previous raises.

In November, residents of San Francisco approved a ballot measure that would also set a minimum wage of fifteen dollars an hour, to take effect by 2018. Other cities, including Chicago, Kansas City, and Oakland, have joined the wage-raising trend, or appear poised to do so. (In an informative post, NPR’s Danielle Kurtzleben provides the full list.)

In New York, where the minimum wage is currently $8.75 an hour, Mayor Bill de Blasio has called for a fifteen-dollars-per-hour minimum by 2019. So far, he hasn’t gained the support of Governor Andrew Cuomo and the state legislature, which would have to approve any increase. “All of us used to think minimum wage meant a wage you could live on,” de Blasio said on Wednesday, when he hailed Los Angeles’s move. “Now, today, in New York City and many other parts of the country, a wage level under nine dollars an hour, nobody thinks a family could live on that.”

The Mayor’s comments highlighted one of the things that is driving the so-called living-wage movement: an ethical judgment, shared by many Americans regardless of their party politics, that people who work a full week should be able to afford the basics of modern existence. Of course, raising the minimum wage isn’t necessarily the only way, or the best way, to achieve this goal. Many economists believe that wage subsidies, such as the federal earned-income tax credit, are a more effective way to boost the incomes of low-income families, because they don’t have a negative impact on hiring. Minimum-wage laws, by raising the price of labor, may end up reducing the demand for it, thus boosting the number of jobless people. Or, at least, that is the argument that has often been made. (More on this below.)

In recent years, however, urban politics have moved beyond the economic debate, and for good reason. In big cities like New York, Los Angeles, and Chicago, the cost of living keeps rising faster than many people’s wages. Clearly, the U.S. Congress isn’t going to approve a big expansion in wage subsidies anytime soon; nor is it going to approve a substantial boost in the federal minimum wage. But local minimum-wage laws can be changed more easily. With groups like the Service Employees International Union and the Working Families Party leading the campaign to raise wages, and with public opinion generally supportive, local politicians like de Blasio and Eric Garcetti, the Democratic mayor of Los Angeles, have joined the cause. “We’re leading the country; we’re not going to wait for Washington to lift Americans out of poverty,” Garcetti told the Times.

As an exercise in participatory politics, the success of the living-wage movement is encouraging, and the new laws, when they come into effect, will have a significant impact on the lives of low-paid workers and their families. Someone who works a forty-hour week and earns $7.25 an hour receives an annual wage of fifteen thousand and eighty dollars, before deductions for Social Security and Medicare. That’s more than nine thousand dollars below the federal poverty threshold for a family of four, and is marginally below the threshold for a family of two. At fifteen dollars an hour, the annual wage rises to thirty one thousand two hundred dollars, which is well above the poverty thresholds.

An important question, from a policy-analysis perspective, is how the new wage laws will affect employment levels in the cities that have introduced them. It is now almost twenty-five years since the labor economists David Card and Alan B. Krueger, who were then both at Princeton, published a famous study challenging the prevailing orthodoxy that raises in the minimum wage inevitably lead to declines in hiring, particularly among teen-agers. To test this theory, Card and Krueger looked at how fast-food restaurants along the border between New Jersey and Philadelphia reacted to an increase in the minimum wage in New Jersey. In a result that surprised (and outraged) many of their peers, they found no decline in employment on the New Jersey side of the border. The change in the minimum-wage law appeared to have had practically no effect.

Since the publication of the Card and Krueger paper, scores of studies and counter-studies have been carried out, many of which broadly confirmed the duo’s findings, and some of which concluded that higher minimum wages do reduce employment, after all, particularly for low-skilled workers. The outpouring of research was so large that it spurred a series of meta-studies, which sought to summarize the earlier findings, and it has now moved on to what Arindrajit Dube, of the University of Massachusetts, Amherst, who is broadly in the Card and Krueger camp, has called a “fourth generation” of research that seeks “to make sense of the sometimes contradictory evidence.” (A very useful paper by John Schmitt, a senior economist at the Washington-based Center for Economic and Policy Research, summarizes and interprets this evolution.)

Almost certainly, the economists won’t resolve this debate by themselves, but the new city ordinances might do it for them. The increases in the minimum wage that will be introduced over the next few years are so substantial that some response from employers seems likely. But how large will it be?

What happens in Southern California will be particularly intriguing. The new law only applies to the city of Los Angeles, which is surrounded by independently run cities and localities. While some of these places may well follow L.A.’s lead, others won’t. Theoretically, they could benefit from an influx of low-wage employers seeking to escape the new law.

Michael Reich, an economist at the University of California, Berkeley, who has been advising Seattle and Los Angeles, argues that the fact that the increases in the minimum wage are being phased in over several years will give employers time to adjust to them; he predicts that the ultimate impact on employment will be very minor. In a study of the Los Angeles proposal, for instance, Reich and three other researchers concluded that raising the minimum wage to fifteen dollars an hour would cost the city just three thousand four hundred and seventy-two jobs by 2019, which is about 0.2 per cent of over-all employment. And that wasn’t the end of it. Reich and his colleagues predicted that Los Angeles County, as a whole, would see a gain in employment of five thousand two hundred and sixty-two jobs by 2019. That’s because all of the low-wage workers who kept their jobs, many of whom live outside the city limits, would get a sizable pay raise. They’d have more money to spend, the over-all level of demand for goods and services would be higher, and so would the level of employment.

In some ways, what is happening in Los Angeles will amount to a larger version of the New Jersey/Pennsylvania experiment that Card and Krueger wrote about all those years ago. If, in five years’ time, the evidence shows that low-wage employers fled the new minimum-wage laws, or that they stayed put but downsized their payrolls substantially, the orthodox economists will feel vindicated. But, if it turns out that cities like L.A. and San Francisco can raise the minimum wage by fifty per cent or sixty per cent without suffering big losses in employment, the old argument that higher minimum wages are job killers will be much harder to sustain. And that would change American politics in a very significant way, greatly expanding the range of possibilities it could encompass.

Originally published by The New Yorker